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--- this_is_lean_-_resolving_the_efficiency_paradox_-_niklas_modig [2018/02/21 05:19] – [Review and Notes] hpsamios
+++ this_is_lean_-_resolving_the_efficiency_paradox_-_niklas_modig [2020/06/02 14:22] – external edit 127.0.0.1
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 The authors then build a model to explain what it means to be lean - called the "Efficiency Matrix". The efficiency matrix builds on the two forms of efficiency that were presented in the first part of this book and illustrates how an organization can be classified based on (a) low respective high resource efficiency and (b) low respective high flow efficiency.
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 Efficient islands In the top left-hand corner of the matrix is a state we call efficient islands. In this state, resource efficiency is high and flow efficiency is low. The organization consists of sub-optimized parts that operate in isolation, where each part works towards maximizing its resource utilization. Through the efficient use of its own resources, each part contributes by lowering the costs for the goods or services being produced. However, efficient utilization of resources comes at the expense of efficient flow. Flow efficiency for every individual flow unit is low. In manufacturing, this is represented by each component/product’s spending most of its time as inventory. In services, this is often represented in the form of unwanted waiting time during which the customer does not receive any value.