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Proceedings of the 2014 Industrial and Systems Engineering Research Conference

Y. Guan and H. Liao, eds.

The iTLSTM model - Integration of Theory of Constraints, Lean
Manufacturing and Six Sigma:
A case study to best practice of operations at a Value Chain of
Multinational in Brazil.

Carlos I. Navarro M.
Marcelo G. Cleto

Production Engineering Department, Master of Production Engineering, Universidade
Federal do Paraná, Curitiba Brazil.

Abstract

Recently the three most applied approaches into the Operations Continuous Improvement are Theory of Constraints
(TOC), Lean Manufacturing, and Six Sigma. However, the high requirements from customers and operations to
obtain products with greater productivity, higher quality and lower prices, provide some limitations to these
approaches when applied individually and it seems they cannot solve problems in a long-term horizon. In 2006,
Russ Pirasteh developed a model that integrates and harmonizes concepts, techniques, tools and methodologies of
TOC, Lean Manufacturing and Six Sigma called iTLSTM. The goal of this paper is to study the model from a
literature review that analyzes the approaches as well as the related points and develop a real case study. In this
sense, this study examined the use of iTLSTM through a method that identified the constraints, then eliminated
wastes of the constraint, and as a final point, reduced the process variability. This was made through an application
of Russ Pirasteh´s model in seven steps to a problem of Value Chain management of a Home Appliances
Multinational Subsidiary located in Brazil. Corresponding to preliminary results, it was observed the model strength
and its applicability to the problem studied. Finally, the study discusses the findings implications and presents some
directions for future research.

Keywords
iTLSTM, Continuous Improvement, Theory of Constraints, Lean Manufacturing, Six Sigma, Innovation .

1. Introduction
The conquest of market competitiveness should focus on excellence in operations. For that, it is necessary to accept
new daily challenges involving the application process of continuous improvement in production systems [1].
Considering the productive systems in the twentieth century, three approaches that have revolutionized and impacted
the way to work in operations around the world, continue in force until today with extraordinary results.

Chronologically, the first one is the philosophy of Lean Manufacturing, as a result of the need for survival in the
automobile market in Japan developed at Toyota Company by TaichiOhno, concentrating on getting profitability by
optimizing the value stream, aiming at reducing or eliminating activities that do not add value, considered waste to
customer [2]. The second one, the Theory of Constraints (TOC), developed by EliyahuGoldratt, defined as the
approach that focuses on the feature that prevents a productive system to reach a better level of performance relative
to its goal [3]. The third one, the Six Sigma by Bill Smith at Motorola Company, aims to raise the level of
performance and reliability of processes according to customer needs with DMAIC support [4].

After the appearance of TOC, Lean, and Six Sigma, it can be checked in academic publications an attempt to
integrate TOC and Lean, Lean and Six Sigma, Six Sigma and TOC. The results showed that the integration between

