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* 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-dollar-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. | ||
Like almost all lean thinking, you can only deliver quality products. Badly engineered products or bad testing is so antithetical to lean thinking, that none of the metrics will work correctly if you start reducing quality. | Like almost all lean thinking, you can only deliver quality products. Badly engineered products or bad testing is so antithetical to lean thinking, that none of the metrics will work correctly if you start reducing quality. | ||
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Throughput-Dollar-Days are very similar to Inventory-Dollar-Days, with the key difference being the 'clock' on IED starts running from the moment you work on the project. TED starts from the expected delivery date or deadline of the project. | Throughput-Dollar-Days are very similar to Inventory-Dollar-Days, with the key difference being the 'clock' on IED starts running from the moment you work on the project. TED starts from the expected delivery date or deadline of the project. | ||
* Incorporates both time and monetary value | * Incorporates both time and monetary value | ||
* Provides more meaningful insights than simple percentage-based metrics | * Provides more meaningful insights than simple percentage-based metrics | ||
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Throughput represents the rate at which the system generates goal units (typically money) through sales. We count all money arriving in the bank (cash flow model) paid by our clients. We don't consider invoices sent out as throughput because we, as a team, are also responsible for ensuring that the invoices get paid. Our work doesn't stop when the invoice has been sent. | Throughput represents the rate at which the system generates goal units (typically money) through sales. We count all money arriving in the bank (cash flow model) paid by our clients. We don't consider invoices sent out as throughput because we, as a team, are also responsible for ensuring that the invoices get paid. Our work doesn't stop when the invoice has been sent. | ||
Revenue is measured in euros. We track three key values in the Metrics sheet: | Revenue is measured in euros. We track three key values in the Metrics sheet: | ||
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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. | 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. | ||
==A sidenote on quality== | |||
We don't measure quality separately from Effectiveness, Reliability or Throughput. Quality is inherently integrated into the three measurements: | |||
* Sales are only recognized after customer acceptance. | |||
* Inventory reductions are only counted once items are deployed to production. | |||
=Relationship Between Metrics= | =Relationship Between Metrics= | ||