Flow metrics - Revision history

Jakobbuis: /* Throughput */ clarify derived values

2025-02-11T14:44:20Z

Throughput: clarify derived values

← Older revision		Revision as of 07:44, 11 February 2025
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	* Average revenue, trailing four quarters.		* Average revenue, trailing four quarters.

	~~These~~ all measure the same, ~~but~~ we don't get invoices paid ~~daily~~. Effectiveness and Reliability go up and down each day in semi-predictable amounts because they mostly directly result from the work you're doing and not doing as a team. ~~Revenue requires work by third parties (customers and banks)~~ and ~~is much more lump-sum~~. We ~~track~~ revenue per quarter and average ~~trailing~~ four quarters ~~as those graphs~~ smooth the ~~numbers to such an extent that visual analysis is much easier~~.		In essence, these all measure the same thing; in theory, only the daily revenue matters. As we are a smaller company, though, we don't send hundreds of invoices per year or get invoices paid to us every working day. For example, we could get 1.000 on Monday, nothing on Tuesday, and 3.000 on Wednesday. That doesn't necessarily imply that Monday was a good day, Wednesday was a great day, and that we failed in our work on Tuesday.

			Effectiveness and Reliability go up and down each day in semi-predictable amounts because they mostly directly result from the work you're doing and not doing as a team. But Throughput can be very "spiky". That makes graphs harder to read and interpret. We use the revenue per quarter and average four quarters trailing revenue to smooth out the graphs.

	=A sidenote on quality=		=A sidenote on quality=

Jakobbuis: /* Effectiveness */ add explicit implication of gaining experience to become faster in releasing

2025-02-11T14:35:07Z

Effectiveness: add explicit implication of gaining experience to become faster in releasing

← Older revision		Revision as of 07:35, 11 February 2025
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	* Lower IDD indicates higher effectiveness. The ultimate goal would be 0 IDD.		* Lower IDD indicates higher effectiveness. The ultimate goal would be 0 IDD.

	Because almost all of our work is being done by people on laptops, we calculate the inventory based on the hours invested into a project, times an hourly rate. The hourly is set in advance and can vary per person. The primary determinant of your hourly rate is your experience level, as we generally expect a senior engineer to be more productive than a junior engineer.		Because almost all of our work is being done by people on laptops, we calculate the inventory based on the hours invested into a project, times an hourly rate. The hourly is set in advance and can vary per person. The primary determinant of your hourly rate is your experience level, as we generally expect a senior engineer to be more productive than a junior engineer, and thus their work to lock up greater value while sitting on the shelf. This implicitly means it becomes more important to get your work into production faster, as you gain more experience.

	==Reliability==		==Reliability==

Jakobbuis: add hourly rate explainer

2025-02-11T14:33:44Z

add hourly rate explainer

← Older revision		Revision as of 07:33, 11 February 2025
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	* Example: If $100,000 worth of products sits in warehouse for 30 days, this creates 3,000,000 inventory-euro-days		* Example: If $100,000 worth of products sits in warehouse for 30 days, this creates 3,000,000 inventory-euro-days
	* Lower IDD indicates higher effectiveness. The ultimate goal would be 0 IDD.		* Lower IDD indicates higher effectiveness. The ultimate goal would be 0 IDD.

			Because almost all of our work is being done by people on laptops, we calculate the inventory based on the hours invested into a project, times an hourly rate. The hourly is set in advance and can vary per person. The primary determinant of your hourly rate is your experience level, as we generally expect a senior engineer to be more productive than a junior engineer.

	==Reliability==		==Reliability==

Jakobbuis: fix dollar -> euro as the unit of money

2025-02-11T14:28:59Z

fix dollar -> euro as the unit of money

← Older revision		Revision as of 07:28, 11 February 2025
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	'''Inventory-Euro-Days (IED)'''		'''Inventory-Euro-Days (IED)'''
	Effectiveness is calculated in Inventory ~~Dollar~~-Days.		Effectiveness is calculated in Inventory Euro-Days.

	* Calculated as: ~~Dollar~~ value of inventory × Number of days held		* Calculated as: Euro value of inventory × Number of days held
	* Example: If $100,000 worth of products sits in warehouse for 30 days, this creates 3,000,000 inventory-~~dollar~~-days		* Example: If $100,000 worth of products sits in warehouse for 30 days, this creates 3,000,000 inventory-euro-days
	* Lower IDD indicates higher effectiveness. The ultimate goal would be 0 IDD.		* Lower IDD indicates higher effectiveness. The ultimate goal would be 0 IDD.

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	'''Throughput-Euro-Days (TED)'''		'''Throughput-Euro-Days (TED)'''
	* Calculated as: Value of late orders × Number of days late		* Calculated as: Value of late orders × Number of days late
	* Example: A $50,000 order delivered 5 days late results in 250,000 throughput-~~dollar~~-days		* Example: A $50,000 order delivered 5 days late results in 250,000 throughput-euro-days
	* Lower TDD indicates higher reliability. The ultimate goal here too, is 0.		* Lower TDD indicates higher reliability. The ultimate goal here too, is 0.

