Understanding Flow Part 1 | Operational Excellence Quick Hits

Speaker 1: (00:00)
What we’re going to talk about is how to synchronize the flow. So again, it doesn’t matter what your organization is. We need to understand what flow means for your organizations. So I’m all about effectiveness, not efficiency, because what’s the difference between the two? Effectiveness is how well we can satisfy our customers’ needs based on the current resources we have. Efficiency is more like, “Oh, let’s make sure people are always busy and working hard.” That’s not the goal. The goal is to meet those customer demands and flow work at the rate that the customer’s demanding our product or service.

Speaker 1: (00:41)
We have the two rowing crews and you can see the boat at the top, it’s running in a straight line and it’s very effective. So all people are in sync, rowing together at the same pace to achieve the goal of crossing the finish line first. The second boat here is going off course. So why is it going off course? Because the second rower here is super efficient. He’s growing three times faster than the other three participants, and so him being efficient actually hurts the effectiveness of the team. That applies in any environment and this is a very difficult concept for people to understand. Being efficient doesn’t mean being effective. Actually, sometimes being efficient hurts the effectiveness of the organization. What we want to do is try to understand how can we leverage this guy, who has extra capacity, right, because he can do things three times as much as everybody else.

Speaker 1: (01:42)
How can we utilize that capacity to actually make the boat go faster and straight? Let’s talk about understanding flow. In any organization, there’s three flows, so it doesn’t matter what the organization is. The first one is our information flow. So no matter what your organization is, there’s some type of supplier that’s either supplying materials or information to your organization. There’s different value-added process steps within the organization. There’s probably some work in process between steps, and there’s a customer need. So information flows from the customer back through your organization to your suppliers.

Speaker 1: (02:25)
The second is the value-added flows. So value added flow flows from the suppliers through your organization, back to the customer. And the one is the almighty cashflow. Especially during this pandemic, if companies are struggling with cash flow, they need to either increase information flow or increase the value-added flow. I’m a big proponent of increasing both. So if we can increase the rate of information flow and increase the rate of value-added flow, we’re going to automatically increase cashflow.