This Is Lean: Resolving the Efficiency Paradox by Niklas Modig & Par Ahlstrom
My rating: 4 of 5 stars
The book starts by explaining the difference between Resource Efficiency and Flow Efficiency. The former having the aim to maximise the use of expensive resources, such as MRI scanners, doctors etc. The latter is focused on maximising the flow of a unit of work though a system, e.g. the speed of getting a patient from initially requiring a diagnosis through to diagnosis.
There are three laws at play:
- Little’s law is that the throughput time is equal to the flow units in process x the cycle time. e.g. it takes 1 minute to go through a security scanner and the queue is 9 people long then the throughput time is 9 minutes.
- The law of bottlenecks. There are always bottlenecks in system with heterogeneous processes. They can be identified as there will be a queue of people, material or data before it. The stages after a bottleneck will work slower than they could because of a limited amount of work to do.
- The law of the effect of variation on processes. This could be because the resources don’t work the same, e.g. different approaches to doing a task. It could be because the flow units/subjects are different e.g. the exact requirements you have when you go to a barbers might be different to the person before or afters. External events, e.g. the sudden arrival of a lot of customers all at the same time.
The efficiency paradox. If there are long lead times then this results in secondary needs e.g. if you have to hold more inventory then there are the costs tied up in the bussiness, the storage space required, the reduced flexibility etc. If this were your doctor referring you to a specialist then if you have not heard about your appointment after some time you are likely to call them up and ask about it which takes up more of their time without adding value to anyone compared to if you had been given your appointment time right away. If there are many restarts then it takes time for the next person to understand more about what has been done which takes more time. The paradox is that we think that by being busy that we are being efficient whereas as significant amount of time is actually take up by secondary tasks which would not have existed had we focused on getting the original task completed much sooner.
So with the two efficiencies the ideal position would be great flow efficiency and great resource efficiency, however – in reality – this is not possible because of the variation which we discussed earlier – this imposes a limit on the maximum possible efficiencies, the efficiency frontier.
So what is Lean? Simply put it is the continued desire to reach the start of peak resource and flow efficiency.
This is based on two principles, just-in-time and about having visibility of everything that is going on and also where things are going with a strong customer focus. You then put in place methods to support the principles which are then actioned by tools and activities.
The ultimate aim of lean is to better than you were yesterday.