January 2000
Volume 7 • Number 1

Contents

The success of a quality program is usually determined by its positive effect on the organization’s performance. Since not all quality improvement (QI) projects are created equal, their sequence of implementation will have an effect on the success of the program. The focus of this study is on the issue of QI project sequencing. Using an example, this study introduces a QI project selection (sequencing) based on theory of constraints (TOC) concepts and compares this selection process with other traditional selection processes. Based on the study, the TOC-based QI project selection process produces the best results.

Key words: theory of constraints (TOC), total quality management (TQM)

byREXNORD H. DRAMAN, ST. EDWARDS UNIVERSITY, SATYA S. CHAKRAVORTY, KENNESAW STATE UNIVERSITY

INTRODUCTION

The analysis and selection process used by most quality programs to select and/or identify specific quality improvement (QI) projects for implementation could easily be described as an approach or methodology of sequencing the alternative QI projects. Since the impact on organizational performance from each alternative QI project is not the same, the sequence with which the QI projects are selected and implemented will greatly impact the organization’s performance (for example, sales, profit, and so on) and the overall success of its quality program. It is known from the study of sequencing that selecting the ‘correct’ sequencing rule is dependent upon the specific situation and criteria deemed most important. Since the organization’s ultimate measure of performance, as viewed by its owners (stockholders), is profits, then profit or some measure derived from it must be one of the most important criteria used in selecting (sequencing) QI projects.

Part of the cause for improperly sequenced QI projects can be traced to two basic assumptions in most selection processes. The first is the reliance on cost-based data for evaluating the impact of the project on organizational productivity. Today, Drucker’s realization that “the vocabulary of business–and especially of accounting–in relation to productivity has become so obsolete as to be misleading” (Drucker 1954, 3) is well supported (Goldratt 1990; Noreen, Smith, and Mackey 1995; Johnson 1992; Johnson and Kaplan 1984). Yet organizations continue to rely on these obsolete accounting (cost-based) measures for making QI project decisions. The second assumption is the commonly held belief of functional independence (Goldratt and Cox 1986; Senge 1990; Wheatley 1992). As Ostroff (1999, 8) stated, “The separation of tasks (functional independence) tends to emphasize what is ‘optimal’ for the individual unit or function rather than what is best for the entire organization.” If some of the criteria (measures) being used in the evaluation of alternatives is obsolete (cost based) and the functional independence is in question, is it any wonder that the resulting decisions (sequencing of QI projects) do not increase organizational performance?

Over the years, the theory of constraints (TOC) has continued to evolve from its origins as a job shop scheduling tool. The TOC challenges the belief of functional independence with its view of organization as a chain of dependent activities. According to the TOC, every organization must have at least one constraint (the weakest link in a chain) and the existence of constraints provides opportunities for QI improvement. In addition, the TOC provides a set of measures that link local actions to the measures of organizational measures (Goldratt and Cox 1986; Goldratt 1990).

The purpose of this study is twofold. First, to introduce a TOC-based alternative for selecting (sequencing) QI projects. Second, using an example, to evaluate the TOC-based alternative along with three of the more commonly used traditional (total quality management (TQM)-based) criteria for selecting QI projects. The focus of this study is on the selection (sequencing) of QI projects once they have been identified and analyzed. The orientation of TQM approaches to identify QI projects is beyond the scope of this study. The rest of the paper provides an overview of TQM with three TQM-based approaches to selecting QI projects, an overview of TOC with TOC-based approach to selecting QI projects, a description of the example, a summary of the QI project selection alternatives, the results, and the conclusions. A detailed discussion of the initial scenario and the analysis is included in the appendix.