HowConstraintsManagementEnhancesLeanandSixSigma

Lean and Six Sigma are two of the most effective business improvement techniques available today. However, many companies still struggle to harness one or both disciplines to achieve the desired results. One solution is to combine lean/Six Sigma with a third business improvement approachconstraints management. By bringing constraints management into the equation, companies can identify where to focus the lean and Six Sigma efforts for maximum success. ByRobertE.SpectorSupplyChainManagementReview,1/1/2006 CompaniesthathaveembracedleanandSixSigmahavehadsomeimpressiveinitialresults.However,these popularbusinessimprovementdisciplineshavenotalwaysworkedforeveryoneevenwhentheyhavebeen combined.Anumberofcompanieshaveeithernotachievedthetoutedbenefitsor,afterinitialsuccess,haveseen theirimprovementeffortsgrindtoahalt. Recently,afewleadingcompanieshaveusedanotherbusinessimprovementapproach,namelyconstraints management,tofocustheirleanandSixSigmaeffortsandamplifytheirresults.Constraintsmanagementlooksat thebusinessaschainsofdependenteventsandfocusesimprovementeffortsontheweaklinksinthechains.On thefaceofit,theinclusionofyetanothersophisticatedbusinessprocessmightseemtoleadtoexcessive complexity.Butinpractice,thisnewlayeredapproachactuallycansimplifymanagement'sjobbyprovidinga focusingmechanismforimprovementinitiatives. Thisarticlewilldiscussthebenefitsofthenewapproach,beginningwitharefresheronleanandSixSigmainan efforttoclarifyhowtheapplicationofconstraintsmanagementtechniquescanhelptojumpstartstalledleanand SixSigmaimplementations.Toaidunderstanding,werefertotheexampleofanautomotivepartsplant(realbut unnamed).Thiscompanyhadarelativelystraightforwardproductionprocessinwhichsteelrollswerereceived, cutandshaped,plated,assembled,painted,andthenshippedtothecustomer.Marketdemandonthepartsplant callsfor30partsanhour.Beforethenewblendedprocessdisciplineswereapplied,thestampingareahada throughputof35partsperhour.Theplatingandpaintingoperationshandledtenand40partsanhour, respectively,withfinalassemblyrunningat20partshourly.Unfortunately,theplantfrequentlysufferedfrom missedduedates,poorquality,shortagesoftherightparts(withplentyofthewrongparts),andlowmorale.Piles ofworkinprocess(WIP)wereseeneverywhereintheplant.And,expeditingwasthenorm. Wewilllooklaterathowthenewbusinessdisciplinesmadeadifferencetothisplant'soperations.(Exhibit1,on page44,depictsthemainactivitiesattheplant,omittinginspectionareasforsimplicity.)First,though,it'shelpful torevisitsomeofthefundamentals.

ACloserLookatLean
Leanfocusesontheeliminationofwaste,definedasanythingunnecessarytoproduceaproductorservice.Seven wastesareparticulartargets:excessivemotion,waitingtime,overproduction,unnecessaryprocessingtime, defects,excessiveinventory,andunnecessarytransportation. TheleanapproachisanaturaloutgrowthofjustintimepracticesandtheToyotaProductionSystem.Theterm wascoinedbyJamesWomackafterhisgroundbreakingstudyofautomotivemanufacturingdetailedinthebook, TheMachinethatChangedtheWorld.Inthe1950s,leanmanufacturingwaspioneeredandfirstappliedeffectively byToyota,andtodaytheautomakeristhegloballeaderinimplementingorganizationwidelean. Leanaimstoeliminatewasteineveryareaofthebusiness,includingcustomerrelations,productdesign,supplier networks,andfactorymanagement.Theobjectivesaretouselesshumaneffort,lessinventory,lessspace,and lesstimetoproducehighqualityproductsasefficientlyandeconomicallyaspossiblewhilebeinghighlyresponsive tocustomerdemand.Leanisdirectlyopposedtotraditionalmanufacturingapproachesthatarecharacterizedby economicorderquantities,highcapacityutilization,andhighinventories.Inleanterms,highinventoriesdiminish acompany'scompetitiveadvantage;instead,itshouldstrivetoproduceonlywhatitknowsitcansell. Theleanimplementationapproachisasfollows: 1. Definevaluefromtheendcustomer'sperspective.Valueisdefinedbycustomerneedsandexpectations.