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Lean and Six Sigma TOC is helped: Lean is helped: Six Sigma is helped: Provides priority (focus) to Six Sigma TOC concepts and tools improvement/innovation projects. Section 3.1 Definition The iTLSTM model is as a result of doctoral research developed by Ph. This paper is organized as follows. less helps: attacking wastes and thus providing more stable processes dependency of computer systems in the daily and quicker response times. elimination of waste and control the variability of processes applied in all disciplines. this research was applied in a multinational of Home Appliances. Six Sigma's central value of customer Six Sigma focus on satisfaction provides balance and reinforces variability reduction helps Six long-term vision to TOC's emphasis on Lean to achieve more stable Sigma financial performance (throughput). the integration of the Theory of Constraints. Cleto two approaches provides satisfactory impacts to achieve optimal results. TOC's Throughput Accounting (TA) complex Lean projects provides better evaluation of the financial impact of SS management. Lean and Six Sigma. and ultimately the variability control of the entire production system [5]. TOC's logical trees (can facilitate better management be used to innovative solution of technical or managerial TOC of flow bottlenecks. the iTLSTM illustrates the correlations between them allowing the enhancement of their strengths and minimizing their limitations. it has been deployed in a metallurgical multinational. TOC's Critical Chain improves complex SS helps: Critical Chain improves projects management. Six Sigma and reliable processes.D Russ Pirasteh that began in 2003 until its completion in 2006. and Services. In Brazil. The iTLSTM model 2. by providing more visual control. TOC's problems. waste and control variability. Then. then the elimination of waste from constraint. iTLSTM is a management philosophy that is based on understanding the problems more deeply and tries to solve them with the greatest possible permanent impact. operation and wider people involvement. Lean and Six Sigma on Process Improvement” [7]. iTLSTM . by Lean process variation and increased customer satisfaction. in order to reduce the lead time on a long term of their value chain. Section 2 tells of the iTLSTM model. The study was called "Effects of Combined Approach of Theory of Constraints. However. Lean concepts and tools facilitate the Lean concepts and tools help the Six Sigma's focuses of less implementation of TOC Solutions. which relates the three approaches described above in a single model consisting of seven steps. Lean and Six Sigma. confirming the possibility of joining methodologies in pursuit of continuous improvement. This concept can be applied in the areas of Production. the case study applying at multinational of Home Appliances in Brazil and results. whose production system is of Discreet Production. In addition to recognizing that all products and services are related to activities where the value stream is impacted by the identification of constraints. through the application of iTLS TM model. variables. Lean and Six Sigma). helps: statistical tools help better analysis. The term is an acronym. Section 4 discusses further research and concludes the paper. Marketing. The researcher Russ Pirasteh proposed a model called iTLS TM (Integration of TOC. Administration. improvement projects. Sales. where the system is regarding Continuous Production [6]. which can be an advantage in production systems: Table 1: Correlations of TOC. and aims to assess the integration of TOC. The fourth method firstly suggests the focus on the constraint of the system. According to all the advantages of the three approaches. 312 . The iTLSTM has expanded into many countries around the world. its definition and steps explanation. and therefore eliminate the constraint. Navarro. 2. Also. through the study and configuration and timely adjustment of optimization of process material/product inventories and time buffers.

In addition to recognizing that all products and services are related to activities where the value stream is impacted by the identification of constraints. TOC's problems. iTLSTM is a management philosophy that is based on understanding the problems more deeply and tries to solve them with the greatest possible permanent impact. Six Sigma's central value of customer Six Sigma focus on satisfaction provides balance and reinforces variability reduction helps Six long-term vision to TOC's emphasis on Lean to achieve more stable Sigma financial performance (throughput). The iTLSTM model 2. its definition and steps explanation.D Russ Pirasteh that began in 2003 until its completion in 2006. variables. Cleto two approaches provides satisfactory impacts to achieve optimal results. The researcher Russ Pirasteh proposed a model called iTLS TM (Integration of TOC. and aims to assess the integration of TOC. Lean concepts and tools facilitate the Lean concepts and tools help the Six Sigma's focuses of less implementation of TOC Solutions. Section 3. by Lean process variation and increased customer satisfaction. waste and control variability. which can be an advantage in production systems: Table 1: Correlations of TOC. In Brazil. This paper is organized as follows. in order to reduce the lead time on a long term of their value chain. Lean and Six Sigma. helps: statistical tools help better analysis. the integration of the Theory of Constraints. Lean and Six Sigma TOC is helped: Lean is helped: Six Sigma is helped: Provides priority (focus) to Six Sigma TOC concepts and tools improvement/innovation projects. Marketing. the case study applying at multinational of Home Appliances in Brazil and results. The iTLSTM has expanded into many countries around the world. improvement projects. TOC's Critical Chain improves complex SS helps: Critical Chain improves projects management. Then. Navarro. Lean and Six Sigma. this research was applied in a multinational of Home Appliances. iTLSTM . through the study and configuration and timely adjustment of optimization of process material/product inventories and time buffers. through the application of iTLS TM model. and Services. Lean and Six Sigma). The study was called "Effects of Combined Approach of Theory of Constraints. Section 4 discusses further research and concludes the paper. less helps: attacking wastes and thus providing more stable processes dependency of computer systems in the daily and quicker response times. 312 . confirming the possibility of joining methodologies in pursuit of continuous improvement. whose production system is of Discreet Production. and therefore eliminate the constraint. The term is an acronym. Administration. it has been deployed in a metallurgical multinational. Six Sigma and reliable processes.1 Definition The iTLSTM model is as a result of doctoral research developed by Ph. Lean and Six Sigma on Process Improvement” [7]. by providing more visual control. TOC's logical trees (can facilitate better management be used to innovative solution of technical or managerial TOC of flow bottlenecks. Also. where the system is regarding Continuous Production [6]. which relates the three approaches described above in a single model consisting of seven steps. operation and wider people involvement. and ultimately the variability control of the entire production system [5]. This concept can be applied in the areas of Production. TOC's Throughput Accounting (TA) complex Lean projects provides better evaluation of the financial impact of SS management. the iTLSTM illustrates the correlations between them allowing the enhancement of their strengths and minimizing their limitations. 2. Section 2 tells of the iTLSTM model. then the elimination of waste from constraint. elimination of waste and control the variability of processes applied in all disciplines. The fourth method firstly suggests the focus on the constraint of the system. Sales. According to all the advantages of the three approaches. However.

