Efficiency is about doing things right. In the simplest terms, it is the elimination of waste – waste of time, waste of resources, and waste of money. Efficiency measures compare actual performance to the best possible. An example is the actual time it takes to deliver goods or services relative to the fastest.
There are numerous ways of measuring efficiency, but typically they fall into the three categories of cost, variation, and cycle time.
- Cost measures the resources consumed in the process of making the goods or providing the service.
- Variation measures the difference the customer sees in the goods and services over time.
- Cycle time measures the total elapsed time required to provide those goods and services.
Efficiency is measured within the process and is not measured by examining products after they are produced or by customer feedback. These process measures are the different variables that control the integration of the 6M’s, i.e., Man, Machine, Material, Method, Measurement, and Mother Nature. Eliminating the waste and variation in these process variables will make your processes more efficient.