Additional Notes on Efficiency

Posted on March 13, 2013 | in Baseball, Basketball, Cars, Concession Stand, Defects, Lean Wastes, Quality, Sports | by
Ted Williams

(Image from imgross.com)

On Monday we looked at efficiency with field goal shooting percentages for Indiana’s Victor Oladipo and the Miami Heat’s LeBron James as well as points-per-possession efficiency on offense and defense of the Indiana Hoosiers.

By maximizing efficiency we are able to maximize the productivity from the quantity of opportunities or effort exerted from activities. Efficiency of cars is measured in terms of miles per gallon and total cost of ownership. A way to think of efficiency of one’s home is through minimizing the energy consumed to keep the inside of the house at a comfortable temperature.

As LeBron James and Victor Oladipo have shown, it’s important for basketball too. A missed shot is a defect or a missed opportunity for productivity. The more often you hit the shots you take, the more efficiently you are behaving.

However, efficiency rates are relative. Shooting 60% from the field like Victor Oladipo has done all year, that’s remarkable. For McDonald’s to get food orders correct 60% of the time, that’s dreadful. Baseball hitters that hit into outs less than 70% of the time, well they make it to the Baseball Hall of Fame. A stadium concession stand should have a very low defect rate…but we all know that they make food order errors often.

Six Sigma is a measure of defect efficiency – it’s a measure of the number of defects per million opportunities (DPMO). For a process to achieve a DPMO rate at Six Sigma capability, they would produce 3.4 defects for every million opportunities encountered.

moneyball

Let’s take Moneyball as an example now. Because of resource constraints in team payroll dedicated to paying players, Oakland A’s general manager Billy Beane was forced to find ways to become more efficient with his payroll dollars. This meant he had to minimize his payroll costs per team victory, essentially maximizing the chances of winning with the funds he had.

To maximize winning ball games, teams must score more runs within the allotted 27 outs per game than the opponent. Outs are defects – they hitters strive to not produce outs. The opposite of outs (for all intents and purposes) is reaching base. Players with high on-base percentages are essentially the most efficient players of the game. Beane and assistant general manager Paul DePodesta not only came to this realization but also found that OBP was extremely undervalued (as opposed to focusing on the more “sexy” statistics like HR, RBI, or batting average).

On-base percentage is the key to baseball efficiency – by reaching base you aren’t producing outs, thereby prolonging the game and giving your team more chances to circle the bases. Fortunately for the A’s there were plenty of undervalued free agents with high on-base percentages.

The formula for on-base percentage is:

(H + BB + HBP)/(At Bats + BB + HBP + SF)

So who is baseball’s career leader in on-base percentage? None other than Ted Williams of the Boston Red Sox. He reached base over 48% of the time he came to bat, whether by hit or walk or hit-by-pitch.

So reduce defects (and opportunity for defects!) and you will be on your way to becoming more efficient.

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