Wednesday, November 24, 2010

Effective Information Flows

The previous post, Measuring Process Flow, defined the first component of Lada’s Laws as Service Time = Work Time + Wait Time.   This post describes how the ratio between work time and wait time indicates how effectively information is used within an office.

Let’s face it.  Information is lazy.  Billions have been spent on information technologies but no one is able to get the right information at the right time in the right format.

Lada’s Laws are an indicator of information effectiveness.  The Agile and Lean Glossary defines the Lean Ratio as the second component of Lada’s Laws:

Lean Ratio = Service Time / Work Time

Where:

Work Time = The total time it would take to create a product or service if there were no blockages or interruptions

Service Time = The wall clock time to provide a product or service to a customer from initiation to delivery

A Lean ratio of 2 our less indicates the effective use of information within an office.  A Lean ratio of 10 or higher is more typical.  A ratio of this magnitude indicates that even if the people are busy the information is not. 

The Paper Mentality
There are two primary causes of ineffective information:
1)   Processes still conforming to paper-based constraints
2)   Data processing systems

An amazing number of processes are still designed as if paper were the primary transport of data.  This was the case during the 50s when time and motion studies were popular; but not today.  The large investments made in technology have largely eliminated paper.  It’s no longer the preferred transport for information.  Whereas paper is disappearing, paper-based constraints to processes are still prevalent.

One constraint paper placed on processes was to make them serial. It was too expensive to copy paper to make parallel flows.  Since paper was hard to move, batches of work were passed from one person to the next.  The arrival of paper was the equivalent of a baton transfer that indicated a transfer of responsibility for who was to work on it next.  Since it was difficult to predict the arrival of paper, people were given many different tasks to insure they stayed busy.  And once paper started down a process, it was almost impossible to find it until it emerged out the other side.

Today processes are still bound up by these paper-based constraints.  Even though most data now travels electronically.  In fact many processes have worse performance now than they did when they were purely paper-based.

Serial processes are still the norm.  Batches of work must be completed before new work is started.  People keep so many balls in the air that more time is spent juggling than working.  Exception processing and expediting are 80% of the effort not 20%.  And meanwhile, everyone is deluged with data making it harder and harder to find the information they are looking for.

Breaking Free from the Paper Legacy
To achieve a Lean ratio less than 2 requires a clear focus on discarding paper-based constraints.  Lean processes are designed to achieve the continuous flow of information from one customer value added step to the next. 

Parallel processes are used to segregate complexity and reduce service times.  Work is pulled in priority order only when needed so work-in-process is kept to a minimum.  Expediting is eliminated and exceptions are reduced by delivering the right information to the right person at the right time. 

The Lean ratio is easy to measure and gives an organization a clear target to shoot for.  Rather than a goal to work harder or faster, the Lean ratio focuses attention on making information more effective and as a result makes the organization more effective as well.

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