PROCESS IMPROVEMENT

Combining lean, Six Sigma and theory of constraints Rock creates a process improvement powerhouse . . . . . : ...... : ...... : . . . . . : . . . . .: ...... :. : . . . . L. . : ...... : . . : . . : ...... D . . . : . . I . 0 . . .. :S . , . . . : . . . . . : . . . . . SURFACE MINING AND subsurface mining requires expensive machinery and equipment. A 12-ton In 50 Words front-end loader and 35-ton haul truck, for example, can Or Less • The 6TOC improvement cost $1.2 million and $350,000, respectively. A single site method employs ele- by Todd Creasy ments of Six Sigma, lean can use several pieces of equipment, with additional capi- and the theory of con- straints (TOC) to zero in tal needed for the plant’s fixed machinery, pushing the on process bottlenecks and eliminate waste and variation. up-front investment into the tens of millions of dollars. • A 10-step implemen- tation plan based on Eliyahu Goldratt’s chain project management process and Joseph M. Juran’s management principles can help any industry implement 6TOC.

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These capital investments can prevent entry into and the theory of constraints (TOC).2 Its principles and in-house receiving department. Critical process flowchart for the industry and complicate efforts to grow or im- deployment steps are shown in Table 1. In the mining industry, it begins with the stone prove productivity. Because money is the language of Although this approach to process and productivity that has been blasted from the stone face. The pro- mining operation / FIGURE 1 senior management,1 site managers are careful about improvement is presented here in a case study involv- cess continues with the stone traveling to the pri- unnecessary capital expenses, and often try to focus ing a mid-southern U.S. mining organization with more mary crusher, conveyor, secondary crushers and on controlling expenses while improving worker and than 50 sites, 6TOC can apply to a broad spectrum of more conveyors until it reaches stock piles and is equipment productivity. industries.3 loaded onto customer trucks, weighed in tons and The aim to improve operational results while reduc- A hybrid combination, 6TOC has elements of Six ticketed. These tickets produce invoices that are Coarse rock to Conveyed to secondary Loaded on trucks ing inputs or keeping them the same is what led one Sigma, lean and TOC. Six Sigma focuses on quality im- sent to customers. primary crusher crusher and then to then weighed organization to embark on a multiyear quest resulting provement and reducing production variation,4 while After the primary process flow has been un- stockpiles and ticketed in a method called 6TOC (pronounced “six tock”) and lean focuses on eliminating waste in all of its seven derstood, it is separated into three or four seg- Phase I Phase II Phase III results worthy of examination. forms.5 When these two philosophies are combined ments. For each data capture, these segments 6TOC is the unique combination of Six Sigma, lean with TOC6 and its focus on bottlenecks, it makes a often begin and end at logical breaks in the pro- potent combination, particularly if there is manage- cess and generally have measuring systems at the Capabilities8 chart—tons per rial support to improve productivity. Using TOC’s five beginning or end. In the mining industry, the pri- hour / FIGURE 2 Steps to implementing 6TOC / TABLE 1 steps, bottlenecks are exploited and elevated with Six mary process is divided into three sections called 7 Sigma and lean tools. phases related to the processing stage of the rock Step 1 Identify and validate operational metrics. Begin 6TOC by identifying the capstone metric. All correlated with the crushing circuit’s continuous 3,0006 Step 2 Identify capstone metric through correlation analysis. organizations have financial or operational ratios that flow system. Figure 1 illustrates a mine’s stone- 2,500 2,540 predict success or profitability. In this collection of ra- crushing primary process divided into three Step 3 Identify value-creating, primary process flow. 5 5.07 tios or metrics, one has a higher correlation relation- phases. 2,000 Step 4 Divide primary process flow into three or four logical and measureable segments. ship to profitability than all the others. Operational bottlenecks­­­­­­­­­­­—areas in the prima- 1,500 Cycle time 4 Step 5 Identify bottlenecks or constraints in each segment. As part of 6TOC, teams are charged with improving ry process where demand exceeds capacity—are 1,000 3.55 outcomes that have either a direct or indirect effect on of keen interest to TOC practitioners. Identify- 910 Step 6 Begin with the segment with the most restrictive bottleneck 718 or constraint. the capstone metric. ing and understanding bottlenecks within each 5003