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2. Identifytheentirevaluestreamforeachservice,product,orproductfamilyandeliminatewaste.Avalue streamconsistsofalltheactionsrequiredtobringaproductthroughmanufacturingandassembly.Tools suchasvaluestreammappingareusedtodeterminewhichactionsdonotaddvalueand,thus,canbe eliminated. Maketheremainingvaluecreatingstepsflow.Herethefocusisonmaximizingvaluebyproducingonly what'sneededintheshortesttimepossiblewiththefewestresources. Pulltocustomerdemand.Everythingisproducedattherateofcustomerdemandonly. Pursueperfection.Empoweremployeeswithwasteeliminationtoolsandcreateacultureofcontinuous improvement.

3. 4. 5.

RevisitingSixSigma
SixSigmawaspioneeredbyMotorolaCorp.inthemid1980stoimprovemanufacturingyields.Thediscipline evolvedfromthequalityprogramsofthe1980s(costofquality,zerodefects,andtotalqualitymanagement) utilizingthecollectiveknowledgeofmanagementgurusW.EdwardsDeming,J.M.Juran,PhilipCrosby,andothers. Itsprimarygoalistheeliminationofvariationinproductsandserviceprocessestosuchadegreethatsixsigmasof variation(99.9997percentyield)willfitwithinthespecificationlimitsdefinedbycustomers.TheSixSigma performancetargetisvirtuallydefectfreeprocessesandproducts:3.4orfewerdefectivepartsperonemillion opportunities.Defectsmayberelatedtoanyaspectofcustomersatisfaction:highproductquality,schedule adherence,orcostminimization,forinstance.1 TheSixSigmadisciplineincludestheuseofstatisticaltoolsandtechniquestohelpanalyzeandreducevariationso theprocesscanbecomemorepredictableandreliable.Oncetheprocessisundercontrol,toolssuchasrootcause analysiscanthenbeusedtohelpreducetheaverageprocessingtime.Here'sanexampleofatypicalSixSigma project:reducingthevariabilityofresponsetimesatacallcenterthathasanaveragecustomerresponsetimeof 20seconds.Thecallsarebeingansweredinaslittleas10secondsandaslongas90secondsawaittimethat quicklyleadstoirritatedcustomers. TheSixSigmadrivefordefectreduction,processimprovement,andcustomersatisfactionisbasedontheconcept thateverythingisaprocessandallprocesseshaveinherentvariability.Dataisusedtounderstandthevariability anddriveprocessimprovementdecisions.SixSigmacomprisesthefollowingkeythemes: Customercentric:StakeholdervalueisthestartingpointforallSixSigmaimprovements. Processfocused:Masteringbusinessprocessesisawaytobuildcompetitiveadvantageindeliveringvalue tocustomers. Dataandfactdriven:Decisionsarebasedonestablisheddataandfacts. Standardizedandrepeatable:Customersvalueconsistentbusinessprocessesthatdeliverworldclass levelsofquality. Collaborationwithoutboundaries:SixSigmaexpandsopportunitiesforcollaborationaspeoplelearnhow theirrolesfitintothe"bigpicture"andastheyrecognizeandmeasuretheinterdependenceofall activitiesinaprocess. Driveforperfection,toleranceforfailure:Understandthatnocompanyhaseverachievedgreatresults withoutsomemistakesalongtheway.

