Whether you are manufacturing something or developing software, making sure that flow is smooth by controlling the queue and capacity utilization is very important.

How do you accomplish this? You will be surprised to know this. In order to increase the overall efficiency, WIP (work in progress) should be kept small. It is very easy to think that multitasking and doing lot of things at once means being efficient.

Lead Time = Starts when a given request is made and ends when the delivery is made.

Cycle Time = Begins when you start the work on a given request and ends when the items is ready for delivery.

Your customers will measure you based on the lead time.

lead-cycle time



Important goal is to reduce all the items which does not add any value. Let us take an example to illustrate this. Green color means value-adding activity and red color means no value add. This scenario happens in many organizations. Whenever a request is made, people wait at various stages to the items to next level in the queue.



In this particular case:

Value Adding Time = 7 Hrs. and 15 Minutes

Total Waste Time = 19.5 days

Lead Time = 19.8 Days (475.25 Hrs.)

PROCESS EFFICIENCY = 7.25/475.25 = 1.52%


Let us see how the WIP plays an important role:

In this example:

WIP = 475.25/7.25 = 65 Items

In order to increase the efficiency, either you can hire more people (which can be more expensive and not practical in many cases) or the reduce the WIP.

Statistically it is proven that, reducing the WIP not only increases the efficiency and throughput, overall quality is also better.

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