Step 7 Use lean Six Sigma tools to exploit or eliminate bottlenecks in In the mining industry, there are several site-spe- segment comprise the third major step in 6TOC. 0 process. cific and contemporaneous measurements to con- Bottlenecks occur when demand exceeds capac- 2 Loader Haul trucks Crusher Step 8 Repeat step 7 working through the next most critical sider, such as tons produced per hour, total costs ity or when actual production in a specified area Cycle time actual Cycle time capable bottleneck. as a percentage of sales, cost per ton and overtime is less than its maximum capability for produc- Step 9 Develop a metrics pyramid for your organization identifying expense per ton. Table 2 shows examples of site- tion. In this instance, underperformance in one pertinent metrics at each level (corporate, division and Truck cycle time location). specific metrics. critical link reduces total production for the en- After studying 14 months of operational metrics and tire chain. actual vs. capable / FIGURE 3 Step 10 Develop a communication system using the metrics pyramid for pertinent levels in the organization; consider using month-end results for more than 50 locations (n = 700), Phase one for a common surface mining opera- 8 scorecards and scoreboards. the metric most positively correlated to profitabil- tion commences with the loading of coarse rock 6TOC = A method that combines lean, Six Sigma and theory of constraints. ity was determined to be tons per man-hour (TPMH), (blasted from a stone face) onto a haul truck to 7 which became the capstone metric. be dumped into a primary crusher, weighed and Similar practices have been conducted at large or- stockpiled. This process requires all personnel 6 ganizations to determine a single most-important met- and machinery (a large front-end loader, several / TABLE 2 ric. The focus on Southwest Airlines’ gate turnaround haul trucks and a primary crusher) to be used. Site specific metrics 5 5.07 time and Walgreens’ revenue per customer visit,7 for Focusing on this phase of the total process,

Production Maintenance Costs Safety example, produced positive results for both organiza- can you determine which component is the bot- tions. tleneck targeted for improvement? This approach Cycle time 4 Tons per hour Plant availability Cost per ton Days 3.55 since last is based on Eliyahu Goldratt’s critical chain and incident When demand exceeds capacity strength of throughput in which the collection 3 Tons per man-hour Rolling stock Labor cost per ton Number The next step in 6TOC deployment is to determine the of individual steps and tasks in the process and availability of near scope of the value-creation process flow or chain. In their relationships ultimately provide power to 2 misses 8 year to some industries, this may begin with overseas com- the process. date ponent manufacturers, raw material suppliers or an Strength arises from recognizing the con- Cycle time actual Cycle time capable

