In manufacturing, Work in Process (WIP) also referred to as Work in Progress is a category of inventory that consists of unfinished items which still require further assembly, processing or inspection to turn them into finished goods ready for delivery to the customer. This term only applies to items in the inventory which have moved into processing. Any items which have not been worked on are considered raw materials.

WIP is considered to be a type of waste, since it ties up money during the processing period, funds which could have been used to generate value and returns in other parts of the organization. In addition, excessive WIP presents business risks to an organization since items will be on the factory floor next to equipment, plant and machinery or blocking traffic areas. Below are some examples of WIP from different industries:

1. Cake Shop

An example of WIP in the confectionery business can be seen when a cake shop bakes bread bases for tarts and stores them until they are ready for use. Bread bases for tarts taste better when they are baked first and later stored to cool during the production process. Because the bases can be used in different flavors of tarts, there is minimal risk of waste.

In this case, the WIP is necessary in order to ensure the best quality tarts are produced for the consumer. Still, it is vital for the cake shop to ensure that it has an accurate estimate of the number of finished tarts required every day to optimize the number of bread bases held in inventory within the bread shop cold room.

2. Motorcycle Plant

Within a motorcycle engine assembly line, one workstation works on carburetor components and feeds the next workstation, which puts them together into a completed carburetor. At the second workstation, the pin on which the butterfly pivots is discovered to be of the wrong dimensions in some instances and, as a result, cannot be added to the carburetor assembly. Production has to be halted as a result, in order for a new pin to be installed manually.

This forces the assembly line to produce and hold more units in stock than are necessary in order to reduce the delay for other processes down the line and increase the assembly time for each bike as a result. The excess carburetor units held in inventory before moving to the next stage are an example of bad WIP, as it creates a bottleneck to compensate for manufacturing problems.

3. Camera Mass Production

A camera manufacturer has work stuck in process when a supply chain disruption stops it from quickly completing lens assembly. For this reason, the camera manufacturer decides to make and stock large numbers of incomplete cameras, hoping to meet demand when the missing components arrive. Such an organization is working inefficiently and the unusually large amount of WIP compared to value is something that would concern investors studying the company’s balance sheet.

4. Skateboard Customization

A skateboard manufacturer may offer to provide custom artwork from a range of its partners imprinted on the boards. The base skateboard units that feature no artwork are manufactured in large weekly production runs with 2400 units in each. However, the skateboards are completed with the custom art at a rate of about 200 units weekly. Immediately the art is completed, and the boards are immediately shipped to customers.  In this case, the manufacturer’s inventory of work in process is inordinately larger than the inventory of finished product.

5. Healthcare

In manufacturing, work in process affects the flow of processes when operators or team members are unable to work or are forced to wait due to problems in one of the production steps such as shortage of inventory or failure of their equipment. There are analogies for this situation in the field of healthcare as well, causing issues for both the patients and healthcare providers. These include:

• Patients sitting in waiting or examination rooms
• Staff with low workloads awaiting their next task
• Patients and their physicians in an emergency room waiting for results of tests
• Patients in the Emergency Department awaiting admission
• Patients who have been treated and are awaiting discharge from hospital

Conclusion

In each case, the desired outcome is to minimize the inventory of unfinished work in process and reduce the time required to move an item from raw material to finished product in order to release the value held up in the product or service.

The post 5 Practical Examples of Work in Process appeared first on 6sigma.

Work in Process (WIP), in some cases also referred to as Work in Progess, refers to inventory which has entered the manufacturing process, is no longer part of the inventory of raw materials, but is not yet a complete product. Within an organizational balance sheet, WIP is placed in the assets category since money has been spent on it to create the finished product. However, since work has not yet been completed, the WIP has a lower value.

In Lean production, excessive WIP is considered to be an indicator of the presence of bottlenecks within manufacturing processes or an inefficient supply chain, resulting in waste. Having too much WIP is undesirable since it ties up funds that would otherwise generate higher returns in another part of the organization.

