Lean Tools: Generic Pull System
Purpose - To place a limit or cap on the maximum number of things or work in process (TIP or
WIP), so that lead times are known and predictable (see Little's Law, slide 14). Then
apply improvement tools to reduce WIP/TIP by eliminating the effects of variation
(traditional Six Sigma) and batch size.
When to Use It - Whenever lead times are critical to satisfy customers and when NVA cost is significant
compared to VA cost.
How to do it -
Part 1: Determine WIP Cap (Maximum amount of work or things that should be in process at any one time)
Step 1: Determine Current Total Lead Time (TLT)
•Option 1: Track individual items through the process, measure lead time
•Option 2: Use Little’s Law to get an average lead time
Step 2: Determine current Process Cycle Efficiency (PCE, see slide 13)
Step 3: Identify Target PCE
* Level at which the process should be operating based on “world class”
(high end efficiency
* If current PCE is:
<< low end, multiply current PCE by 10 to get target PCE
< low end, use low end figure as target PCE
= or > low end, use high end as target PCE
>> high end, move toward one step flow
Step 4: Calculate target lead time for the process.
* Lowest process cycle time with the current process
Target Lead Time = VA time for critical path/Target PCE
Step 5: Calculate WIP Cap
* Maximum WIP allowed within the process at any given time
WIP CAP = Target Lead Time x Exits
LEAN Basic Tools Concepts - Part 2
Time Efficiency Metrics: Used to Identify the Sources and Impact of Inefficiency
PROCESS CYCLE EFFICIENCY (PCE)
•Best measure of overall process health
•Percentage of VA time in the process: PCE = VA Time/Total Lead Time
•Total Lead Time can either be measured by measuring the total time it takes “things in process” to transit the process or use Little's Law (next slide) to determine the average PCE.
•PCE tells how efficiently the process is converting work-in-process into exits/completions
•Low PCE processes have large NVA work and costs and therefore great opportunities for improvement. Crate a Value Stream Map to indicate these opportunities. PCE values of 10% or so are common pre-improvement.
•The only way to improve PCE is to reduce NVA work and costs.
Little’s LAW
•On prior slide, defined PCE = VA Time/Total Lead Time
•Little's Law is: Total Lead Time = # Things in Process/Av. Completion Rate
Number of things in process = TIP or WIP
• Little's Law shows the relationship between TIP or WIP and the completion (exit) rate of the process.
•To improve Total Lead Time and, in turn, PCE, either increase capacity (average completion rate) and/or reduce TIP or WIP.
PROCESS CYCLE EFFICIENCY (PCE)
•Best measure of overall process health
•Percentage of VA time in the process: PCE = VA Time/Total Lead Time
•Total Lead Time can either be measured by measuring the total time it takes “things in process” to transit the process or use Little's Law (next slide) to determine the average PCE.
•PCE tells how efficiently the process is converting work-in-process into exits/completions
•Low PCE processes have large NVA work and costs and therefore great opportunities for improvement. Crate a Value Stream Map to indicate these opportunities. PCE values of 10% or so are common pre-improvement.
•The only way to improve PCE is to reduce NVA work and costs.
Little’s LAW
•On prior slide, defined PCE = VA Time/Total Lead Time
•Little's Law is: Total Lead Time = # Things in Process/Av. Completion Rate
Number of things in process = TIP or WIP
• Little's Law shows the relationship between TIP or WIP and the completion (exit) rate of the process.
•To improve Total Lead Time and, in turn, PCE, either increase capacity (average completion rate) and/or reduce TIP or WIP.
LEAN Basic Tools Concepts - Part 1
Things to know before we start -
TOTAL LEAD TIME
(also called total cycle time, process lead time, or total cycle time): The time from when
a work item enters a process until it exits.
EXAMPLE: Total Lead Time of a mortgage process could be measured as the elapsed
time from when an applicant calls until the mortgage closes (average = 33 days).
THINGS IN PROCESS (TIP) or WORK IN PROCESS (WIP):
Any work item that has entered the process and not yet exited. Can be anything:
materials, orders, applications, emails, etc.
EXAMPLE: There were 3300 refinance applications in process at the end of the month.
TOTAL LEAD TIME
(also called total cycle time, process lead time, or total cycle time): The time from when
a work item enters a process until it exits.
EXAMPLE: Total Lead Time of a mortgage process could be measured as the elapsed
time from when an applicant calls until the mortgage closes (average = 33 days).
THINGS IN PROCESS (TIP) or WORK IN PROCESS (WIP):
Any work item that has entered the process and not yet exited. Can be anything:
materials, orders, applications, emails, etc.
EXAMPLE: There were 3300 refinance applications in process at the end of the month.
LEAN is for Every Process!!!
Lean is... A principle driven, tool based philosophy that focuses on eliminating waste so that all activities/steps add value from the customers perspective.
Imagine Office Processes with:
•Shorter Lead Time
•Higher Flexibility
•Higher Quality
•Lower Costs
•Higher Employee Satisfaction
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