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 Paran, 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 Pirastehs 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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two approaches provides satisfactory impacts to achieve optimal results, confirming the possibility of joining
methodologies in pursuit of continuous improvement. The researcher Russ Pirasteh proposed a model called iTLS TM
(Integration of TOC, Lean and Six Sigma), which relates the three approaches described above in a single model
consisting of seven steps. The fourth method firstly suggests the focus on the constraint of the system, then the
elimination of waste from constraint, and ultimately the variability control of the entire production system [5]. The
iTLSTM has expanded into many countries around the world. In Brazil, it has been deployed in a metallurgical
multinational, where the system is regarding Continuous Production [6]. However, this research was applied in a
multinational of Home Appliances, whose production system is of Discreet Production, and aims to assess the
integration of TOC, Lean and Six Sigma, through the application of iTLS TM model, in order to reduce the lead time
on a long term of their value chain, and therefore eliminate the constraint, waste and control variability.

This paper is organized as follows. Section 2 tells of the iTLSTM model, its definition and steps explanation. Then,
Section 3, the case study applying at multinational of Home Appliances in Brazil and results. Section 4 discusses
further research and concludes the paper.

2. The iTLSTM model

2.1 Definition
The iTLSTM model is as a result of doctoral research developed by Ph.D Russ Pirasteh that began in 2003 until its
completion in 2006. The study was called "Effects of Combined Approach of Theory of Constraints, Lean and Six
Sigma on Process Improvement [7]. The term is an acronym, iTLSTM , the integration of the Theory of Constraints,
Lean and Six Sigma.

Also, 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. In addition to recognizing that all products and services are
related to activities where the value stream is impacted by the identification of constraints, elimination of waste and
control the variability of processes applied in all disciplines. This concept can be applied in the areas of Production,
Sales, Marketing, Administration, and Services.

According to all the advantages of the three approaches, the iTLSTM illustrates the correlations between them
allowing the enhancement of their strengths and minimizing their limitations, which can be an advantage in
production systems:

Table 1: Correlations of TOC, Lean and Six Sigma

TOC is helped:
TOC
helps:
Lean concepts and tools facilitate the
implementation of TOC Solutions, by
Lean
providing more visual control, less
helps:
dependency of computer systems in the daily
operation and wider people involvement.
Six Sigma's central value of customer
satisfaction provides balance and reinforces
Six long-term vision to TOC's emphasis on
Sigma financial performance (throughput). Six Sigma
helps: statistical tools help better analysis,
configuration and timely adjustment of
material/product inventories and time buffers.
Lean is helped: Six Sigma is helped:
Provides priority (focus) to Six Sigma
TOC concepts and tools
improvement/innovation projects. TOC's logical trees (can
facilitate better management
be used to innovative solution of technical or managerial
of flow bottlenecks. TOC's
problems. TOC's Critical Chain improves complex SS
Critical Chain improves
projects management. TOC's Throughput Accounting (TA)
complex Lean projects
provides better evaluation of the financial impact of SS
management.
improvement projects.
Lean concepts and tools help the Six Sigma's focuses of less
process variation and increased customer satisfaction, by
attacking wastes and thus providing more stable processes
and quicker response times.
Six Sigma focus on
variability reduction helps
Lean to achieve more stable
and reliable processes,
through the study and
optimization of process
variables.

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 Navarro, Cleto
two approaches provides satisfactory impacts to achieve optimal results, confirming the possibility of joining
methodologies in pursuit of continuous improvement. The researcher Russ Pirasteh proposed a model called iTLS TM
(Integration of TOC, Lean and Six Sigma), which relates the three approaches described above in a single model
consisting of seven steps. The fourth method firstly suggests the focus on the constraint of the system, then the
elimination of waste from constraint, and ultimately the variability control of the entire production system [5]. The
iTLSTM has expanded into many countries around the world. In Brazil, it has been deployed in a metallurgical
multinational, where the system is regarding Continuous Production [6]. However, this research was applied in a
multinational of Home Appliances, whose production system is of Discreet Production, and aims to assess the
integration of TOC, Lean and Six Sigma, through the application of iTLS TM model, in order to reduce the lead time
on a long term of their value chain, and therefore eliminate the constraint, waste and control variability.

