Efficiency, in the strictest sense of the definition is being able to produce something with the minimum amount of time and resources. Efficiency in Lean comes with a few cautions.
The first warning regarding efficiency in Lean is to make sure you are using the term the same way that the people around you are. The definitions of efficiency, productivity, and utilization are all used in different ways by different people.
The second warning is to make sure that you don’t confuse efficient with effective. Being efficient is generally a good thing, but being efficient at doing the wrong things is not effective.
Perhaps your plastics department is extremely fast (i.e. efficient) at pumping out component for a particular model. So good, in fact, that there is now a 4 month supply of parts in the warehouse.
Make sure that efficiency gains are targeted at areas where the work is desired. Don’t get good at doing the wrong things.
A more specific way efficiency is commonly used is in line-balancing. Let’s say that you have 5 stations on an assembly line that shift every 5 minutes (takt time = 5 minutes), you would have 25 total minutes of available work time.
If the cycle times on the station were 3,4,4,3,5 minutes, you would have a total cycle time of 19 minutes. 19 / 25 = 76% efficient. In this example, more than a full person is standing around because of inefficient line-balancing. Better balancing can often free up enough time to be able to move a person out of the work area (to another assignment, of course. You can’t get good at Lean if people worry about losing their jobs).
This concept of efficiency in an assembly line is similar to the utilization concept used to describe machinery.