When it comes to improving production, a standard question is this one: What are the differences between Lean, Total Quality Management (TQM), Six Sigma, Agile, Quick Response Manufacturing (QRM), and all the other prescribed improvement programs? Underlying the question is a rational need to find a way to navigate through the jungle of “solutions”, and select the one(s) that fit exactly your firm. In this blog post, I suggest that considering “Concept Epicenters” might be helpful in making the right strategic choices.
There are quite a few papers and blog posts out there attempting to contrast different production improvement programs (see below for a few selected good ones). In my opinion, however, a problem with many of them is that they often end in some useless classifications of the different concepts and philosophies. For example, some conclude that TQM, at core, is about “quality”, whereas Lean is about “timely delivery”, and QRM is about “flexibility”. Practitioners know that these things are related. Does it mean that everyone should implement all prescribed programs? Of course not. I suggest that it might be more fruitful to consider the differences between programs based on an analogy to geology: the epicenters of earthquakes.
Hayes and Wheelwright’s process-product matrix
Let’s start with a well accepted framework for classifying manufacturing industries: Hayes and Wheelwright’s (1984) famous process-product matrix. On the left side are four different manufacturing process stereotypes; from job shop, flow shop, line flow, to continuous flow. On the top are four different types of product mixes. The first group includes firms that produce low volumes of non-standard and one-of-a-kind products—typically represented by the construction- and craftsmanship industries. In the second group, companies have low volumes but many products—as we find among manufacturers of high-tech healthcare products, robotics or tooling machinery. The third group includes companies that produce few major products in high volumes—typically automobile and other discrete manufacturing companies. The fourth group consists of companies that produce high-volumes of standard commodities—like manufacturers of food and other consumer goods, or manufacturers of steel, dairy products or painting. Hayes and Wheelwright suggested that a good fit between a firm’s product-mix and its process set-up would be on the diagonal of their matrix. The figure below shows some examples:
In geology, an epicenter describes the center directly above the point where the earthquake breaks out. It is the point where the quake has the most impact. As we move away from the epicenter, the impact of the quake diminishes gradually. Some quakes are heavier and, hence, have bigger—and wider—impact than other quakes. Now let’s assume that the epicenters of each of the production improvement concepts can be found in the industry they were developed in:
- Lean (or Toyota Production System) clearly stems from—what Peter Drucker already in 1946 labelled “the industry of industries”—the automobile industry (see Womack, Jones and Roos, 1990), and has enjoyed popularity across all industries.
- Total Quality Management (TQM) also has its roots in Japanese and US automobile industries (see my earlier post about the quality gurus).
- Six Sigma was developed by Motorola (and later General Electric) for discrete manufacturing with high volumes (Pande et al, 2000).
- Theory-of-Constraints (TOC) is a concept focusing on bottleneck-optimization developed by Eli Goldratt’s (1984) in his novel about UniCo Manufacturing; a sort of machining company. (See my post about drum-buffer-rope.
- Quick Response Manufacturing(QRM) was proposed as a particularly suitable concept for high-mix, low-volume companies (Suri, 1998). The same is claimed for Agile Manufacturing
- Mass Customization uses modularization and information technology to produce high volumes of customized products fast and efficiently (Pine, 1993).
- Traditional Project Management techniques (like PERT and CPM) and the “new” agile project management techniques (like SCRUM) are used for managing all kinds of project.
Let’s place these different concepts in the product-process matrix according to their epicenters and approximate impact:
The Concept Epicenter Map both fuels and calms statements like: “Hey, Lean thinking is developed for high-volume automobile industries; it does not suit our highly cyclical and unpredictable business”. As we can see, there will always be some part of the programs that have applicability outside their core. When it comes to Lean, for example, ideas like removing wasteful processes, continuous improvement and having a well-organized workplace are never wrong, while just-in-time and “kanban” do not fit all. “Core lean” works best in the automobile industry. The map also illustrates the large overlap between most of the concepts. In my opinion, the trick is to work out the parts of the different ideas that your firm can take advantage of, and repack them into your own tailored company-specific production system—your XPS.
Does the Concept Epicenter Map make sense to you?
Recommended further reading:
- Shuba Kathikeyan’s excellent info graphic set “ISO 9000 vs. Six Sigma: A Visual Guide”
- Michel Baudin’s reflective and much discussed blog post: MIT article comparing Lean, TQM, Six Sigma, and related enterprise process improvement methods (9. Jan 2013)
- Richard Schonberger (2007. “Japanese production management: An evolution – With mixed success“. Journal of Operations Management, 25, 403-419.
- Andersson et al. (2006) Similarities and differences between TQM, six sigma and lean, The TQM magazine
- Shah, R. & Ward, P. T. (2003) Lean manufacturing: context, practice bundles, and performance. Journal of Operations Management, 21, 2, 129-149.
- Drucker, P (1946) The Concept of the Corporation, John Day, New York
- Goldratt, E. M. & Cox, J. (1984) The Goal: Excellence in manufacturing, Croton-on-Hudson, N.Y., North River Press.
- Hayes, R. H. & Wheelwright, S. C. (1984) Restoring our competitive edge – Competing through manufacturing, New York, John Wiley & Sons.
- Pande, P. S., Neuman, R. P. & Cavanagh, R. R. (2000) The Six Sigma way: how GE, Motorola, and other top companies are honing their performance, New York, McGraw-Hill.
- Pine, B. J. (1993) Mass customization: the new frontier in business competition, Boston, MA, Harvard Business School Press.
- Suri, R. (1998) Quick response manufacturing: a companywide approach to reducing lead times, Portland, Ore., Productivity Press.
- Womack, J. P., Jones, D. T. & Roos, D. (1990) The machine that changed the world, New York, Rawson Associates.
Ps! Thanks to Professor Jan Olhager at Lund University, Sweden, and Kværner Contractors Norway for inspiring this blog post (all mistakes remain my own).