TheEmergenceofLean/SixSigma
Inthepastfiveyears,companieshavebeguntorealizethatusingeitherleanorSixSigmaexclusivelyhasserious limitations.SixSigmawillhelpeliminatedefectsandvariationand,thus,increasethereliabilityofprocesses.But,it willnotaddressthequestionofhowtooptimizeprocessflow,anditdoesnotaddressthecompetitiveelementof speed.Lean,foritspart,willhelpreducecomplexity,butitdoesnotaddressreliabilityasSixSigmadoes. Bycombiningthesecomplementaryapproachesintowhatisnowcalledlean/SixSigma,companiescanaddressthe keycompetitiveelementsofspeedandquality.Forexample,onacallcenterproject,SixSigmawouldhelpidentify acustomerrequirementtoanswercallswithin19secondsandthenenable95percentofthecallstobeanswered Page2

HowConstraintsManagementEnhancesLeanandSixSigma
innolessthan15secondsandnomorethan25seconds.Meanwhile,leanwouldhelpreducethelengthand volumeofthecalls,andhelpreducetheneedforfulltimestaffandfacilities.Or,onasupplychainproject,Six Sigmacouldhelpidentifytherootcausesofvariationinscheduleandproductionprocesses,whileleanwould contributetolowermanufacturingcycletimesandinventorytomeetmarketdemand. Tofurtherillustratehowlean/SixSigmacanbeappliedconcurrently,let'stakealookattheautomotiveparts companyexample.Exhibit1showstheoldprocesswithmarketdemandof30partsanhour.Theautopartsplant wasoperatingina"push"fashionorderswerepushedthroughtheplant.Butleanprescribestheuseofa demandpullsystem,withordersbeingpulledthroughtheplantaccordingtoafinalassemblyschedulethatis synchronizedtocustomerdemand.Inourexample,thesetuptimeforthestampingpresswasmeasuredindays andwashighlyunpredictable.Byapplyingleanreductiontechniques,setupcanbereducedfirsttoafewhours andeventuallytolessthan10minutes. ToenablethekanbanlogisticssystemtopullmaterialthroughthesystemtothecustomerbothleanandSix Sigmatoolscanhelpdrivevariationoutoftheprocessandeliminatenonvalueaddedactivities. Exhibit2showsthenewprocessafterapplicationoflean/SixSigma.(Marketdemandisstill30partsanhour.)Set upreductiontechniqueshavebeenappliedatthepressoperationstocutsetuptimes.Thesetechniquescanalso dramaticallyincreaseeffectivecapacityaswellastheabilitytoreducebatchsizes.SixSigmaproblemsolving techniqueshavehelpedtoincreasethequalityattheplatingoperation(previouslyexperiencingalotofrework)so thatitseffectiveyieldisslightlymorethanmarketdemandof30partshourly.Leanconceptshavebeen implementedatalloperationstohelpreducewaste,andpreventivemaintenanceisnowbeingdonetoavoid machineandtoolbreakdowns,whichhasresultedinasignificantboostinfinalassemblythroughput.Finally,apull schedulingsystemhasbeenimplementedthatpullsproductthroughthesystemattherateofmarketdemand. Dramaticimprovementshavebeenmade.Theprocessisnowpredictableandundercontrol.Inventory, particularlyWIPinventory,hasbeenslashedbymorethan70percent.Cycletimehasbeenhalved,andcustomer servicelevelsarenowup95percent.

