Lean Metrics

Lean Metrics

Lean metrics are the measures that can be used to control and monitor the manufacturing processes such that continuous quality can be facilitated by identifying the opportunities for improvements and changes. Before we make an effort to reduce or mitigate waste and move towards lean management, it is imperative that we should know how to measure them.

Lean Metrics

Lean Metrics. Photo by Christina Welsch

The lean metrics augments the opportunities for improvement by pinpointing and actually measuring the magnitude of waste and the variables causing customer dissatisfaction. Every business charter must incorporate some of these lean metrics as per the goal of the project.

Little’s Law

The objective of lean manufacturing is to minimize waste and enhance the speed of operations. By reducing waste, one is able to deliver efficient and effective products and services to the customers; and by enhancing the speed would mean the flow time to serve the customers would be reduced. The Little Law equates the flow time in terms of work-in-progress inventory in units and the average completion rate computed in units per time period. Mathematically,

Whereby, WIP = work in progress inventory in units

ACR = Average completion rate in units per time period

For instance- in a publishing house, the staff can complete printing of about 100 books, while there are 500 books in various stages of the printing department. Applying the Little’s law equation,

Flow time = 500/100 = 5 days

Hence, it can be interpreted that any new order trusted with the printing department would take 5 days to be completed.

It should be noted that the organization can increase the efficiency in reducing the flow time by reducing the WIP and/or improving the average completion rate.

Throughput Rate

Throughput rate is also known as flow rate. It calculates the rate at which the flow of units passes from a particular process in the manufacturing unit. The maximum throughput rate is the capacity of the process. It is calculated as the reciprocal of the cycle time. Mathematically,

From the Little’s Law explained above, we can derive that

WIP inventory = Flow Time * ACR

Now, Average completion rate is same as throughput rate. So we can substitute ACR with 1/cycle time. Thus,

WIP = flow time/Cycle time

Hence, flow time = WIP * cycle time

Let us understand this using an instance. In the example of the publishing house, the throughput rate is 100 books, and the flow time is calculated at 5 days. Now the cycle time in this case would become 1/100 = 0.01 days.

Total Lead Time

Lead time is the total time taken for the work to process from one point to another in the manufacturing process. It is calculated the time between two points, known as starting point and end point. There can be many lead times in an organization that are customer lead time, development lead time etc. The total lead time is calculated by calculating the total time one unit of product takes to travel between all the processes in a manufacturing process. It includes the sum of all the process lead times and the waiting times in between different processes.

Total lead time = Sum of process lead times + sum of queue times

Lead time for individual process is same as flow time, and as per Little’s Law principle, it can be calculated by dividing the number of items in work in process by the average completion rate in units per time period.

Process Cycle Efficiency

The process cycle efficiency helps to detect how much of the process is actually adding value to the entire process. It is calculated by using the following formula:

Process Cycle Efficiency = Value-added time/ Cycle time

The process cycle efficiency varies in application, but a process is considered lean when the process cycle efficiency is above 25 per cent.

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