Benchmarking and the Absolute Benchmarking Process Efficiency Ratio

Neil always used to confound and shock me. He was always pursuing perfection. And I would always retort something like, “But, the real world isn’t perfect.”

Over the years, I slowly realized the value and wisdom of Neil’s mindset. It is consistent with traditional lean thinking (as long as it does not paralyze the PDCA cycle), and it helps drive innovation and the right thought process. I have found that lean thinkers not only benchmark themselves against the competition, they also benchmark themselves against perfection. This is where math can help.

In order to truly benchmark ourselves against perfection, one can use the absolute benchmarking process efficiency (ABPE) ratio. Where:

ABPE = 100% * (Minimum effort required to complete task)/(Actual effort required to complete task)

Using the example of an insurance company executing a policy renewal, the minimum effort represents the effort required to change a few bits in computer memory that indicate the policy is renewed. The actual effort required is the time invested contacting the insurer, recording their information in a log, having the staff type the info into a risk analysis tool, reviewing the results, and mailing the customer their new policy.

In manufacturing, the minimum effort required to make a plastic bottle using injection molding is the effort required to inject plastic into a mold and to extract the bottle from the mold. The actual effort is the effort to inject plastic into a mold, plus all the effort required to eliminate voids, all the effort that goes into the defective bottles that were made when the machine started up, all the effort to recycle those defects, and all the effort that goes into normal yield loss.

In health care, the ABPE ratio can be used to look at activities like administering flu shots. Ultimately, the goal is to deliver a vaccine, so the minimum amount of effort is the effort required to deliver the vaccine. (Admittedly, there is some record keeping that needs to be done as well.) Whereas the actual effort includes the effort to produce the flu shot availability campaign, setup and reconfigure the space, deliver the flu shots, etc, etc, etc.

Example: Logging onto my computer

My login process is a follows:

  1. Open laptop.
  2. Press the on button.
  3. Wait for machine to boot up.
  4. Type in password.
  5. Wait for password to be verified.
  6. Wait for laptop to load applications.

The entire process takes about 150 seconds.

Estimating how long it should take ideally is where it gets interesting. One could easily imagine that the ideal situation is one in which I open my laptop, it uses facial recognition to authenticate who I am, and it is ready to use. Maybe it will take awhile to get there, so as a conservative estimate of the ideal state, let’s use my smartphone as a benchmark.

The smartphone login process is:

  1. Press the home button.
  2. Swipe the home screen.
  3. Enter password.

The entire process takes approximately 7 seconds. In which case the ABPE ratio is:

ABPE = 100% * (7 s / 150 s) = 5%

Clearly, there is a huge efficiency opportunity! And now I understand why I get so frustrated every time that I log into my laptop.

Tips:

  1. Be certain to use the same units of measure in the numerator and the denominator. Often times dollars are a convenient choice. Simply convert lost time to dollars. Defects to dollars. And don’t forget that overhead costs will already be in dollars.
  2. Use the broadest scope possible. In the insurance renewal example discussed above, if one limits their scope to typing the log info into a risk analysis tool, their calculation of the ABPE ratio would stipulate that the log file is the starting point. But, from an absolute efficiency standpoint, the log file doesn’t have to be created. The information could be directly entered into the risk tool, eliminating the need for the log file altogether. Limiting the scope can make the ABPE ratio artificially high.
  3. Challenge the start and end states. For example, if you are a high-volume gear manufacturer and the machining process starts with a solid piece of metal, ask yourself: could you start with a block of metal that has a hole in it so you don’t have to drill a hole every time? Or could you change the end state, so the gear is put into reusable packaging instead of disposable packaging? Or could packaging be eliminated altogether?

Notes:

The Absolute Benchmarking Process Efficiency (ABPE) ratio is similar to Process Cycle Efficiency which is the ratio of the processing times (on the critical path of a value stream) to the total lead time for the value stream. The difference is that Process Cycle Efficiency essentially looks at the time to produce something versus the lead time, whereas ABPE measures how efficient a value stream is in absolute terms, and by doing so deeply challenges the production process. Not only does it ask the question: Can we do the process quicker? But it also asks the question: Can we do the process using fewer resources? Using less energy? Using less space? Etc.