“Ohm’s Law” for WIP — Little’s Law Explained in Russian | Holz Expert

Sourced through Scoop.it from: holzex.ru

Translated from Russian: “Every production manager knows that the amount of work in process (WIP) — stacks of parts lying between machines waiting for processing —  should be reduced. In contrast to the raw materials in the warehouse,  work has already been done on it, and its cost increased by the amount of value added. This makes it an illiquid asset – in contrast to raw materials and finished goods, it cannot be sold. In addition,  WIP costs extra space, heating, transportation and personnel. But, before reducing WIP, it is necessary to properly evaluate it…”

Michel Baudin‘s comments:

 Even though it has a German name meaning “Wood Expert,” Holz Expert is a consulting group based in Moscow and specialized in the furniture industry.

I had not heard of them before, but Oleg Novikov pointed out this article to me on Facebook. It is well done. If you can’t read Russian, check it out with Google translate. They explain all the assumptions needed for the formula to be applicable, and give examples from furniture manufacturing. They even include a smiling picture of John D.C. Little.

Working with Russian clients, I was surprised that they insisted on mathematical formulas in consulting reports. To them, it was essential to the credibility of the recommendations, a feeling that I have never encountered among their counterparts anywhere else.


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A defense of old-fashioned WIP accumulation | Manufacturing Digital

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“Toyota pioneered modern lean manufacturing and created a highly efficient and reliable manufacturing system that the rest of the world sought to adopt with huge variations in success. A main thrust of Lean philosophy is to closely examine manufacturing processes, find unnecessary steps and eliminate them. The same philosophy suggests that we should only allow room for value adding steps – in terms of value perceived by the customer – as this drives up efficiency and enables us to manufacture simpler and faster. It is said that accumulating work-in-progress through the process ties-up resources and can obscure problems and is therefore deemed to not add value, so conventional Lean thinking is to eliminate this wasteful step.With this thinking comes a generally held view that Lean manufacturing and Accumulation cannot coexist…”


Michel Baudin‘s insight:

The gist of this article is that you should hold just enough WIP to meet your production requirements with the changeover times you currently have and protect your bottlenecks against malfunction in other resources. So far, this is stating the obvious, and a visit to a Toyota plant or even dealership is enough to see that the Toyota system is not one with zero inventory. You see shelves of stampings, bins of bolts, and trees of wire harnesses. The Kanban system involves some inventory, and, in fact, the only approach that doesn’t is just-in-sequence. What is considered waste is not all inventory, but unnecessary inventory, accumulated for no valid reason anyone can explain.

The article, however, goes further and asserts that it is cheaper to accumulate WIP than to expose and solve the problems that make it necessary, which is a return to the mass-production thinking that was prevalent in pre-Lean operations management.

What the Lean successes of the past decades have shown is (1) that the overall costs of WIP were understated and (2) that the ingenuity of production people and engineer was underestimated. You operate today and next week with the resources that you have, dysfunctional as they may be, and you hold WIP as needed to sustain production. As you do this, however, as an organization, you keep working at solving your problems so that you need less and less WIP month by month and quarter by quarter. This perspective is missing from the article.

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