Why Reducing WIP Is Important

In manufacturing, reduction of WIP results in a higher level of liquidity, improved cash flow, better customer service and lower risks to the business. Many benefits can be enjoyed when a manufacturer reduces work in progress significantly, instead focusing on the raw material inventory and delivery of finished products. Implementation of Lean Six Sigma principles is one of the best ways to reduce WIP.

WIP has an effect on various sections of manufacturing, including line efficiency and labor productivity. These two factors are often the source of significant bottlenecks in manufacturing processes. Below are three techniques that can help an organization reduce their WIP:

1. WIP Levels and Forecasting

Tracking of WIP levels and inventory is good manufacturing practice that ensures operations proceed smoothly. The best case is to establish the lowest WIP levels and batch sizes so that good operational flow is maintained. However, a major hurdle that needs to be overcome is to determine appropriate levels in line with demand. Use of a predictive performance format in reporting aids to make these decisions.

Having accurate forecasts will promote awareness and, as a result, provide a sound basis for planning. The desired outcome should be a lessening of the buffer sizes in order to maintain continuous flow and avoid overstocking.

2. Sharing Of Capacity

Most manufacturing operations involve much higher capacity when compared to the demand required by line production. For this reason, an organization should understand cases where there are bottlenecks in order to set up a policy through which a portion of the bottleneck operation can be handled by adjacent business units that have higher capacity but low demand. Lean manufacturing processes are able to sustain the sharing of capacity between units at particular intervals. The major challenge to this methodology is organizational structures or policies that run contrary to this line of thinking.

3. Addition of Machinery and Improvement of the Workforce

Of all the methods used in manufacturing to scale down WIP and eliminate bottlenecks, this is the most common practice. However, in Lean manufacturing, this approach is discouraged as an initial solution since there may be other ways to achieve lower WIP levels that do not require an organization to incur the cost of additional machinery or manpower.

Still, there are cases where, if other steps to improve flow fail, addition of machinery and improving the workforce may be a viable solution of last resort, resulting in significant reduction of WIP. Before implementation of this technique, it is vital to establish that the operational capacity of each machine and operator is calculated relative to demand.

Conclusion

The techniques outlined above not only save time, but also serve to positively impact work in progress levels. By adding extra machines, improving the workforce or improving the flow of processes in these ways, defects in manufacturing can be reduced and production can be increased dramatically. In addition, any problems or bottlenecks within the manufacturing process can be identified quickly and rectified in a timely manner, benefitting the business as a whole.

The post 3 Techniques to Reduce WIP (Work in Process) in Manufacturing appeared first on 6sigma.

Work In Progress (WIP) sometimes also referred to as Work in Process refers to any work within a business process which has been started but is not yet complete. It is fairly obvious that any work only offers value to a company or its customers once it has been completed. With this in mind, it is a no-brainer that limiting the WIP within a team or system should lead to increased value. While the idea is, on the face of it, simple enough to understand, few work teams place the necessary emphasis on limiting of WIP or utilize methods of controlling WIP that simply do not work.

Why Is It Important To Manage WIP?

While most people like to believe that they are good at multitasking, the reality is that working on multiple things at the same time is less effective than placing focus on one task at a time. Also, when someone works on several tasks at the same time, they will need to jump from task to task often, resulting in a loss of productivity whenever they take time to refocus on the previous task.

Placing a limit on the work that can be handled by one worker or team at a time will prevent workers from starting new tasks when they still have unfinished tasks. Instead of having people start work on a new task if their current task is blocked or too difficult, the WIP limit will force them to examine why the current task is not moving forward. By establishing the reasons, they can then focus on finding a solution and finishing the task to allow more work to come in and resume the flow of work.

Getting Started With Management of WIP

Among the key principles followed by teams working within the Agile methodology is focusing on making continuous improvements to processes. This continuous improvement is often the result of team members inspecting processes, experimenting with them and then adapting.

