Written by Mark Lilly
One of the main struggles manufacturing companies experience today is delivering to their customers on-time. In spite of the excellent scheduling tools available within ERP, or as standalone applications, on-time delivery percentages often have a hard time getting to 80 or above on a consistent basis.
The problem may not lie in the planning tool, but rather in the execution methodology of the company using it. By ‘execution methodology’, I mean how and when does material get released to production, and when it does, how is it prioritized once there?
What we often find is that jobs and workorders are released as soon as material is available. The thinking, which seems rather intuitive, is “the faster we get material out to the shop floor, the sooner it will come out the other side as finished product, right?” There is also a prevalent metric of “utilization” that drives the immediate release of available material to the shop floor so that all resources – people, machines, tools – stay as busy and ‘productive’ as possible. Sometimes, if things aren’t busy enough, material is procured for the sake of keeping resources busy, thus driving a higher “utilization percentage”.
Another effect we have seen on occasion is that if a company is frequently late on a six to eight week leadtime job, then we better back it off and release material even sooner, maybe even nine or ten weeks in advance to ensure that it will finish for on-time delivery to the customer.
Unfortunately the effect of these actions is exactly the opposite of the desired result.
John Little studied Mathematical Queue Theory at MIT. And he proved this seemingly simple, dare I say ‘intuitive’ theory, so now it’s a law: Little’s Law. And here it is: N = cT. Really all this says is that N, the number of things, items, people in a ‘system’ (think a bank or grocery store for example), is directly related (c, a constant), to T, the length of time that any one of those things, items, people remain in the ‘system’.
Seems kind of obvious, doesn’t it? The more people that enter a bank, the longer any one of those people is going to be in the bank. A couple of neat things about this:
- Little’s Law is directly applicable to Manufacturing shop floor, and
- The inverse of the above example is also true, meaning, the fewer people in the bank, the shorter period of time any one of those people will be in the bank.
So Little’s Law tells us, the more stuff we put into production, the shop floor, into Work in process (WIP), the longer any one of those workorders/jobs is going to be in WIP. And the exciting part: the less we release to WIP, the faster any one of the jobs/workorders is going to get through WIP. Less is Faster.
Does your company have the potential to use Little’s Law to schedule better and improve on-time delivery? Try these two questions to find out:
- What is the average leadtime sales quotes to a customer or prospect for an ‘average’ job in your plant? A common leadtime in a custom manufacturing company is “six to eight weeks”.
- What is the actual touch time of that ‘average’ job/product? Meaning, if you have all the material you need, and nothing else is using any machines or tools needed, and all personnel are at the ready (very little if any ‘wait time’ between operations), how long would it actually take to manufacture that part?
For a six to eight week leadtime, we often hear “a week or two”, sometimes “a few days”, sometimes even “hours”. Take the ratio between your responses to question one over question two. What is your Little’s Law Potential Factor?
3 or more – you probably have some opportunity to speed flow and improve your on-time delivery with better manufacturing execution and scheduling.
10 or more – you have significant opportunity to speed flow and improve your on-time delivery with better manufacturing execution and scheduling.
20 or more – you should be able to dramatically improve your flow and achieve much better on-time delivery with better manufacturing execution and scheduling!