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Cycle time comparison by per hour was 718 tons. The primary crusher was tested in five trials producing an average rate of 910 tons per Methods of exploiting or elevating a driver / FIGURE 4 hour. 12 The haul trucks seemed to be the bottleneck. Mea- constraint can be associated with people, sures were taken to improve the weakest link and 10 hopefully raise the average tons per hour of each haul 8 Dan process and machinery. truck, including exploiting the bottleneck and raising 6 Bill the entire phase’s throughput. Time 4 Kyle Because the team had substantiated the haul truck 2 theory through Six Sigma-style data capture and anal- In the mining case study, attempts were made to People. The haul truck operators were not aggres- 0 ysis, it avoided erroneous assumptions and rule-of- exploit the haul truck bottleneck by getting as much sively driving their trucks to achieve maximum produc- 1 4 7 10 13 16 19 22 25 28 31 34 37 40 43 46 49 Cycles thumb management. Until this experiment, manage- out of the constraint as possible. We began using lean tion. They took their time. The drivers were not posi- ment had considered purchasing an additional haul to determine how much time would elapse during a tioning their haul trucks correctly near the loader prior truck or a larger crusher to obtain more throughputs. typical haul truck cycle. It begins with the truck be- to being loaded. The loader operator was not loading nections among the individual links and steps. The Both expenditures would have been premature. ing loaded with coarse rock, it travels to the primary the truck efficiently, using techniques that consumed strength of the throughput is only as strong as the crusher, it dumps the rock into the crusher and it trav- more time. weakest link. At this juncture, a capabilities chart is Exploiting and elevating constraints els back for another load. The distance from rock load- Cycle times were not communicated to drivers so used (Figure 2, p. 47). With a capabilities chart, each The second and fourth steps of Goldratt’s five-step ing to rock dumping can range from several hundred they did not know how they were performing. This component is independently tested to determine its bottleneck improvement process are exploiting and feet to two miles. failure to adhere to Joseph M. Juran’s principle of maximum output. Emphasis can be placed on the most elevating. Exploiting a constraint involves trying to The time lapse between each load of rock being “placing employees in a state of control”9 was recti- chronic bottleneck slowing the entire process phase to get the most possible out of the constraint. Elevating dumped into the primary crusher was measured using fied, resulting in a healthy competition between driv- a suboptimal pace. a constraint involves major changes that often require a proximity switch attached to each haul truck. The ers for the lowest cycle time. Times were posted daily The front-end loader was measured to determine capital expenditures to increase its capacity and re- proximity switch fed information to an on-board GPS reflecting the previous day’s results. See Figure 4 for how many tons it could load in one hour. The average moving it as a bottleneck in the system. unit linked to a mobile phone and uploaded daily cycle an example. for five trials was 2,540 tons per hour. The haul trucks Methods of exploiting or elevating a constraint can times into the cloud and database. Process. Other vehicles on the route often would also were measured, and their combined average haul be associated with people, process and machinery. The We tested each haul truck to see what its cycle time clog the passageway, slowing the cycle time. The haul following questions may help start the processes: capability was compared to its actual production time. roads were not wide enough in some areas for two People. Are pertinent people cross trained to al- Several trials were conducted. Example results are trucks to safely oppose one another in their transport. Metrics pyramid for the mining leviate problems associated with absences? Are em- shown in Figure 3, p. 47. A lower cycle time equates industry / FIGURE 5 ployees performing a task suboptimally because of to greater production levels, thus exploiting the bottle- poor training or because that’s the way they’ve always neck. 6TOC communication done it? Do employees consciously slow down the system / FIGURE 6 process to avoid potential unpleasant consequences People, process and machinery Senior level metrics (organization) such as machine failure? Is the 5S workplace organi- The capability time was one minute and 30 seconds Audience Form and frequency • Tons per man-hour (capstone metric) Ultimate lagging • Cost per ton metrics zation method practiced in the facility and monitored faster than the actual. It may not seem significant, but Seen by senior • Labor cost per ton for compliance? it was. If each truck carries 35 tons of material, and Monthly management Capstone Process. Does everyone understand the upstream the site uses three trucks, the difference is significant. metric financials Middle metrics (division) and downstream process implications of his or her With a five-minute cycle time, each truck will deliver Seen by Leading and divisional or Weekly • Tons per man-hour • Tons per hour lagging metrics actions? Does everyone know where the hotspots 96 loads a day (12 loads an hour x eight hours). With a • Plant availability • Total tons (or bottlenecks) in the process are? Is there a formal three minute and 30 second cycle time, each haul truck regional Middle scorecard • Average selling price produced management metrics way of accomplishing a task and a real way of accom- will deliver 136 loads a day (17 loads an hour x eight

Leading plishing a task? Have you considered poka-yoke and hours). metrics Foundational metrics (location) its impact on your process? Has anyone documented These theoretical additional 40 loads x 35 tons x Seen by site Daily managers Foundational scoreboard • Haul truck cycle time • Overtime hours process flow recently? three trucks equate to 4,200 tons a day in improved pro- and foremen metrics • Plant availability • Downtime Machinery. Is current machinery being operated duction with the same equipment, the same equipment • Total tons produced hours according to its specifications for throughput? Is it be- operating hours and no additional overtime. Each level of metrics needs a real-time communication system. ing calibrated regularly? In terms of facilities layout, is Let’s explore the people, process and machinery fac- These metrics should provide a line of sight to the capstone metric. appropriate machinery located closely together? tors that led to this constraint exploitation. 6TOC = A method that combines lean, Six Sigma and theory of constraints.