Managing WIP for a team is no different. When the team commences on any project, especially without much experience in Agile, managing work in progress and setting up of WIP limits can be a somewhat tricky affair. If WIP limits are made too stringent at the start, people start to get worried, frustrated or even discouraged. On the other hand, if the limit is too big, people will start to work on to many tasks concurrently, defeating the purpose of managing WIP in the first place.

To start managing WIP in business effectively, teams need to pick limits that they feel comfortable with at the start and commit to them for a given period of time. At the end of this period, the team can meet to discuss the efficiency and effectiveness of their initial approach. They may then decide if it is necessary to revisit the WIP limits they set. In time, and with maturity of the team, the WIP limits will naturally get smaller.

Use of the Kanban System

In the modern workplace, it often feels that each employee’s to-do list on a day-to-day basis is a mile long. With people having so many tasks in their work queues, it is very tempting to jump from task to task while attempting to tick off as many work items as possible off the list. However, when someone dives into new tasks before they have had a chance to complete their previous work, it can result in the employee getting overwhelmed by a deluge of work, lengthening the lead times for the projects they are working on. In this case, a kanban board system could prove to be an invaluable tool to help manage WIP.

The kanban board (roughly translated from Japanese to mean card you can see’) offers a simplified way for workers to visualize their workflows and stem the chaos which may cloud busy projects. This solution works in management of work in progress by making it simpler for team members to graphically visualize project workflow in one place, offering convenience and transparency.

Conclusion

While it is simple enough to understand WIP limits, teams will all too often misuse or ignore them. No matter the process improvement method used Lean, Agile, Waterfall or any other process if individuals or teams can focus on completing a task at a time and move on to the next, more will get done faster.

The post The Importance of Managing WIP in Business appeared first on 6sigma.

There are 14 principles in lean thinking, with flow being one of the most important. In an organizational context, flow is used to refer to how smoothly work flows through a system. Good’ flow occurs in a system in which work moves from step to step in a steady and predictable manner, while bad’ flow is present in a system where the work starts and stops frequently. Consistent work flow is vital if there is to be higher production efficiency as well as reliability and greater value for customers, your team and the organization as a whole.

If a system has been set up to produce tangible items for instance, a motor vehicle assembly plant it is quite easy to identify areas that bottlenecks form and hamper the flow of progress. In the case of service industries such as education and healthcare, it can be more difficult to see flow problems. For this reason, teams in these industries require Kanban boards to help visualize flow of work through their system.

Below are three commonly used methods through which lean and Kanban flow efficiency can be achieved.

1. Keep Track Of Work In Progress

Tracking of items on which work has started but is yet to be completed will help you to improve how value flows through your system. In a practical sense, the work done adds no value to your customers, your team or the organization unless it is completed. For instance, consider a team of software developers working on new features for their company’s mobile app. Whatever new features they are working on add nothing to the app until they go live and the customers can use them.

When you count and document the number of work items (cards) still unfinished within your system every week, you will get a clearer understanding of the amount of work that has been started but is not yet offering any value.

2. Limit Work in Queue

Queues are formed within a process whenever there is work stuck in waiting between the different steps of the process. Because queues form a major part of any product’s production life cycle, it is vital for you to know where they appear in your process and how they affect the efficiency of your team. By limiting the time that products or items spend in queues, you can reduce the entire production life cycle time and keep the work flowing smoothly.

Creating an efficacy diagram provides a snapshot comparison between the total work in progress (WIP) and the work still held up in queues. The diagram allows you to see if queued work is growing in relation to the total work in progress. This lets you pinpoint where work is stuck in a queue and identify remedial measures that will get work moving again.

3. Understand Lead Time and Cycle Time

The lead time and the life cycle time are useful metrics that will help you understand the length of time it takes for work to flow from the start to the end of your Kanban system. The two measures are very similar and are often confused. Although they both measure the length of time used by the work flow, they are used within different segments of the production work flow.

