Little’s law

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).

Definitions:

  • 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!

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