Internalising Little’s Law from a strategic standpoint

brahmins-coffee-bar1

I am waiting in class to talk to the strategy professor about Loreal, P&G and the likes to understand how they compete. It’s been 30 minutes. In the last 30 minutes, there have been varying lengths of queue of students in front of the professor to ask doubts. Just to give you some context here, this was the last lecture before mid-terms, so fairly high number of students with doubts. I kept contemplating at different points of time if I should go join the queue and was waiting to join when the queue was the shortest. Then, in a moment of revelation, I realised that I had a very wrong strategy!!

I am going to use the Little’s law to rationalise why my strategy was wrong. Little’s law (from operations) states that the work in progress in a system is a function of throughput and throughput time (WIP=Throughput X Throughput time). In this case, let’s assume the demand is constant because the number of people who wanted to ask doubts was determined at point zero (end of the class) and did not change over time (last lecture before mid-terms, mind you! So people were willing to not be discouraged by the length of the queue). So given that the demand is constant and the incentive lies in maximising throughput by increasing WIP and keeping throughput time constant (just to be fair to all students). Greater the WIP, greater the throughput time. Rightly so, where there was a larger group of people waiting to ask the professor a doubt, the average turnover was far higher than when it was just a one-on-one discussion (shorter queue).

So, the moment I realised that I had adopted the wrong strategy, I quickly jumped in to put some pressure on both the professor and student in discussion and rightfully so, soon enough, it was my turn. Now, I am going to extend this concept a little further so I can convince you that the world works like this. Think about fast food joints like CTR, Brahmins or MTR (for the lack of frequent exposure to western fast food chains like McD’s or KFC). You maximise your throughput by increasing WIP and reducing throughput time. These places are crowded as hell, there are people waiting to take your seats the moment you’re done eating which indirectly forces you to eat quickly and get out. In case you’re wondering why Brahmin’s operated in a tiny little shop for years, it was intentional. It was to improve their operations (High WIP, low throughput time) and keeping costs low. Now that they’ve expanded, would they fail? No, because they’ve been able to sustain their operational efficiency through a different operations model (more about it when I go back home)!

Advertisements

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s