• Lead Time: This is a measure of the total time that it takes for work to be moved through the entire value stream, from the time it is requested to the moment of final delivery. It is the duration of the process from start to finish.
• Cycle Time: This is a measure of the time taken for a work item in process to get from one point to the next. Because the cycle time is measured from any two points of the process, several cycle times may exist in a system. For instance, a process could have a deployment cycle time as well as a Quality Assurance cycle time.

Conclusion

In the case of flow, the ultimate aim has more to do with consistent economic value and efficiency that achieving the quickest cycle time or the highest throughput. Through the maintenance of a steady work flow through the Kanban system, an organization can attain higher efficiency and deliver reliable value to customers.

The post 3 Ways to Achieve Lean and Kanban Flow Efficiency appeared first on 6sigma.

What Are the Principles of Kanban and Why Do They Work?

Kanban is both one of the simplest and most efficient tools to manage workflow in a visual way. It’s one of the important tools used in more complex process improvement methodologies (such as Lean), and its wide-spread adoption is a testament to its flexibility, utility and effectiveness. Kanban is based on a few core principles that ensure successful implementation at scales ranging from the individual to organizations with multiple departments and teams that need to be coordinated.

Let’s explore the 4 core principles that the Kanban approach is based on, and why following them is advantageous.

1.     Visualize

Our brains are wired in such a way that processing visual information is what we are best at. For instance, looking at charts or graphs gives us a much better understanding of a large set of numbers than looking at the raw data ever could. Kanban takes this visual approach and applies it to the workflow.

In Kanban, each task and each step of the process has a clear visual representation that also includes the most vital information. This is an extremely efficient way to make the current state of affairs in an organization visible and understandable by all. Everybody can infer what they need just by a quick glance at the Kanban board, and all workflow impediments like blockers or bottlenecks become obvious right away. This is extremely beneficial by making communication within the team easier and more efficient, and by uncovering problematic areas that need to be fixed.

2.     Limit the Work in Progress

One of the few rules that Kanban imposes is limiting the number of pieces of work that can be worked on at any given moment. The actual limitation depends on those that are managing the particular Kanban implementation, but the simple act of imposing a limit is quite advantageous.

This limit fosters focus and forces proper prioritization. This allows an organization to be efficient in how it utilizes its workforce. Additionally, it eliminates decision paralysis, as it doesn’t allow individual team members or managers to be destabilized by the sheer amount of tasks that have piled up, and prevents the common mistake of trying to do too much all at once. On top of this, having a WIP limitation also ensures that each piece of work will go through the workflow process as quickly as possible, which helps productivity.

3.     Focus on the Flow

Despite the fact that this can be partially viewed as a function of the first two principles, focusing on the actual workflow is a core value engrained into Kanban as a tool. It should be viewed as an integral part of its proper implementation. Kanban takes the workflow to the forefront of the team’s understanding of their job, and how their organization functions. While Kanban is being used to manage how individual pieces of work are handled as part of the larger process framework, data about what is going on is collected, so the flow can be described and understood using a system of clear metrics. This understanding allows the organization to gain deeper knowledge about its own inner workings, and sets the stage for the last principle

4.     Continuous Improvement

Kanbans have a lot of benefits in the day-to-day operation and management of a team or an organization. It puts you in a position where continuous improvement can be achieved and can become part of the company culture. By making sure everything is visual, and by focusing on the flow and collecting data about the performance of the system over time, Kanban allows improvement opportunities to be identified, and taken advantage of on a regular basis. As this process is repeated over and over again, even the smallest of improvements can start to affect the overall performance of the organization in a positive way. This leads to ever increasing productivity, efficiency and thus competitiveness.

Read more about Kanbans >>>

The post What Are the Principles of Kanban and Why Do They Work? appeared first on 6sigma.