increase system performance. For a variety of reasons. The first step is the most important. When a new bottleneck arises. it requires starting the cycle again from the first step. However. improve quality and reduce variability [8]. to control the operations and resources which are necessary to ensure consistency of performance over the long term. They should identify other ways to further increase productivity and reduce costs. Once the resource bottlenecks are eliminated.  Lean illustrates variety of tools in the reduction of waste in the system. of course. the third step of iTLSTM analyzes the root cause that causes unnecessary activities and that do not add value to the value chain and identifies how they can be definitely eliminated [8]. rather than focusing elsewhere to get local efficiencies. Before breaking the system constraint. eliminate interruptions in work flow. the constraint must be analyzed so that the best method constraint is explored. It is necessary. the audits are presented as effective methodology to monitor the results and ensure the gains of the process. capacity control. At this step the tools of Lean are used to identify other ways to further increase the yield and reduce waste. emphasizing the generation of higher performance. the control must be implemented such as letters and measurement control. in what aspects the efforts should be concentrated and reveals the problem that limits the system [8]. For that.  The power of Six Sigma is its fundamental statistical tools for reducing variation in the process. and the tools of Six Sigma and Lean are used in this step. Step 3: Eliminate sources of waste. Step 2: Exploit the constraint. This phase consists in implanting controls and indicators with the use of the six sigma tools. This step will protect the operations of the neck and raise them to a level of ability that will no longer be considered a constraint. reduce operating costs and create better leaders A. 2. The lean tools can increase performance and eliminate waste in the system. In this phase it is necessary to evaluate the result after clearing the constraint and stabilizing the process. by the tools of TOC. Step 6: Remove the constraint and stabilize. Cleto The application can improve customer satisfaction. In order to prevent erosion. Step 4: Control process variability. so that the variations of the process are controlled over time [9]. and other statistics tools. The former steps were required to align and synchronize before and after the constraint processes. but it lacks a mechanism for global focus to prioritize where and when these wastes should be applied. a number of tools of Lean is suggested. Step 5: Control supporting activities. it is useful to establish the “buffers” before and after the constraint so that performance is not lost due to a possible disruption in operations. since it determines. such as the identification of waste [8]. Navarro. "Efforts to reduce unnecessary waste can be a waste” [8]. Nevertheless TOC lacks many tools and analytical techniques necessary to expand capacity. 313 . Also. as the sources of waste. regression. but more important is that the measures that stimulate actions are aligned with the needs of the constraint. Step 7: Reevaluate the system. From this principle. the iTLSTM synchronizes three major approaches:  The power of TOC is to provide attention on improvement efforts.2 Steps Step 1: Mobilize and Focus. At this stage. the “buffers” may be concomitantly eliminated. The measures should be established to evaluate the benefits of improvement. To perform this step. As Lean. eliminating the constraints in order to increase the volume in the system. one must also decide whether it is important to focus on further improvement or identify more opportunities to achieve better performance in the production system. real improvements have a tendency to fade over time. the lacks in prioritizing efforts to reduce the most important variations [8].