ProblemswithImplementation
Yetwhiletherehavebeenexamplesofdramaticresults,leanmanufacturingprogramsatmanymanufacturing companieshavehadtroublestayingontrack,accordingtoarecentarticlebytheARCAdvisoryGroup."Manylean programsareintrouble,"saysRalphRio,researchdirectorofARC'sleanmanufacturingpractice.2IntheLean EnterpriseInstitute'srecentsurvey,36percentofleanpractitionersviewedtheircompanies'"backslidingtothe oldwaysofworking"asamajorobstacle. ThesamephenomenonhasbeenobservedwithcompaniesthathaveimplementedSixSigma.Eventhosethat havehadgreatinitialresultswiththeirimplementationsarenowencounteringdifficultymaintainingtheir programs'momentum.Insomecases,theprogramshaveactuallygroundtoahalt. Whyisthishappening?Partoftheproblemisthatmanyofthecompaniesthathaveeffectivelyimplementedlean and/orSixSigmahavetoomanysuchprojects.Managershavebeenheardcomplainingthatthatthey'vereacheda pointofsaturationwheretheydon'tknowwhichprojectsare"important"andwhicharen't.Thisproblemcanarise fromthecoreassumptionsbehindthesedisciplines.Lean'scentralassumptionthatwastereductionwill automaticallyresultinariseinbusinessperformanceisnotvalidinallcircumstances;noristheSixSigma assumptionthatreducingvariabilityeverywherewillautomaticallyleadtoanoverallsystemsimprovement. Itisdifficulttoargueagainsttheunderlyingphilosophyofimprovement.Theeconomicreality,however,isthat companiesseekthemostimprovementfortheleastinvestment.Tryingtoimproveallofacompany'sindividual processesatthesametimerequirestremendoustimecommitmentsbymanypeoplethroughoutthecompany.In truth,wringingvariationoutofprocessesandeliminatingwasteeverywheredoesnotnecessarilyleadto decreasedspendingorincreasedthroughput.Howdomanagersdeterminewhichprojectsareimportantand whicharen't?Ifeverythingisapriority,thennothingisapriority. Thereisalsothecommonissueofviewingtheseimprovementprojectsonlyintermsoflocaloptimizationwithout lookingatthe"bigpicture."Inonenotablecase,amanufacturer'spurchasingdepartmentlaunchedaninitiativeto Page3

HowConstraintsManagementEnhancesLeanandSixSigma
lowerthecostofrawmaterials.Theconclusion:Thecompanycouldsavemoneyonaparticularcomponentby purchasingthepartfromChina.Althoughtherawmaterialcostsavingswerereal,theycameatahugeprice.The newdeliverytimeswerelongandunreliableaslongassixweeksyetcycletimewasakeycompetitivefactorin thecompany'smarketplace.Thebandaidmeasure:largewarehousesfullofcomponentinventory.Thecompany cameclosetogoingoutofbusiness. Thiswasaclassiccaseoflocalimprovementsquicklycompromisingtheentiresystem.Companiesthathavebegun enterprisewidelean/SixSigmaeffortswithmanyimprovementprojectsrunningatthesametimearevery susceptibletothistypeofproblem. Sohowcanmanagersunderstandtheeffectsoflocalinitiativesonthewholecompany?Theansweristocombine lean/SixSigmawiththesystemsfocusofconstraintsmanagement.

