Lean VS. TOC


This article was originally published in The Critical Path email newsletter, December 15, 1998.  We received several emails about this article when it was published which may be even more interesting than the original piece.

LEAN VS. TOC – GOLDRATT’S PERSPECTIVE

At Management Roundtable’s recent Metrics conference, I had the opportunity to participate in a special luncheon with Theory of Constraints guru, Dr. Eliyahu Goldratt. Having read both “The Goal” and “Lean Thinking,” I took the opportunity to ask Dr. Goldratt a question that I had been thinking about for some time:

“Dr. Goldratt,” I asked, “Can you compare and contrast TOC with Jim Womack’s “Lean Thinking” as it’s derived from the Toyota Production System?” Both philosophy ‘systems’ appear cast from the same mold, both are strategies that focus on value, both challenge ‘batch and queue’ conventional wisdom, and both are attempting to apply their shop floor principles to the overall enterprise, especially product development.

Goldratt paused pensively, as he does with every question.

“First of all,” he said, “let us set something straight. We are principally talking about the car manufacturers here with lean – they are the ones principally involved with it. However, there are many things called lean, but they really aren’t – what YOU mean is the work of Taiichi Ohno from Toyota. Lets make sure that is understood. Now, the main problem with how the automotive factories are going about lean is they are still too focused on ‘efficiencies.'”

“Now, don’t get me wrong – I love lean. It’s tools are just beautiful. Machine set-up time reduction, etc. Just beautiful! It works very well with TOC. But, let me give you an example that will help. At one car company, which I cannot name, I am sorry, they underwent a lean project. They brought in 30 outside people, many of them from Japan, which of course tells you…”

Someone else at the table shouted out the answer.

“That’s right,” Goldratt agreed, “it was a very expensive project – a lot of plane tickets. Now, at the same time they started a TOC project in another department. Do you want to know how many people were brought in for it? Three. Big difference. Now, both groups went about their business, and at the end of both projects, the TOC one had 40 times improvement over anything the lean implementation produced. 40 times! Throughput, inventory turns, batch sizes, everything! The lean team wanted to kaizen every piece of machinery and every piece of the process. The TOC team picked only the most significant bottlenecks and constraints and focused on those.

“Now, can you tell ME,” he said socratically, “what the difference was with the TOC project?”

I thought hard for a moment. I always get these on-the-spot kinds of questions wrong. “The difference,” I said, “was in what the TOC group DIDN’T try to improve?”

“Exactly!” Dr. Goldratt exclaimed. “Exactly.”

Now, I wonder how Taiichi Ohno would feel about that.

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MRT Workshop: Second Generation Lean Product Development: Applying the Principles of Flow

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