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Flow metrics: Difference between revisions
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Effectiveness measures actions that should not have been done but were nevertheless performed. That can be a little hard to grasp because "should not have been done" usually means "should not have been done YET". Essentially, it's work we could have done later but didn't. | Effectiveness measures actions that should not have been done but were nevertheless performed. That can be a little hard to grasp because "should not have been done" usually means "should not have been done YET". Essentially, it's work we could have done later but didn't. | ||
Effectiveness doesn't measure overpolishing (work that is being done too well, compared to what we or the customers need) | Effectiveness doesn't measure overpolishing (work that is being done too well, compared to what we or the customers need) but WIP: work in progress. Work that has been completed; is ready to be delivered to the customer, but it hasn't been delivered yet. | ||
'''Inventory-Dollar-Days (IDD)''' | '''Inventory-Dollar-Days (IDD)''' | ||
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* Calculated as: Dollar value of inventory × Number of days held | * Calculated as: Dollar 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-dollar-days | ||
* Lower IDD indicates higher effectiveness. The ultimate goal would be 0. | * Lower IDD indicates higher effectiveness. The ultimate goal would be 0 IDD. | ||
=== | ===A sidenote on quality=== | ||
We don't measure quality separately from Effectiveness. Quality is inherently integrated into | 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. | * Sales are only recognized after customer acceptance. | ||
* Inventory reductions are only counted once items are deployed to production. | * Inventory reductions are only counted once items are deployed to production. | ||
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. | |||
==Reliability== | ==Reliability== | ||
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These three metrics are interconnected: | These three metrics are interconnected: | ||
* High effectiveness (low IDD) supports better throughput by reducing waste | * High effectiveness (low IDD) supports better throughput by reducing waste | ||
* Strong reliability (low TDD) enables consistent | * Strong reliability (low TDD) enables consistent delivery and higher customer satisfaction. | ||
* Improved throughput often requires balancing effectiveness and reliability | * Improved throughput often requires balancing effectiveness and reliability | ||