ARefresheronConstraintsManagement
Constraintsmanagement(CM)isbasedontheTheoryofConstraintsdevelopedbyEliGoldratt,anIsraeliphysicist.3 CMlooksatcompaniesassystems.Asystemcanbedefinedgenerallyasacollectionofinterrelated, interdependentcomponentsorprocessesthatactinconcerttoturninputsintodefinedoutputsinpursuitofa particulargoal.Likeningsystemstochains,CMdefinestheweakestlinkastheconstraintthesystem'slimiting factor.(SeeExhibit3.) AcommonthemeinthesuccessstoriesofCMimplementationsishowquicklyresultsareattained.That'sbecause thefocusonconstraintsis,defacto,afocusontheareaswherethere'sthemostpotentialforimprovement. Thereareessentiallytwodifferenttypesofconstraints:physicalandpolicy.Aphysicalconstraintisusuallya capacityconstrainedresource,suchasamachineorperson.Itcanalsobethemarketitself:excesscapacitycan resultifdemanddriesup.Apolicyconstraint,whichisthedominanttypeofconstraint,canbeanybusinessrule thatconflictswiththegoalofmakingmoremoney.Anexample:theprescribeduseoflargebatchsizesinorderto be"efficient"butattheexpenseoflongerleadtimes. Thinkingofabusinessasamoneymakingmachinewithmoneyenteringthemachineandmoneycaptured insidehelpsexplainthevalueoftheCMapproach.Themoneyproducedbythemachineiscalled"throughput," definedas"theratethemachinegeneratesmoneythroughsales."Notetheword"sales";ifsomethingisproduced butisnotsold,it'snotthroughput.Noristhroughputthesameasgrossrevenue.Somerevenuegeneratedbythe machineisproducedbyvendors,andthisrevenueelementsimplyflowsthroughthemachine.Sothroughput equalsgrossrevenueminusallvariableexpenses(rawmaterialcosts,salescommissions,andsoforth). Themoneycapturedinthemachineiscalled"inventory."(Inthiscaseitincludesnotonlythematerialsandparts madebutalsoallassets,includingbuildingsandequipment.)And,themoneythemachineusestoturninventory intothroughputiscalled"operatingexpense."Thisdefinitionincludesalldirectandindirectlaborandalloverhead. Considertheseastheunavoidablecostsofdoingbusiness.Theyareshortterm,nonvariablecosts;overthenext financialperiod,itdoesn'tmatterhowmanyunitsaresoldtheemployeesmuststillbepaid. Throughput,inventory,andoperatingexpensecanbeeasilytiedtothebottomlinefinancialmeasuresofnet profitandreturnoninvestment(ROI). Constraintsmanagementarguesthatthegreatestimprovementscomefromaddressingissuesattheweakestlinks inthechain.Improvementsatnonconstraintshaveverylittlepositiveimpactontheoverallsystemandcaneven bedetrimental.TheCMapproachconsistsofthefollowing: Keyfocusingsteps:ThisreferstoGoldratt'sfiveoriginal"processesofongoingimprovement":1) identifyingtheconstraint,2)exploitingtheconstraint,3)subordinatingeverythingelsetotheconstraint, 4)elevatingtheconstraint,and5)repeatingthesteps.Thesestepsapplywhetherthesystemis manufacturing,distribution,sales,orprojectmanagement. Thethinkingprocesses(TP):Thesearethemethodstoenablethefocusedimprovementofanysystem. ThepurposeoftheTPistohelpanswerthethreequestionsessentialtoachievingfocusedimprovement: Whattochange?Whattochangeto?Howtocausethechange? Page4

HowConstraintsManagementEnhancesLeanandSixSigma
Throughputaccounting(TA):ThisistheCMalternativetocostbasedmanagementaccounting.TAisnot costing,anditdoesnotallocatecoststoproductsandservices.Ratherthanfocusingoncosts,itfocuses onprofitmaximizationbymanagingconstraints. Applicationspecificsolutions:Thisincludessupplychainandoperationsactivitiesandproject managementoperations.

