To continue on my explaining of the theories behind agile the time has now come to Little’s law. It’s used to calculate cycle time (also referred to as lead time).
- Cycle time = Average time through the process for one work item
- Work in process (WIP) = the number of work items you have going on at the same time
- Throughput = Average time to complete one work item
Then the formula states:
Cycle time = Work in process (WIP) / Throughput
Lets say that you have measured your throughput to 10 items/month (to keep the calculations really simple).
1. If you have 10 things going on at the same time (WIP = 10), you get the following:
Cycle time = 10 / 10 = 1 month
2. If your ability to stop starting and start finishing is lower, so you need to have 20 things going on at the same time:
Cycle time = 20 / 10 = 2 months
3. Now you get your process in order and start to limit WIP and can keep it on 5 items (WIP = 5), you will get:
Cycle time = 5 / 10 = 0,5 month
4. You do continuous improvements (kaizen) to your process and after a while you have been able to double the throughput, you have:
Cycle time = 5 / 20 = 0,25 month (one week)!
To summarize, aim to half your WIP and double the throughput and things will be four times quicker ”out the door”. Would your customers appreciate that? I bet they will!