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One truck would have to stop and wait for the other process. These findings were replicated to other sites. gressive preventive maintenance schedules, plant Monthly performance / FIGURE 8 to pass, causing cycle delays. With the capstone metric firmly established, each level and equipment availability climbed into the mid-90% Machinery. The roads on the haul route were not of the organization (corporate, strategic business units range from the upper 70 to mid-80% level. Location A tons per hour smooth. The rough rides caused bodily discomfort dur- and site locations) had metrics that were directly or in- In most locations, little capital was expended to 700 ing transport and slowed cycle times. Different brands directly tied to the capstone metric. The establishment achieve these results. Most long-time employees previ- 36% improvement and models of trucks with different maximum operat- of these associated metrics enabled the organization ously believed new equipment or refurbished machin- 650 649 ing speeds being used complicated team synergy and to align toward a common direction. ery would have to be purchased to improve equipment 621 produced lower cycle times. Preventive maintenance Figure 5 on p. 48 is an example of the metrics pyra- availability and productivity. 600 606 631 was not being performed as required, which slowed mid. This pyramid has three sections. The top portion Equipment expenses dropped because the desired 583 577 production during downtime events. represents the metrics of primary interest to senior tonnage was being produced in fewer hours. Inven- 550 Data management, which includes the capstone metric. tory accuracy improved because of the increase in 527 Communication strategy The second tier represents middle metrics and is of measurements along the throughput process, which 500 484 The process of exploiting or elevating bottlenecks oc- primary interest to divisional management. The third prevented financial surprises at the end of an account- 463 curred throughout the site’s entire production flow section has foundational metrics used by location- ing period. 450 Baseline = 475 tons specific personnel. For a comparison of mean tons per hour, month- The last stage of implementing 6TOC is the manage- over-month production comparisons by location (rep- 400 March April May June July Aug. Sep. Oct. Nov. ment and employee communication system. To keep resented in box plots), refer to Figure 8. Communication employees in a state of control, Juran said they must Practitioners of continuous improvement con- / FIGURE 7 system understand the goal, understand their performance stantly search for tools to help lead teams and orga- Location B tons per hour and have the autonomy to meet the goal if perfor- nizations toward successful outcomes. The marriage 725 Scorecard of divisional or regional metrics mance lags.10 of lean and Six Sigma illustrates the complementary 10% 700 improvement Margin per ton Cost per ton Plant availability Using lean, a series of communication systems was strengths each method offers for delivering on organi- 677 673 Site compared to compared to compared to established based on the metrics identified as impor- zational or project needs. 675 location group average group average group average tant for each level of the organization. Senior manage- The addition of TOC creates a potent combination 650 651 A ment received communication monthly through stan- for quickly finding root causes and producing solu- 647 B

dard financial reviews and reports on the capstone tions with a direct bottom-line impact. Regardless of Data 625 617 Baseline = 625 tons C metric and other pertinent metric values. industry, 6TOC can save time, effort and money when 613 608 600 D Regional or divisional management received perfor- dealing with process constraints and productivity im- E mance information weekly that compared locations. provement goals, and enable organizations to better 575 F Location-level managers and personnel often required serve all stakeholders, including customers, suppliers, 550 G information that is posted daily and populated with team members and managers. QP data from the previous day’s activities. See Figure 6 on = good = bad June July Aug. Sep. Oct. Nov. Dec. p. 49 for a schematic of 6TOC’s communication system REFERENCES 1. Joseph M. Juran, The Quality Handbook, McGraw-Hill, 1999. Scoreboard of site or location-level metrics and Figure 7 for the communication system’s example 2. Todd Creasy, “Pyramid Power,” Quality Progress, June 2009, pp. 40-45. 3. Todd Creasy and Sarah Ramey, “Don’t Lose Patients,” Quality Progress, Location C tons per hour of a scorecard and scoreboard. February 2012, pp. 42-49. 650 4. Louis Johnson and Kirk McNeilly, “Results May Not Vary,” Quality Progress, 23% May 2011, pp. 42-48. improvement Doing more with less 5. Greg Kruger, “The Power of Prediction,” Quality Progress, June 2013, pp. 6TOC enabled the mining organization to go against 26-32. 6. Eliyahu Goldratt, Critical Chain, North River Press, 1997. 600 602 613 the operating paradigms and traditional thinking prev- 7. Jim Collins, Good to Great, Harper Collins, 2001. 8. Goldratt, Critical Chain, see reference 6. alent in the industry. This hybrid of Six Sigma, lean 9. Juran, The Quality Handbook, see reference 1. and TOC proved you can do more with less and don’t 10. Ibid. 550 560 556 need to reach for the checkbook to improve produc- Data 536 526 tivity. 517 Because production goals were generally met 500 TODD CREASY is an associate professor at Western 497 Baseline = 500 tons before an eight-hour shift was completed, preven- Carolina University in Cullowhee, NC, and a consultant at Bridgepoint LLC in Asheville, NC. He holds a doctorate tive maintenance activities, which were normally in Management from Case Western Reserve University in Cleveland. An ASQ member, Creasy is an ASQ- 450 conducted during overtime hours, were conducted certified Six Sigma Black Belt. April May June July Aug. Sep. Oct. Nov. during normal shift hours. Also, because of the ag-

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