HowConstraintsManagementEnhancesLeanandSixSigma

Lean and Six Sigma are two of the most effective businessimprovement techniques available today.However,many companiesstill struggletoharnessoneorbothdisciplinesto achievethe desired results. One solution is to combine lean/Six Sigma with a third businessimprovement approachconstraints management. By bringing constraints management into the equation, companiescanidentifywheretofocustheleanandSixSigmaeffortsformaximumsuccess. 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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