Jakobbuis: /* Late delivery */

2025-02-05T18:21:35Z

Late delivery

← Older revision		Revision as of 11:21, 5 February 2025
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	\| 5 \|\| 4.000 \|\| 6.000 \|\| 0		\| 5 \|\| 4.000 \|\| 6.000 \|\| 0
	\|- style="text-align:right;"		\|- style="text-align:right;"
	\| 6 \|\| 4.000 \|\| 6.000 \|\| 0		\| 6 \|\| 4.000 \|\| 9.000 \|\| 0
	\|- style="text-align:right;"		\|- style="text-align:right;"
	\| 7 \|\| 0 \|\| 0 \|\| 3.000		\| 7 \|\| 0 \|\| 0 \|\| 3.000

Jakobbuis: /* Further reading */

2025-02-03T15:08:52Z

Jakobbuis: /* Observations on the metrics */

2025-02-03T15:07:32Z

Observations on the metrics

← Older revision		Revision as of 08:07, 3 February 2025
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	Numerically:		Numerically:
	* After the deadline, reliability behaves roughly as the first order integral of the current effectiveness value.		* After the deadline, reliability behaves roughly as the first-order integral of the current effectiveness value.
	* ~~Effectivness~~ and Reliability are measured in euro-days, and go up quite rapidly over time. Values in the millions of euro-days are not uncommon. That doesn't mean you're making millions of euros in throughput though!		* Effectiveness and Reliability are measured in euro-days and go up quite rapidly over time. Values in the millions of euro-days are not uncommon. That doesn't mean you're making millions of euros in throughput, though!

	= See Also =		= See Also =

Jakobbuis: /* Late delivery */

2025-02-03T15:06:42Z

Late delivery

← Older revision		Revision as of 08:06, 3 February 2025
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	\| 4 \|\| 3.000 \|\| 3.000 \|\| 0		\| 4 \|\| 3.000 \|\| 3.000 \|\| 0
	\|- style="text-align:right;"		\|- style="text-align:right;"
	\| 5 \|\| 4.000 \|\| 7.000 \|\| 0		\| 5 \|\| 4.000 \|\| 6.000 \|\| 0
	\|- style="text-align:right;"		\|- style="text-align:right;"
	\| 6 \|\| 4.000 \|\| 7.000 \|\| 0		\| 6 \|\| 4.000 \|\| 6.000 \|\| 0
	\|- style="text-align:right;"		\|- style="text-align:right;"
	\| 7 \|\| 0 \|\| 0 \|\| 3.000		\| 7 \|\| 0 \|\| 0 \|\| 3.000

Jakobbuis: /* Cancellation */

2025-02-03T15:06:07Z

Cancellation

← Older revision		Revision as of 08:06, 3 February 2025
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	\|-		\|-
	! Day !! Effectiveness (€D) !! Reliability (€D) !! Throughput (€)		! Day !! Effectiveness (€D) !! Reliability (€D) !! Throughput (€)
	\|-		\|- style="text-align:right;"
	\| 1 \|\| 1.000 \|\| 0 \|\| 0		\| 1 \|\| 1.000 \|\| 0 \|\| 0
	\|- style="text-align:right;"		\|- style="text-align:right;"

Jakobbuis: /* Cancellation */

2025-02-03T15:05:57Z

Cancellation

← Older revision		Revision as of 08:05, 3 February 2025
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	\|-		\|-
	\| 1 \|\| 1.000 \|\| 0 \|\| 0		\| 1 \|\| 1.000 \|\| 0 \|\| 0
	\|-		\|- style="text-align:right;"
	\| 2 \|\| 2.000 \|\| 0 \|\| 0		\| 2 \|\| 2.000 \|\| 0 \|\| 0
	\|-		\|- style="text-align:right;"
	\| 3 \|\| 3.000 \|\| 0 \|\| 0		\| 3 \|\| 3.000 \|\| 0 \|\| 0
	\|-		\|- style="text-align:right;"
	\| 4 \|\| 4.000 \|\| 3.000 \|\| 0		\| 4 \|\| 4.000 \|\| 3.000 \|\| 0
	\|-		\|- style="text-align:right;"
	\| 5 \|\| 5.000 \|\| 6.000 \|\| 0		\| 5 \|\| 5.000 \|\| 6.000 \|\| 0
	\|-		\|- style="text-align:right;"
	\| 6 \|\| 0 \|\| 0 \|\| 0		\| 6 \|\| 0 \|\| 0 \|\| 0
	\|-		\|- style="text-align:right;"
	\|}		\|}

	=Observations on the metrics=		=Observations on the metrics=

← Older revision		Revision as of 08:08, 3 February 2025
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	= Further reading =		= Further reading =
	* [https://flowchainsensei.wordpress.com/2018/03/06/reliability-and-effectiveness/ Effectiveness Framework, Bob Marshall]		* [https://flowchainsensei.wordpress.com/2018/03/06/reliability-and-effectiveness/ Effectiveness Framework, Bob Marshall]
			* [https://www.amazon.com/Phoenix-Project-DevOps-Helping-Business/dp/1942788290/ The Phoenix Project, Gene Kim]
			* [https://www.amazon.com/Unicorn-Project-Developers-Disruption-Thriving/dp/1942788762/ The Unicorn Project, Gene Kim]
	* [https://www.amazon.nl/-/en/Eliyahu-M-Goldratt/dp/0884271951 The Goal, Eliyahu M Goldratt]		* [https://www.amazon.nl/-/en/Eliyahu-M-Goldratt/dp/0884271951 The Goal, Eliyahu M Goldratt]
	* [https://www.amazon.nl/-/en/Eliyahu-M-Goldratt/dp/0884271668 Theory of Constraint, Eliyahu M Goldratt]		* [https://www.amazon.nl/-/en/Eliyahu-M-Goldratt/dp/0884271668 Theory of Constraint, Eliyahu M Goldratt]
	* [https://www.amazon.com/Beyond-Goal-Eliyahu-M-Goldratt-audiobook/dp/B000ELJ9NO Beyond the Goal, Eliyahu M Goldratt]		* [https://www.amazon.com/Beyond-Goal-Eliyahu-M-Goldratt-audiobook/dp/B000ELJ9NO Beyond the Goal, Eliyahu M Goldratt]