The factory manufactures products denominated in this study as T. this is referred to as Excess of Stock. the indicator is calculated by the following equation: 314 . the production schedule should be planned according to historical data and may. iTLSTM taps into the core capabilities of the three CPI methodologies and combines them with common sense. such as time delivering the raw material efficiency of the assembly line and the availability of transport. A common example of this problem happens in Gamma chain. quality. Overproduction. low cost. since the month of August 2012 (date on which you begin to collect data for analysis) stock has been showing higher sales values. iTLSTM plays a critical role in connecting strategic goals and objectives with process improvement efforts. it is when you have a variation in demand (uncertain demand). The interaction effect among Lean. This type of waste is in the range chain result from several factors such as low turnover products. Customer satisfaction is a key factor in the company to ensure their survival in the market and involves the need to produce high quality. and then re-energizes the system to look for the next logical place for improvement. creating negative effects of Marketing and low turnover models. The DSA measures performance with a supplier to efficiently deliver planned quantities to customers. The company has different factories in the country and in this research the selected factory is located in Curitiba. cause delays or anticipation. among others. cost and delivery. high productivity in operations and efficient delivery to customers. The indicator that relates customer satisfaction and flow operations is the DSA (DeliverySchedule Adherence). and Z. The problem of excess inventory and low sales alter the entire range chain and customer satisfaction. Figure 1 illustrates the results of the value chain in terms of quantity sold and stock when it works to acquire the four criteria in the best way: Figure 1: Initial performance of quantity sold and stock In the previous figure. the value chain receives pressure to obtain better performance of productivity. Six Sigma. and then implement fail-safe process strategies to prevent the same waste from recurring. however. production planning is not according to plan in S&OP. Typically. taking into consideration the global benefits. and the setting that should be established to limit the variability to a level acceptable to the customer. current sales do not agree with the planned sales. depending on the flow of transactions. According to the company needs. Cleto In summary. When products are not available at the right time and the right moment. The case study of iTLSTM Application The company of this case study is a multinational of Home Appliances established in Brazil since 1980. 3. The six sigma tools and metrics are used to perfect the process by understanding the nature of variability sources (which is the error in the process). X. remove it. Similarly. there is a high probability that the customer no longer wants this product and look for a similar model of competition. In the definition of waste. and TOC creates much higher benefits than their cumulative effect. Lean techniques are used to identify waste. Navarro. TLS first uses TOC to bring focus to what needs to be improved. since variability affects the desired target.

Navarro. it is applied to the TOC based ART (Actual Reality Tree). the main activity of the constraint is to find the problem.05 days. the first tool to be applied is the VSM to calculate the lead time and see potential wastes in different areas. When the current lead time in the value chain is established. QI is the quantity of incorrect that is considered when the production was not in time. QP is the planning quantity of production of one week frozen. not in correct quantity of the plan.1 Step 1: Mobilize and Focus To identify the constraint of this value chain. the diagnosis of the value chain has long shown negative results. which finds the undesirable effects of the outcome of the value chain and the DSA. Cleto (1) According to the equation 1. customer satisfaction and sales efficiency. Considering the concept of delivery. The initial lead time of the value chain applying VSM is 27. For this technique. Figure 3: Value Steam Mapping of value chain study 315 . Figure 2: Initial performance of DSA Weekly 3. which affects the reliability.