This paper is organized as follows. Section 2 tells of the iTLSTM model, its definition and steps explanation. Then,
Section 3, the case study applying at multinational of Home Appliances in Brazil and results. Section 4 discusses
further research and concludes the paper.

2. The iTLSTM model

2.1 Definition
The iTLSTM model is as a result of doctoral research developed by Ph.D Russ Pirasteh that began in 2003 until its
completion in 2006. The study was called "Effects of Combined Approach of Theory of Constraints, Lean and Six
Sigma on Process Improvement [7]. The term is an acronym, iTLSTM , the integration of the Theory of Constraints,
Lean and Six Sigma.

Also, 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. In addition to recognizing that all products and services are
related to activities where the value stream is impacted by the identification of constraints, elimination of waste and
control the variability of processes applied in all disciplines. This concept can be applied in the areas of Production,
Sales, Marketing, Administration, and Services.

According to all the advantages of the three approaches, the iTLSTM illustrates the correlations between them
allowing the enhancement of their strengths and minimizing their limitations, which can be an advantage in
production systems:

Table 1: Correlations of TOC, Lean and Six Sigma

TOC is helped:
TOC
helps:
Lean concepts and tools facilitate the
implementation of TOC Solutions, by
Lean
providing more visual control, less
helps:
dependency of computer systems in the daily
operation and wider people involvement.
Six Sigma's central value of customer
satisfaction provides balance and reinforces
Six long-term vision to TOC's emphasis on
Sigma financial performance (throughput). Six Sigma
helps: statistical tools help better analysis,
configuration and timely adjustment of
material/product inventories and time buffers.
Lean is helped: Six Sigma is helped:
Provides priority (focus) to Six Sigma
TOC concepts and tools
improvement/innovation projects. TOC's logical trees (can
facilitate better management
be used to innovative solution of technical or managerial
of flow bottlenecks. TOC's
problems. TOC's Critical Chain improves complex SS
Critical Chain improves
projects management. TOC's Throughput Accounting (TA)
complex Lean projects
provides better evaluation of the financial impact of SS
management.
improvement projects.
Lean concepts and tools help the Six Sigma's focuses of less
process variation and increased customer satisfaction, by
attacking wastes and thus providing more stable processes
and quicker response times.
Six Sigma focus on
variability reduction helps
Lean to achieve more stable
and reliable processes,
through the study and
optimization of process
variables.

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 Navarro, Cleto
The application can improve customer satisfaction, increase system performance, reduce operating costs and create
better leaders A. From this principle, the iTLSTM synchronizes three major approaches:

The power of TOC is to provide attention on improvement efforts, emphasizing the generation of higher
performance, eliminating the constraints in order to increase the volume in the system. Nevertheless TOC
lacks many tools and analytical techniques necessary to expand capacity, eliminate interruptions in work
flow, improve quality and reduce variability [8].
Lean illustrates variety of tools in the reduction of waste in the system, but it lacks a mechanism for global
focus to prioritize where and when these wastes should be applied. "Efforts to reduce unnecessary waste
can be a waste [8].
The power of Six Sigma is its fundamental statistical tools for reducing variation in the process. As Lean,
the lacks in prioritizing efforts to reduce the most important variations [8].

2.2 Steps
Step 1: Mobilize and Focus. The first step is the most important, since it determines, by the tools of TOC, in what
aspects the efforts should be concentrated and reveals the problem that limits the system [8].

Step 2: Exploit the constraint. At this stage, the constraint must be analyzed so that the best method constraint is
explored. To perform this step, a number of tools of Lean is suggested. Before breaking the system constraint, 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. Once the resource bottlenecks are eliminated, the buffers may be concomitantly
eliminated. The lean tools can increase performance and eliminate waste in the system, such as the identification of
waste [8].

Step 3: Eliminate sources of waste. At this step the tools of Lean are used to identify other ways to further increase
the yield and reduce waste. The measures should be established to evaluate the benefits of improvement, as the
sources of waste. They should identify other ways to further increase productivity and reduce costs. Also, 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].

Step 4: Control process variability. This phase consists in implanting controls and indicators with the use of the
six sigma tools, so that the variations of the process are controlled over time [9]. For a variety of reasons, real
improvements have a tendency to fade over time. In order to prevent erosion, the control must be implemented such
as letters and measurement control, capacity control, regression, and other statistics tools.

