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What Is 'Throughput'?

Throughput is the rate at which a system achieves its desired goal. It's the measure of effectiveness of your Value Stream. It's measured in the form of units/time: the higher the number of units and the lower the time, the higher the throughput.

Josh Kaufman Explains 'Throughput'

Throughput is the rate at which a system achieves its desired goal. By understanding and improving the process you use to actually create and deliver the value you’ve promised to your customers, you can improve quality and customer satisfaction.

Throughput is a measure of the effectiveness of your Value Stream.

Throughput is measured in the form [units / time]. The higher the rate and the lower the time, the higher the throughput.

In order to measure throughput, you need a clearly defined objective:

Dollar Throughput is a measure of how quickly your overall business system creates a dollar of profit. Assume a standard time unit, like an hour / day / week / month—how many dollars does your business system produce on average during that time? The faster your business produces dollars of profit, the better.

Unit Throughput is a measure of how much time it takes to create an additional unit for sale. How long does it take to go from raw materials to a finished unit rolling off the production line? The faster the unit throughput, the more units you'll have available to sell, and the faster you'll be able to respond to new demand for those products.

Satisfaction Throughput is a measure of how much time it takes to create a happy, satisfied customer. It takes restaurants like Chipotle Mexican Grill approximately three minutes from the time the customer enters the restaurant to the time they receive their order. The less time that it takes to create a happy customer, the more customers you can serve in an hour and the more happy customers that you can create. The longer customers have to wait, the fewer customers you can serve in an hour, and the less satisfied they will be about the experience.

The best way to begin increasing Throughput is to measure it. How long does it take for your business system to produce a dollar of profit? How long does it take to produce another unit to sell, or a new happy customer?

If you don’t know your throughput, make it a priority to find out – measuring Throughput is the first step toward improving it.

Questions About 'Throughput'

• Based on what you're offering, what is your current dollar / unit / satisfaction throughput?
• What appears to be slowing down your value delivery system?

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"However beautiful the strategy, you should occasionally look at the results."

Winston Churchill, prime minister of Great Britain during World War II

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