Efficiency frontier

theoretical perfect state

impossible to achieve

Unfortunately, the star is a theoretically perfect state,

which is worth striving for but impossible to achieve

to reach the star requires perfection

• customer's present and future needs

• flexible and reliable resources

obstacles

• variation in demand

• • perfectly predict (what, when, which amount)

• variation in supply

• • perfectly flexible resources (what, when, which amount)

  • perfectly reliable

impossible to reach an operational state beyond the efficiency frontier

defined by level of variation

the efficiency frontier is pushed inwards as variation increases

The better an organization at developing capabilities to handle the two conditions

- predictability of demand

and

- flexibility and reliability of supply,

the further out the organization will move towards the star in the perfect state

(src: Model: Efficiency Matrix)