Step 5: Control supporting activities. The former steps were required to align and synchronize before and after the
constraint processes, and the tools of Six Sigma and Lean are used in this step, but more important is that the
measures that stimulate actions are aligned with the needs of the constraint, rather than focusing elsewhere to get
local efficiencies.

Step 6: Remove the constraint and stabilize. 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. It is necessary, of course, to control the operations and
resources which are necessary to ensure consistency of performance over the long term. For that, the audits are
presented as effective methodology to monitor the results and ensure the gains of the process.

Step 7: Reevaluate the system. In this phase it is necessary to evaluate the result after clearing the constraint and
stabilizing the process. However, 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. When a new bottleneck arises, it
requires starting the cycle again from the first step.

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In summary, iTLSTM taps into the core capabilities of the three CPI methodologies and combines them with common
sense. TLS first uses TOC to bring focus to what needs to be improved, taking into consideration the global benefits,
and then re-energizes the system to look for the next logical place for improvement.

Lean techniques are used to identify waste, remove it, and then implement fail-safe process strategies to prevent the
same waste from recurring. 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), since variability affects the desired target, and the
setting that should be established to limit the variability to a level acceptable to the customer. Similarly, iTLSTM
plays a critical role in connecting strategic goals and objectives with process improvement efforts. The interaction
effect among Lean, Six Sigma, and TOC creates much higher benefits than their cumulative effect.

3. The case study of iTLSTM Application

The company of this case study is a multinational of Home Appliances established in Brazil since 1980. The
company has different factories in the country and in this research the selected factory is located in Curitiba. The
factory manufactures products denominated in this study as T, X, and Z. According to the company needs, the value
chain receives pressure to obtain better performance of productivity, quality, cost and delivery. 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, since the month of August 2012 (date on which you begin to collect data for analysis) stock
has been showing higher sales values. In the definition of waste, this is referred to as Excess of Stock. This type of
waste is in the range chain result from several factors such as low turnover products, current sales do not agree with
the planned sales, production planning is not according to plan in S&OP, Overproduction, among others.

A common example of this problem happens in Gamma chain, it is when you have a variation in demand (uncertain
demand), the production schedule should be planned according to historical data and may, however, cause delays or
anticipation, depending on the flow of transactions, such as time delivering the raw material efficiency of the
assembly line and the availability of transport. When products are not available at the right time and the right
moment, there is a high probability that the customer no longer wants this product and look for a similar model of
competition, creating negative effects of Marketing and low turnover models. The problem of excess inventory and
low sales alter the entire range chain and customer satisfaction. Customer satisfaction is a key factor in the company
to ensure their survival in the market and involves the need to produce high quality, low cost, high productivity in
operations and efficient delivery to customers.

The indicator that relates customer satisfaction and flow operations is the DSA (DeliverySchedule Adherence). The
DSA measures performance with a supplier to efficiently deliver planned quantities to customers. Typically, the
indicator is calculated by the following equation:

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(1)

According to the equation 1, QP is the planning quantity of production of one week frozen. QI is the quantity of
incorrect that is considered when the production was not in time, not in correct quantity of the plan.

Considering the concept of delivery, the diagnosis of the value chain has long shown negative results, which affects
the reliability, customer satisfaction and sales efficiency.

Figure 2: Initial performance of DSA Weekly

3.1 Step 1: Mobilize and Focus

To identify the constraint of this value chain, the first tool to be applied is the VSM to calculate the lead time and
see potential wastes in different areas. The initial lead time of the value chain applying VSM is 27.05 days.

When the current lead time in the value chain is established, the main activity of the constraint is to find the
problem. For this technique, it is applied to the TOC based ART (Actual Reality Tree), which finds the undesirable
effects of the outcome of the value chain and the DSA.

Figure 3: Value Steam Mapping of value chain study

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In this sense, according to ART and categorization of undesirable effects in the value chain, 25 adverse events were
identified, of which 14, representing 56% of the total effects, are originated by the category of Planning, Process and
Logistics. The other four categories illustrate undesirable effects representing 16% of the total effects in the product
category, 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. Consequently,
the main constraint that represents a greater proportion of effects, and in which the value chain should focus
improvements to reduce the lead time, is the system of Planning, Process and Logistics illustrating the performance
of the assembly line.