CombiningCMwithLean/SixSigma
CompaniesthathaveeffectivelyimplementedleanandSixSigmahavedrivenmuchofthewasteandvariationout oftheirprocesses.Theeasygainshavebeenachieved.Sohowdotheirmanagersdecidewhichlean/SixSigma improvementinitiativestolaunchnext? First,theyhavetokeepinmindtheultimategoalofanyimprovementinitiative:toincreaseshareholdervalueby improvingnetprofitandROI.Constraintsmanagementprovidesaframeworkformeasuringtheimpactofalocal initiativeonthosebottomlinemeasures.Forexample,whenthroughputisincreasedwithoutadverselyaffecting theCMdefinitionsofinventoryoroperatingexpensethennetprofitsandROIaresimultaneouslyincreased. Whendecidingwhethertoundertakealocallean/SixSigmaimprovement,managersshouldtakeintoaccountits impactonallthreemeasuresthroughput(makingmoneythroughsales),inventory(allassets),andoperating expense. TheCMpositionisthattheemphasisshouldfirstbeonincreasingthroughput,thenonreducinginventory,and finallyonreducingoperatingexpense.ByapplyingaCMframeworktolean/SixSigmaefforts,companiescanmore easilyavoidtheproblemsincurredbyplacingtoomuchpriorityonreducingoperatingexpense. Considerthemanyexamplesofbusinessesthathavefocusedexcessivelyoneliminatingwastewiththeobjective ofcuttingcosts,whilenotapplyingatleastasmuchefforttosellingmore.Excesscapacityusuallyintheformof peopleisviewedaswaste.Thisviewpointcanleadtoseverallonglastingproblems.First,cuttingcapacityto matchexistingdemandleaveslittleroomforincreasesindemand.Oncecapacityhasbeenreduced,it'snoteasyto increaseitagain.Ittakestimeandmoneytofindandhireskilledworkers.Asecondproblemistheeffectofsuch movesonmoraleandonfutureimprovementefforts.Justhowareworkersexpectedtocooperatewithany futurelean/SixSigmaeffortsiftheyknowtheyareimprovingthemselvesoutofajob?Bythatpoint,anyhopeof continuousimprovementinitiativeshasbeendashed. Todeterminewherethefocusshouldbeforimprovementinitiatives,it'simportanttorememberthatasystemof dependenteventsisgovernedbyaverysmallnumberofconstraints.The80/20rulestatesthat20percentofthe initiativeswillyield80percentoftheresults.Onceyourealizethatconstraintsgovernthesystem'sperformance,it becomesclearthatonlyafewthingscanbedonethatwillhaveasignificantimpact.Infact,the80/20rule becomesthe99/1rule. Aprocessisneededtomanagethesystemtoconfirmthattheconstraintisthecenterofattention.Thefollowing arethefivefocusingstepsofconstraintmanagement: 1. Identifythesystemconstraint.Whatandwhereisthelimitingfactor?Areviewofthecompany's symptomscanquicklyleadtoadiagnosisoftheconstraint.Forexample,inaplantthatcan'tmake enoughproductstomeetdemand,theconstraintcanbeacapacityconstrainedmachineorworkcenter. Decidehowtoexploittheconstraint.Oncethelocationoftheconstrainthasbeenidentified,managers shouldtrytomaximizeitsperformance.Forexample,ifamachineiscapacityconstrained,allsourcesof wastedandidletimeshouldbeeliminated. Subordinateeverythingelsetotheconstraint.It'svitaltodeterminethatthenonconstrainedresources areworkingsolelytosupporttheconstraint.Forexample,withacapacityconstrainedmachine,allother resourceswouldproduceatthesamerateasthismachineandrunnofaster. Elevatetheconstraint.Managershavetotakewhateveractionisnecessarytoeliminatetheconstraint. Additionalcapitalinvestmentisconsideredatthispoint.Breakingacapacityconstraintcouldtakethe formofadditionalequipmentorpeople.

2.

3.

4.

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5. Returntostepone,butbewareofinertia.Atsomepoint,theconstraintisbrokenandmovessomewhere else.It'sessentialtorecognizethelocationofthenewconstraintandtoredirecteffortsratherthan continuingtofocusontheoldbrokenconstraint.Forexample,productioncapacitymightberaisedtothe pointthatthemarketisnowtheconstraint,andeffortsshouldthenbefocusedonimprovingsalesand marketing.

Followingthesefivestepshelpsfacilitatethedevelopmentofaprocessofcontinuousimprovement.Thishasto happenbecausethecompanyalwayshasanewconstraint.Solean/SixSigmaimprovementinitiativesshouldbe evaluatedandprioritizedandperiodicallyreevaluatedandreprioritizedinthecontextoftheirimpactonthe company'ssuccessiveconstraints.Forexample,ifacompanyiscapacityconstrained,leantoolsshouldbeusedto eliminatewasteandimprovetheflowusingdemandpullscheduling.Ontheotherhand,iftheconstraintis externalifthecompanyhasmorecapacitythandemandthenSixSigmaprojectsshouldbeaimedatareasthat willmakethesystem'sofferingsmoreattractivetopotentialcustomers.Keyareasinthisregardincludecustomer responsetimeandthereliabilityofdeliverypromises.

