VSM – Production Rate Question

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    Hi All,
    I am looking for some advise. Here is a little background; I am developing a VSM and I am trying to calculate my Lead Time from the inventories that I have at the various work centers. Based on Little Law I will be using the formula; Lead Time = WIP/Production Rate. In my current state I am not meeting my customer demand (hence the project). Should I use the customer demand that I should be acheiving (the one that I am failing on) or should I use the customer demand that I am producing too. I am not sure what way to calculate my Production Rate??
    I have looked at it both ways and I am not quite sure.
    Any information that you can share would be greatly appreciated.



    Dear Andy,
    the production rate is different from customer demand….. since customer demand is calculated through Takt Time while actual production rate acheived is the cycle time.
    Now, in ur case as the present system is not meeting the customer demand (Takt Time), it does’nt mean there will be no inventories. the Production rate in this case and other cases as well will remain the Customer Demand you should be targetting on.



    Hai Andy,
    Ever heard of IST and SOLL? I think in USA it is called ‘AS IS’ and ‘AS SHOULD BE’ or CURRENT and WISHED.
    IF you use the PR you have at the moment: that shows what the LT is at this moment. And if you use the PR you customer demands, you get the LT that you should improve to.
    Another question: Is the Customer Wish really an improved PR?



    Andy,It seems you have gotten 1 vote for each so far :O) Let me chime in
    with my perspective.I would suggest that you not focus on the “customer demand that I
    am producing too”, since you said yourself that you are NOT. That
    is the whole problem. You are instead only producing to your
    current ability. Just because you currently cannot meet customer
    demand does not mean it is different. Customer demand in the
    Current State is the same as in the Future State (assuming no
    seasonality bumps, short-term sales growth, etc.). Your challenge
    is to make improvements so you can satisfy it.The point of converting “inventory piles” into so many days’ worth
    of demand is to highlight the shortcomings. If you have inventory
    of some major component(s) ahead of some process, and yet you
    are not meeting demand, something else probably will show zero
    inventory in some other place because there is waiting. For
    example, you may have a stack of unprocessed Work Orders
    (information inventory) somewhere, and zero parts inventory
    somewhere else.DLW – BPEX



    As far as Little’s Law goes – the Customer demand (takt) is the Production rate you use to calculate how many days worth of Inventory you hold at any one operation/station/cell.
    When I have moments of doubt, I refer to “Learning to See” ( Rother and Shook), re affirms the basics.

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