The color green is Value added. four side effects that result in16% of the total adverse effects on the sales category 3 and undesirable effects representing 12% of the total undesirable effects on the management of category value chain. Process and Logistics. A practical way of representing the line balancing on the beams of the Lean concept is GBO (Graph Balancing Operator). developed by Toyota to involve the work of the operators in the process of distribution of tasks. Process and Logistics illustrating the performance of the assembly line. according to Figure 5.2 Step 2: Exploit the constraint In this case. Cleto In this sense. cycle times and Takt Time are illustrated graphically. Navarro. their types of activities are analyzed in detail. representing 56% of the total effects. The other four categories illustrate undesirable effects representing 16% of the total effects in the product category. Figure 4: ART value chain study 3. An essential tool that distinguishes the process activities while evaluating the performance as Takt Time is Line Balancing. Line Balancing balances the cycle times of the jobs or workstations to Takt Time. Consequently. Once registered all 33 stations. are originated by the category of Planning. the assembly line. of which 14. Yellow is Non value added and red is Wastes: 316 . as a restriction of the chain. is the system of Planning. the main constraint that represents a greater proportion of effects. and in which the value chain should focus improvements to reduce the lead time. according to ART and categorization of undesirable effects in the value chain. 25 adverse events were identified.

Navarro. planning delivery routes and improving sustainability. This balancing is not considered times of FMLE because the GBO is a technique that only illustrates the activities in each workplace where operators are exercising their function of assembly components. and concentrate on the product assembly line. the operators of the stations should receive the raw material in a manner not to move and perform other various assembly activities. the correct parts are arranged in a standard box in multiples by the logsitics supplier and are available on the assembly line. Figure 6: Final Line Balance and Value Added Analysis 3.3Step 3: Eliminate Source of Wastes According to the one piece flow concept. eliminate waste and reduce non value added and wastes. it is clearly evident the focus on providing raw material in the production line. the resulting work. The solution to such problem is to develop FMLE (Material Flow Logistics Lean) as a logistics management system. providing the raw m PFEP (Plan for every part). To analyze the variation controls in the process as waste disposal in the constraint. After identifying the time sat. creating a re-packaging market of external parts suppliers. To keep the added value activities without non-value added ones and wastes. the assembly line was balanced as Takt Time and Kaizen described. This requires discipline and procedure to monitor the results. activities that add value. so that they are not forgotten. it is the base to analyze the variation of the DSA. Cleto Figure 5: Line Balance and Value Added Analysis To reduce and eliminate wastes and activities. 3. so that operators can focus on quality. which is able to adjust the activities that add value and reduce or eliminate the job wastes. this step uses Six Sigma techniques in controlling the variability of the neck. 317 .4 Step 4: Control process variability After identifying the restriction of the value chain.

5 Step 5: Control supporting activities. identify the causes of non-compliance. In this case. Navarro. Cleto Figure 7: Control Process variability after improvement of wastes From week 17 on. which indicates its approach around the average of 90% of DSA. In this sense. the tool applied was 8D (8 Disciplines) as a structured methodology for solving problems in 8 steps. it is also said to improve the standard deviation. processes audits and detailed analysis were established as a solution to the immediate the problem. guides the analysis of non-compliance in an organized manner and evaluates the effectiveness of the taken action.0088. whose goal is to deal with recurring problems. To monitor the process variability and assembly line continuous flow. when the project was initiated to improve the performance of the DSA. compared with 70% of the mean DSA of weeks of diagnosis. the indicator has increased by 90% on average. 3. The benefits of 8D are:  Standardization of the problem solving process.  Documentation of the process. Different improvements were applied such as. the weeks have a deviation of 0. development of audits in FMLE. Ishikawa and five whys: Figure 8: Tools of 8D applied in this study 318 .  Ability to share the learning of problem-solving across the value chain process.

