From, George Eckes, Six Sigma for Everyone, John Whiley and Sons, 2003.

Eckes writes a short introduction into Six Sigma, running 121 pages of big type. He describes the objective of Six Sigma as the simultaneous optimization of both effectiveness, the ability to deliver customer appreciated value, and efficiency, the ability to deliver that value with the least waste.

Productivity is then some function of these two variables, P(V, E), where V is some measure of customer appreciated value, typically measured by high sales and low customer support requests or complaints, and E is a measure of efficiency. The goal is to maximize this function.

The problem is that these are not necessarily independent variables.

Building on Eckes example of a fast food restaurant, let’s image a local hamburger joint down the street. On a typical day, it has three people on shift, let’s call them Fred, who’s working the drive-through, Sarah who is working the lobby sales desk, and Anne who is working the grill. Now Mr. Ed, the owner wants to improve his operation, so he hires Daiquiri, the local efficiency expert to evaluate his restaurant.

Daiquiri notices that Anne, who is working the grill spends 50% of her time flipping hamburgers and 50% of her time just watching the grill. Meanwhile, both Fred and Sarah are idle, waiting for customers 25% of the time each. Daiquiri adds this all up, and finds that, well you know, since Fred and Sarah are both idle 25% of the time, that adds up to 50%, so–you can see where this is going–that we can eliminate Anne by consolidating the free time of the Fred and Sara to do the cooking. Ed has just increased your efficiency by more than 30%.

But a funny thing happens. Pretty soon the drive through starts to get backed up, and the line at the inside counter starts to get long, and orders start to get messed up which requires rework which causes things to get even more backed up with increased quantities of food that need to be discarded, creating more waste.

Cars start to have to park in the parking lot waiting for late orders while Fred runs in and out of the building. Sarah is in tears, and Fred threatens to quit.

But after a week or so, things settle down, because there aren’t any more customers because the word is out about the crummy service, and the crummy orders and the overcooked (or worse, undercooked) food.

The point is, if you focus just on efficiency without considering other impacts, your efficiency my look good, but your productivity will be in the pits. You may efficiency yourself out of business. Similarly, if you focus entirely on customer value, you have a few customers who are very happy, but whom you can no longer afford to serve. You may price yourself out of business.

The challenge in productivity improvement is optimizing this function when the input variables are interdependent instead of independent.