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.
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.
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.
Little’s 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.
This law states:
L = λ * W
- L = the average number of items in a queuing system (works in progress).
- λ = the average number of items arriving at the system per unit of time (average completion rate, throughput rate, or flow rate).
- W = the average waiting time an item spends in a queuing system (flow time).
We can also write Little’s Law like this:
WIP = Flow Time * ACR
- 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 daily, while there are 500 books in various stages of the printing department. This is because there are five different processes that each book has to go through:
- Page printing
- Quality Assurance.
Each of these processes can handle 100 books/day, and each process needs to occur on a separate day for a single book. For example, after binding, the glue needs to dry before the book can be trimmed.
Applying the Little’s law equation:
WIP = Flow Time * ACR 500 = Flow Time * 100 Flow Time = 500 / 100 Flow Time = 5 days
Hence, we can expect that any new order of under 100 books trusted to the printing department would take 5 days to be completed.
It should be noted that you can reduce flow time by reducing the number of items going through (to a point!) or increasing the average completion rate – for example by improving processes or decreasing wait times between processes.
Throughput rate is also known as flow rate. It’s the same as average completion rate. In the book publishing example from the previous section, we used throughput rate for the entire end-to-end publishing operation.
Throughput rate 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.
Cycle time is the average time taken to complete a process, per item. It is calculated as the reciprocal of the throughput rate. In other words:
Cycle Time = 1 / ACR
In the book publishing example, the throughput rate was 100. So:
Cycle Time = 1 / ACR Cycle Time = 1 / 100 Cycle Time = 0.01 days
Note that cycle time does not give you the amount of time that it will actually take to manufacture an item. It gives you the average per item, instead.
Little’s Law says:
WIP = Flow Time * ACR
Now, average completion rate is same as throughput rate. And as we’ve seen, this is the inverse of cycle time. So we can substitute ACR with 1/cycle time. Thus,
WIP = Flow Time * 1/Cycle Time WIP = Flow Time / Cycle Time
Flow Time = WIP * Cycle Time
Let us understand this using an example. In the example of the publishing house, the WIP is 500 books, and the cycle time is 0.01 days. So:
Flow Time = WIP * Cycle Time Flow Time = 500 * 0.01 Flow Time = 5
The flow time for this example is 5 days.
Flow time vs cycle time
Flow time is the amount of time it takes a single unit to get through the whole manufacturing operation.
Cycle time is the average time it takes to get units through the whole manufacturing operation, per unit.
Cycle time will typically be much lower than flow time. On the surface, this might seem ridiculous. Keep in mind, though, that you’re typically dealing with large volumes of items. Using the book example above, it might take 5 days to produce a book, period. Up to 100 books can be worked on at any stage. If you wanted to produce 100 books, it would take 5 days. However, if you wanted to produce a single book through that manufacturing operation, it would still take 5 days.
That’s why we differentiate between flow rate and cycle time: sometimes you need to know the minimum amount of time required to produce a single item (flow time); sometimes you need to know how many items, in bulk, you can produce in a particular time period (cycle time).
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.