319 . The results obtained on the elements of the value chain to reduce the lead time of 5. Finally. Navarro. the 24 jobs on the assembly line as well as all operations have FMLE standardized documentation and are periodically reviewed to determine compliance of the action by the employees of the manufacturing operations. Cleto 3. Standardization is not an obligation but a consensus on the best way to perform an activity.6 Step 6: Remove the constraint and stabilize. so that the best results are achieved and process variations are minimal.7 Step 7: Reevaluate the system. The stability is the foundation for improving implementation. the entire project from research to application of iTLS TM was satisfactory showing that the restriction was removed and ensure variability steadily rise in its value chain. Figure 9: Standard work documentation on Workstations in the value chain 3. Step 6 provides efficient and standardized processes to keep the reduction of waste and predicts if it can happen in the future. The design of Value Stream Mapping Future was made with the implementation of FMLE and results of Kaizen in the restriction regarding the elimination of waste previously referred.4 days through the use of iTLSTM model are shown in Figure 10 Figure 10: Future VSM of the Value Chain In the figure above we can see that the moment was concentrated depending on the constraint of the chain to reduce lead time as the objective of the research has designed positive results in the value chain. In this sense.

3rdEdition. Beyond Lean manufacturing. In addition. McGraw-Hill. “Administração da produção e operações. 320 .. It is recommended to apply iTLSTM in Continuous production systems and thus to compare the behavior and limitations that the model can present to the different systems and suggest adaptations of the model. 2004. São Paulo. APICS Magazine. Lean and Six Sigma for multidimensional results”.43.D. Pande. 2010. 2006. R. Wisconsin. M. S. Dettmer. reduce wastes. the author recommends some observations:  The model does not have publication in literature system. Atlas. J. 4. “Effects of Combined Approach of Theory Of Constraints. leads companies to seek for differentiation in the way of working and have better performance in productivity. Pirasteh. Horn. Integrating approaches to continuous improvement is a way to obtain differentiation and innovation to provide better results and an advantage in competition. Navarro. cost reduction in operations and deliver products on time and at the right place. A. 6. Pirasteh. R. P. Pirasteh. Correa. Procurement.  A review of the literature according to the illustration indicates iTLSTM in manufacturing environments. product quality.  Relate a search in a real situation leading to development of research in terms of updates. 2ndEdition. US: Port Angeles. “Combining Lean and the Theory of Constraints for higher performance”.. R. L. Lean. “Which Continuous process improvement method should I do?. in order to find greater benefits and difficulties in the present case.. among others. 2012. E. California. 5. it is recommended to explore all the tools at each step. Six Sigma Results”. Pirasteh. Theory of Constraints and Six Sigma” paper of TOCICO 2012. 2. but this research is applied in discreet production system. C. 8. It is recommended to apply the model in various areas of operations and subsequently publish articles and dissertations related to the central theme of this research . 2003 “Manual da teoria das restrições”.  According to the model. 7. Cleto Figure 11: General results of the company by iTLSTM application 4. References 1. H. New York. therefore it is recommended to explore other areas in companies such as Marketing. Correa H. Porto Alegre. constraints and variability. and results in customer satisfaction . manufatura e serviços: uma abordagem estratégica”. 2009. Finance. dissertation Kennedy Western University.How to successfully integrate Lean. Optimize TOC. “The many slides of TLS: Using the Theory of Constraints. Bookman. Spencer.. “The Six Sigma Way Team Fieldbook – An Implementation Guide for Process Improvement Teams”. Conclusions and Future Research The challenge to be more competitive and innovative. “Profitability with no boundaries: Focus. R. Lean and Six Sigma on Process Improvement” Ph. 2000 3. 2000. Fox. an integration of concepts helps supply limitations when an approach is applied in isolation As for suggestions for future work. CoxIII. p 40. 2002. ASQ Quality Press. R.