Why Does No One Own the Flow?

Ceren has 120 TL in her pocket and spends 1 TL each day. If no new money arrives and spending stays the same, it will last 120 days. This is a simple example of how many days an available resource will cover consumption.

Days of inventory coverage and flow time are different measures

Dividing inventory quantity by average daily consumption gives an inventory coverage duration. This calculation does not show that an individual part takes exactly that many days to pass through the business.

D2D, or door-to-door production lead time, is the time required for material to move within the defined production boundaries. It can be tracked using actual entry and exit times. The time from receiving an order to collecting payment is a broader measure; these two must not be confused either. [1]

Under stable conditions, a relationship can be established between average inventory, average throughput and average flow time measured using the same scope and units. Arbitrarily adding different products or inventory values and interpreting the result as the transit time of every order is misleading.

While everyone improves their own indicator

Purchasing may buy large batches for a lower unit price. Production may manufacture ahead of need to keep machines busy. The warehouse may request more inventory to avoid shortages. Planning may try to keep every work centre loaded.

These goals can work against one another unless their impact on overall flow is assessed together. Departmental results may look good while orders wait, inventory grows and cash requirements increase.

Every department has an owner. But who follows the order’s journey between departments?

Establishing shared responsibility for flow

Let us map a product family’s flow together and see where it waits, for how long and why. Define who coordinates the entire process, the decision rules between departments and the shared measures.

If OTIF is used to measure delivery performance, the definitions of both on-time and in-full delivery must be clear. Inventory and lead time should also be tracked for the same period and product scope. Then we can discuss the outcomes of the same flow.

Let us improve the process, of course. But let us not leave the growing queue before or after a faster machine without an owner.

[1] Lean Enterprise Institute · Cycle Time and Production Lead Time