Figure 4: ART value chain study

3.2 Step 2: Exploit the constraint

In this case, the assembly line, as a restriction of the chain, their types of activities are analyzed in detail. 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. Once registered all 33 stations,
according to Figure 5, cycle times and Takt Time are illustrated graphically. 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. The color green is Value added, Yellow is Non
value added and red is Wastes:

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Figure 5: Line Balance and Value Added Analysis

To reduce and eliminate wastes and activities, it is clearly evident the focus on providing raw material in the
production line. To keep the added value activities without non-value added ones and wastes, the operators of the
stations should receive the raw material in a manner not to move and perform other various assembly activities. The
solution to such problem is to develop FMLE (Material Flow Logistics Lean) as a logistics management system,
which is able to adjust the activities that add value and reduce or eliminate the job wastes, providing the raw m
PFEP (Plan for every part), creating a re-packaging market of external parts suppliers, planning delivery routes and
improving sustainability.

3.3Step 3: Eliminate Source of Wastes

According to the one piece flow concept, the correct parts are arranged in a standard box in multiples by the logsitics
supplier and are available on the assembly line, so that operators can focus on quality, and concentrate on the
product assembly line, activities that add value.

After identifying the time sat, the resulting work, the assembly line was balanced as Takt Time and Kaizen
described. 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.

Figure 6: Final Line Balance and Value Added Analysis

3.4 Step 4: Control process variability

After identifying the restriction of the value chain, eliminate waste and reduce non value added and wastes, this step
uses Six Sigma techniques in controlling the variability of the neck. This requires discipline and procedure to
monitor the results, so that they are not forgotten. To analyze the variation controls in the process as waste disposal
in the constraint, it is the base to analyze the variation of the DSA.

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Figure 7: Control Process variability after improvement of wastes

From week 17 on, when the project was initiated to improve the performance of the DSA, the indicator has
increased by 90% on average, compared with 70% of the mean DSA of weeks of diagnosis. In this sense, it is also
said to improve the standard deviation, the weeks have a deviation of 0.0088, which indicates its approach around
the average of 90% of DSA.

3.5 Step 5: Control supporting activities.

To monitor the process variability and assembly line continuous flow, processes audits and detailed analysis were
established as a solution to the immediate the problem. In this case, the tool applied was 8D (8 Disciplines) as a
structured methodology for solving problems in 8 steps, whose goal is to deal with recurring problems, identify the
causes of non-compliance, guides the analysis of non-compliance in an organized manner and evaluates the
effectiveness of the taken action.

The benefits of 8D are:

Standardization of the problem solving process;
Documentation of the process;
Ability to share the learning of problem-solving across the value chain process.

Different improvements were applied such as, development of audits in FMLE, Ishikawa and five whys:

Figure 8: Tools of 8D applied in this study

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3.6 Step 6: Remove the constraint and stabilize.

The stability is the foundation for improving implementation. Step 6 provides efficient and standardized processes to
keep the reduction of waste and predicts if it can happen in the future. Standardization is not an obligation but a
consensus on the best way to perform an activity, so that the best results are achieved and process variations are
minimal.
In this sense, 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.

Figure 9: Standard work documentation on Workstations in the value chain

3.7 Step 7: Reevaluate the system.

Finally, 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. 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.

The results obtained on the elements of the value chain to reduce the lead time of 5.4 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.

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Figure 11: General results of the company by iTLSTM application

4. Conclusions and Future Research

The challenge to be more competitive and innovative, leads companies to seek for differentiation in the way of
working and have better performance in productivity, product quality, cost reduction in operations and deliver
products on time and at the right place, and results in customer satisfaction .

Integrating approaches to continuous improvement is a way to obtain differentiation and innovation to provide better
results and an advantage in competition. In addition, an integration of concepts helps supply limitations when an
approach is applied in isolation

As for suggestions for future work, the author recommends some observations:
The model does not have publication in literature system, but this research is applied in discreet production
system. 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.
According to the model, it is recommended to explore all the tools at each step, in order to find greater
benefits and difficulties in the present case.
Relate a search in a real situation leading to development of research in terms of updates. 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 ;
A review of the literature according to the illustration indicates iTLSTM in manufacturing environments,
therefore it is recommended to explore other areas in companies such as Marketing, Finance, Procurement,
among others.

References

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