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Don’t Confuse Activity with Productivity
Using time in the laboratory effectively
One concept of the “Theory of Constraints” business management paradigm is the understanding of “utilization” versus “activation.” Utilization states that the resource is engaged in a meaningful activity that is adding value (as much as possible) to meet the customer demand or expectation. Activation is defined as working to stay busy, regardless of the demand. Studies of laboratory operations indicate workforce utilization comprises only about half of employee activity, which means there is significant opportunity for improvement.
The Lean Concept of Waste
The key to identifying “utilization” versus “activation” is the Lean Concept of Waste. Waste is defined as the “elements of the process that add time, effort, and cost but do not add value.” Typically, 80% to 90% of the total production steps within any given process are waste from the standpoint of the end customer.
Value Added Activities
The value of a product is defined solely by the customer, not by a business’ perceptions, processes, or accountants. Value Added (VA) activities are defined as “activities that transform or shape raw material or information to meet true customer requirements.” Non-Value Added (NVA) activities are “activities that take time, resources or space, but do not transform, or add to the customer’s desired, perceived value of a product.”
Unfortunately, there is a gray area that often causes confusion as to what constitutes VA. This gray area can be called Necessary Evil, and is defined as “activity that must be performed due to customer, legislative, regulatory requirements, but does not transform product or service.” The concept of a Necessary Evil includes the idea that if the customer is willing to pay for an activity, then it is no longer a Necessary Evil, and becomes VA. This is a financial definition, not an operational definition. Receiving money for performing activities that do not transform or shape may take the sting out of using your scarce labor and time to perform the non-value added activity, but it does not alter the definition.
A fundamental principle of the Lean Concept is that anything that does not add value to the product is waste and must be reduced or eliminated. Once the skills to identify Waste have been acquired, the ability to work on increasing utilization, and thus reducing activation, by eliminating and/or reducing wasteful activities becomes clear. Since the large majority of the process tasks fall into the NVA or NE category, and they are targeted for elimination or reduction, logic dictates that utilization (productivity) has to increase.
As a laboratory manager or owner, you want your workforce utilized as much as possible. Take a moment and think about the way some of your workforce spends the day. When is the value added? The answer? When they are pouring, forming, waxing, shaping, shading, polishing, etc. Any activities such as meetings, phone calls to clinicians, waiting for a process or material, looking for an order, walking the cases around the factory, performing inspection, entering data in the computer, and remakes are all typical NVA (activation) that gives the appearance that real work is being performed.
Engaging in Meaningful Activity
The Lean Concept provides a structured approach to increasing utilization of your workforce by focusing on identifying the right tasks to be performed in the best sequence. Knowing how to separate Value Add from Non-Value Add will ensure resources are engaged in a meaningful activity, not just activated.
Bob Yenker is the principal/owner of Practical Process Improvement.