AComplementaryApproach
It'sapparentnowthatthesethreebusinessimprovementapproachesarenotexclusiveofeachotherandare,in fact,complementary.Constraintsmanagementisasystemsbasedwayofthinkingtodeterminewherethe organizationshouldfocusitsefforts.Inshort,Constraintsmanagementcanbeusedtofocusontherightproblem andtherightsolutionattherighttimeintherightplace.LeanandSixSigmatoolsandtechniquescanthenapplied wheretheywilldrivethemostbenefiteliminatingwasteandreducingvariationattheconstraint. Savvysupplychainmanagersdon'twastetimeandresourcesonprojectsthataresimplystrengtheningalready strongerlinksofthechain.Instead,theyareturningtoconstraintsmanagementtofocuslean/SixSigmaeffortson theweaklinks.(Thesidebar,on"Seagate'sAchievements"offersagoodexample.)Andtheyaremakingsurethat whenthey'vedealtwithaconstraint,theyshiftthefocusoftheireffortstothenextconstraint.Forcompaniesthat arejuststartingtheirlean/SixSigmaefforts,constraintsmanagementwillaccelerateresultsbyfirstfocusingonthe areaswherethemostimprovementopportunitylies.

Author Information
RobertSpectorisamanagerintheSupplyChainStrategyPracticeatDeloitteConsultingLLPandisaCertified EnterpriseLean/SixSigma(EL/SS)BlackBeltPractitioner.

Endnotes
1 2

PeterS.Pande,RobertP.Neuman,andRolandR.Cavanagh,TheSixSigmaWay(NewYork:McGrawHill,2000).

RalphRio,"SuccessfulExecutionofaLeanProgram,"ARCAdvisoryGroup.(www.arcweb.com/Newsmag/auto/leanmfgins37 111104.asp).
3

EliyahuM.Goldratt,TheGoal,secondedition(GreatBarrington,MA:NorthRiverPress,1994).

Seagate'sAchievements
Theworld'sleadingproviderofharddiskdrives,SeagateTechnologyLLC,hasadoptedbothconstraints managementandSixSigma.Thecompanyhas42,000employeesworldwide;infiscal2004,itshippedmorethan 79milliondrives,generatingrevenuesof$6.22billionandnetincomeof$529million. In1998,SeagatelaunchedSixSigmaasaglobalinitiative.Thedisciplinehasprovedtobearesoundingsuccess, producing$1.2billioninsavingstodatewith8,000employeescertifiedinSixSigmaand4,700completedSix Sigmaprojectsinall.However,thereweresomedrawbacksinthecompany'sapproach.Amongthem:TheSix Sigmapractitionersdidn'thaveawaytoprioritizeprojects,andprojectsweretakingtoolongtocompletesix Page6

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monthsonaverage. Toaddresstheseproblems,SeagatedecidedtointegrateconstraintsmanagementtoolswithSixSigma.Themove hashadtheseresults: Projectsarenowmorefocused. Problemsaremuchlessambiguous. Projectcompletionratehasincreasedby80percent. Thenumberofprojectscompletedwithinthreemonthsincreasedby70percent.

SeagateisnowusingconstraintsmanagementtoolstoeffectivelyidentifyanddrivethemostappropriateSix Sigmaprojects.ThecompanyhasalsoimplementedtheCCPMCriticalChainProjectManagementapplicationto bringthefirst15,000rpmdiskdrivetomarket.ThedrivemakerreportedonitsToCactivitiesinapaper "IntegratingtheTOCThinkingProcessandSixSigma,"whichwaspresentedattheTheoryofConstraints InternationalCertificationOrganizationConferenceinOctober2004.

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