There is a debate raging on whether it is best to focus on resource efficiency or flow efficiency. Most companies these days are concerned with resource efficiency. Their focus is on keeping their staff busy and occupied. Staff costs in the service industry are often over 50% of companies expenditure, therefore it makes good sense to keep this expense busy all day. We have all experienced it; waiting in bank lines, at the supermarket checkout, and at the doctor’s office. The waiting time that the customers experience is not a cost for the company providing the service, or is it?
There is another method called flow efficiency; its focus is on the customer or the item having value added to it. Its goal is to reduce the time from the customer’s request to when it is delivered to them. It is to look at your processes and to remove all the non-value added items, which includes waiting time, to be able to deliver the product as quickly as possible. It could be the time it takes for you to order a Happy Meal to when you are provided it, or the time it takes from when it becomes apparent that you need a heart bypass till the time you have had that bypass. The focus of flow efficiency is not on the resource doing the work but on the item that is being worked on.
We will show you how the two different systems work with the example of planning a house build.
Resource efficient builders
John has decided to build a three-bedroom bungalow in Wellington. He contacts a number of home building companies and eventually decides to go with the company called “Resource Efficient Builders”. They have some good plans and one of the bungalows fits John’s requirements. John sends an email to the “Resource Efficient Builders” company and two days later he gets a phone call to discuss what he’s wanting. They assure John on the price but any changes he wants he will have to pay extra for. A week later, he makes an appointment with the sales manager and agrees and signs a contract with the company. They book a time with the architect in three weeks as he is currently busy with many other contracts. Eventually, he meets with the architect and they discuss his requirements. The architect tells him that he will have a draft of the plans to him by the end of the week. The building company prices the plan and sends it to John with the new plan. However, the architect misunderstood some of John’s requirements, so John needs to book another appointment with the architect.
Once again he waits for three weeks to get the appointment and finally the architect understands his requirements and details the drawings. The architect needs engineering work done on the drawings and submits his request to the engineer. Two weeks later the engineer comes back and says that it is too difficult and expensive to build in this way and recommends that they change the plan. The architect looks in his calendar and can move a couple of appointments around for next week and books John in. John attends the meeting and agrees on the changes. He is not perfectly happy about these changes but for expedience sake decides to just accept it. The architect tells John that he will have the changes complete and ready for pricing within four weeks. The detailed design is completed and priced and John agrees on the price for the build. The plans are then submitted to the council; however, the foundation plan was missing some needed detail. The plans were sent back to the architect from the council, but as he was busy the plans had to wait in his in box for 10 days before he could look at them.
By this time John is growing impatient with the process and is ringing up the building company daily to check on the progress. He can only get through to the receptionist who is used to getting these calls from various customers and gives hollow answers. The architect eventually gets around to John’s job, but has to refamiliarise himself with it. When he finds the missing detail he quickly adds it in and resubmits it to the council. Two days later the council comes back asking for more details on the job. This time with John’s persistence the architect gets onto it the next day and resubmits the changes. The council has all the details, and they issue the building consent for the job.
In the example above, you can see how the focus of the company was on resource efficiency. They worked to keep their staff busy and occupied by keeping a queue of jobs in front of them. They worked in silo, with each profession servicing many clients. They did not concern themselves on how long it took but on maximising their staff. Working in this way was resource efficient, however, it added an additional load due to all the calls that John was making; having to refamiliarise himself with the design, the handoff costs and the additional rework because of the engineering that was not considered in the build. From John’s perspective the other costs were the stress, the additional time to push things through, and the cost of renting for another few months. The total time it took from when the agreement was signed to when the building consent was issued was a 116 days. In conclusion, the architect spent six days on the job, the engineer spent one day, the quantity surveyor four days and the council had twenty days for the building consent. The value added time was 31 days out of a total of 116 days!
To have efficient resources you need to have queues, and these queues have to wait to get work completed. As shown below, one worker serves many clients and the focus is on keeping this worker busy 100% of the time.
Flow efficient builders
Paul has decided to build a three-bedroom bungalow in Wellington. He contacts a number of home building companies and eventually decides to go with the company called “Flow Efficient Builders”. They have some good plans and one of the bungalows fits Paul’s requirements. Paul sends an email to the “Flow Efficient Builders” company and two days later he gets a phone call to discuss what he’s wanting. They assure Paul on the price but if he wants any changes he will have to pay extra. A week later he makes an appointment with the sales manager and agrees and signs a contract with the company. An appointment is booked for next week to plan the house build. While Paul is waiting for the appointment, the receptionist at “Flow Efficient Builders” gathers the required information for the meeting.
When Paul arrives at the meeting, all the relevant information is available for the design. The first two hours of the meeting is with the architect. They go over the design and consider different options. Eventually, the architect scribbles down a high level concept design. At this stage he brings in the engineer. The engineer looks at the property and how the design integrates with it and has some issues with the complications of building it that way. They discuss it further and make some changes to make it easier to build. One of the key builders is brought in at this stage and makes some comments on the use of materials and some basic changes are agreed on. Paul goes out to lunch with the architect and they continue to discuss some options. In the afternoon, a draftsman is brought into the meeting. He is briefed on what they are doing and works with the architect in producing a concept drawing. Paul stays with them at that time and continues to provide feedback. At 3:30pm they have a wrap-up meeting and bring in the engineer and the key builder to discuss the plan. A few minor tweaks are made and Paul has all his different questions answered. Paul is given the concept plan, and a follow-up meeting is made for the following week to discuss more.
Over this week “Flow Efficient Builders” price the change and have it ready for Paul when he arrives at the meeting. When Paul comes back he is greeted by the architect, draftsman, builder and quantity surveyor. Paul explains that after talking with his wife he wants to add an ensuite to the second bedroom. This is quickly drafted up with input from the different parties. The quantity surveyor discusses this with the builder and updates the price to build. The price and plan is agreed upon and the contract signed. The draftsman and engineer receive instructions to detail the house. Five days later a final check of the documentation to be submitted to the council is complete and Paul verifies the drawings. They were submitted to the council and signed off.
In the example above you can see how the company was focused on the client rather than their resources. The client got what he wanted and had the ability to influence the design all the way through the process. The team worked together, rather than in silos, and produced a good and efficient result. The total time from when the initial agreement was signed to the producing of the building consent was 35 days. This included two days for the receptionist to gather information, one day with the architect and a partial time with the engineer, builder and draftsman. Two days were used by the quantity surveyor and builder to price the job, and a further day was making some changes and getting agreement on the plans. The draftsman spent four days developing the plans and then a final day to update the plans before submitting them to the council. The council took 21days to process the plans. Here we see 30 days effort out of a total of 35 days.
The key to this flow-efficient process was that the company was focused on the client and his needs. In doing this the client and the company received a better result. The staff were engaged and quickly and completely finished off a piece of work. No time was wasted in chasing up the company and the client is likely to recommend them to his friends.
So my question to you is; what is your focus? Are you focused on the client or are you focused on keeping your resource busy? Contact us for more information.