Posts Tagged ‘throughput’

Picking up from our prior post on Throughput…

To get an ideal flow time for a complex assembly, use the version of Little’s Law that stipulates (stay with me here): Flow Time = Inventory / Throughput

To estimate a flow time for an assembly process then, we measure the Inventory (in dollars) across the line or process, measure Throughput in terms of COGS (Cost of Goods Sold) and find their ratio.  This will provide a usable measure of Flow Time.

Same goes for WIP.  Little’s Law implies: Flow Time = WIP / Throughput.  If you reduce WIP, you may reduce your cycle time, but that’s a slippery slope.  If you reduce WIP without making other changes to the variables in the system, you’ll reduce your throughput, eventually affecting lead times and ability to deliver.  You can’t just reduce WIP to get lean.  You need what’s called a variability reduction to maintain or improve throughput with less WIP.

The ideal production scenario, then, is one that can be scheduled with a clear eye on the rhythm of product (the Drum) while cognizant of the cost effects of the Throughput component – setting up the ideal length of time, based on the right amount of inventory — for parts to reach the constrained area (the Buffer)

Next up, the Rope…

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