Organizations with high level of Work In Progress also have long Lead Time, according to Little’s law. High level of WIP clutter the process and tie cash into the process, while long Lead Times do not help agility nor On Time Deliveries.
In order to improve the situation it is necessary to drain the system of excess WIP.
To achieve this, it is necessary to by-pass the ERP system that keeps pouring more work orders into the system due to long lead time. That’s where the “2 for 1 rule” comes in.
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The principle is to launch one new item into production only once two finished items leave it, or release one new work order when two have been completed.
In this video, Philip Marris explains how it works and why it’s effective.
In the French, longer version of this video, Philip explains the proposed work orders by the ERP have to be managed manually. The system will keep pushing work orders into the system.
At some point, the data must be adjusted: the time between operations must be reduced. The ERP translates this as the process working faster, thus no more need to anticipate the launches to meet the due dates.
There is no general rule for reducing the time between operations. This adjustment is iterative and has to be done each time the work orders (not WIP) pile up in excess. Repeated small increments are a good way to improve and adjust.
The ERP will launch work orders “later” (without anticipating long delay between processes), thus reducing the work order WIP.
It is somewhat counter-intuitive not to use the ERP to improve operations, instead operations are improved and then “explained” to the ERP by adjusting the data.
It is also counter-intuitive to put worker orders on hold when the system delivers late, managers tend to “anticipate” by releasing orders sooner instead, choking the system even more. That’s where a good understanding of Little’s law helps!
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