03 February, 2023
3 MINUTE READ
The Process Cycle Efficiency, sometimes referred to as the "Value Added Ratio," is a measurement of the amount of value-added time in a process. The higher the number, the more efficient the process becomes. Material often spends 95 percent of its time in waiting. This is due to time delay injected by fewer than 20 percent of the workstations known as 'time traps.' We can identify time traps using value stream mapping and eliminate these. The proportion of value-added time is measured by Cycle Efficiency. A Lean process is that in which value-added time in the process is more than 25 percent of the total lead time. Calculating process cycle efficiency begins with identifying those areas that do not contribute to the value of the product. This typically can be done using a value stream map, which identifies activities in a process that use resources, time, or space. Those activities are placed in one of three categories: There are two important questions: Who are my customers? And what constitutes waste from the customer's perspective? Identifying who is a customer may not always be simple. For example, who are Google's customers? When you use Google to perform a search, are you the customer? No, you are the product Google sells. Google's business is selling advertising. What advertisers buy are clicks on their ads. Google uses its search service to attract people who will click on the ads. That makes you the product Google is selling, and their customers are those who are buying the ads. Waste is defined as being any of the following: The next step is to determine the amount of time used by each activity on the Value Stream Map. This should equal the cycle time, which is the amount of time required to receive and process an order, through to the delivery of the product to the customer. A common way to calculate the cycle time is to take the total number of paid man-hours in a month, and divide that by the number of finished products produced that month. This gives the amount of time required to produce one item. That time is then divided among the activities on the value stream map. The calculation for Process Cycle Efficiency uses a simple formula: If the process only includes activities that add value a customer is willing to pay for, then the process cycle efficiency is 100%. We like to think that our processes are close to 100% efficient. That the customer is willing to pay for everything we do in making the product they purchase. In reality the process cycle efficiency is typically in the 5% to 10% range. Once lean methods have been used to improve a process, the efficiency may improve to be in the range of 20-25%. This means there is always room for improvement. One of the important aspects of calculating the Process Cycle Efficiency is to establish a standard for how it will be calculated. To know if your Process Cycle Efficiency is improving, you need to be sure it is calculated the same way each time. Process Cycle Efficiency is improved by decreasing the cycle time through the elimination non-value added activities, and minimizing the necessary, but non-value adding activities. One of the tools for reducing cycle time is Quick Response Manufacturing (QRM). QRM puts the focus on reducing the time from order receipt to product delivery, by eliminating all unnecessary steps and activities. Seeing the activities involved in a process, and the amount of time they each require, is made a lot easier when the workplace is well organized. That's why 5S is one of the foundational principles of lean manufacturing. You can learn more about 5S, and how it can help your organization be more productive, with a5S System Guide from Duralabel.Calculating Process Cycle Efficiency
Who are my customers?
What is waste?
Calculating Process Cycle Efficiency ? Assigning Times
Process Cycle Efficiency ? The Calculation
Process Cycle Efficiency and 5S