Defining Cycle Time

Question: What do you mean by Cycle Time?

Answer: I use the term Cycle Time to describe the transit time through a product development process. To measure this we must decide when we start and stop the clock. I usually use the date a charge number is opened up for the project as the start time, and the date the first revenue producing unit is shipped as the ending time.

Cost of Delay vs. Delay Cost

Question: What is the difference between Cost of Delay (CoD) and Delay Cost?

Answer: I use the term Cost of Delay to describe the cost in life cycle profits per unit of delay time. Thus, it is measured as cost per month or cost per week. I use the term delay cost to describe the cost of the delay; it is measured in pure cost. When we multiply CoD by the duration of the delay we get Delay Cost.

Measuring WIP or Queues

Question: Is it better to measure WIP or queues?

Answer: I usually recommend that people start by measuring WIP. WIP is composed of jobs waiting for service (jobs in queue) and jobs actively being served (jobs in service). Frequently when an organization learns that queues are bad, they will claim eveything is in service, and nothing is in queue.You can avoid this sort of gaming by just using the simplification of measuring total WIP. Since the majority of WIP is the jobs in queue, total WIP is a very good proxy for queue size. You can subdivide WIP most easily once you implement visual control boards because they force you to create an unambiguous distinction between what is in queue and what is in service.

Don Reinertsen