Lean Glossary of Terms
Lean Dictionary for Process Improvement
Definitions, formulas, and examples for lean manufacturing terms that are so important to Lean process improvement.
These are the exact formulas and definitions used in your Systems2win Excel templates. Download free trial templates
Lean Glossary Contents
Road map for a typical
Lean Manufacturing Terms
Bookmark = TheThing
also known as 'the thing being transformed'
What the customer is buying. What you are transforming.
In a manufacturing, distribution, or retail environment, the thing is usually a physical product.
In an office, service, non-profit, or government environment, the thing might be a form.
Video: Units of Measure
In a medical environment, the thing might be a patient.
Units of Measure
Customer Demand Unit of Measure
should be the most common unit of measure for the end product
that is delivered to the customer for the entire value stream.
Examples: Cases or six-packs of soda (rather than bottles).
Units or cases, rather than pallets. (unless your customer usually buys pallets)
Customer Demand should be expressed in the same time Unit of Measure as Work Time Available.
Examples: Demand units per week and Work Time Available per week.
Demand units per shift and Work Time Available per shift.
Your Systems2win Value Stream Mapping template allows you to define both:
- The Common Demand Unit of Measure
The most common unit of measure for the end product
that is delivered to the customer of the entire value stream.
Example: The Common Demand Unit of Measure for the product family produced by this value stream might be 'go carts'.
- Each process can optionally have its own Demand Unit of Measure
For example, one process might produce 4 'wheels' per 'go cart'.
And (unlike any other value stream mapping software on the market),
all values are automatically converted back into the Common Demand Unit of Measure
so that the math comes out correctly in the Time Sum Line for your Value Stream Totals.
Bookmark = WorkingTimeAvailable
Work Time Available
aka Time Available for Work, or Working Time Available
Time available to work toward meeting Demand.
Customer Demand should be expressed in the same Unit of Measure as Work Time Available.
Examples: Demand per week and Work Time Available per week.
Demand per shift and Work Time Available per shift.
How to calculate Work Time Available:
(Your Systems2win templates have fields with pop-up help to remind you, and to make calculations visible)
- Your initial starting number should NOT include meal times
- Then deduct regularly scheduled breaks and meetings
- Then deduct Planned Downtime
such as beginning of shift setup, end of shift clean-up, planned maintenance, and most other planned non-working time.
Tip: Optionally use your Custom Formula Zone to explain "Where did that number come from?"
Do NOT deduct unplanned downtime or change-overs.
Several of your Systems2win templates allow you to calculate Work Time Available in minutes,
and then a series of sophisticated formulas automatically convert Work Time Available into your chosen Units of Measure for Cycle Time (which might be seconds, minutes, or hours), and Lead Time (which might be hours, days, or weeks), and Work Time Available (which might be shift, batch, day, week, or any other unusual work cycle).
If you pay your expensive Black Belts to invent their own templates... good luck with that.
Your Standard Work Template has special features to make Planned Downtime and other Out of Cycle Work visible, understandable, auditable, and controllable.
That template will summarize Time per Unit for all Out of Cycle Work,
and then in addition to Work Time Available, you also have visibility of 'Run Time Available'.
Run Time Available = Work Time Available minus (Out of Cycle Work * Demand)
Bookmark = OOCW
Out of Cycle Work
Steps that are not performed in every Run Cycle,
but reduce Work Time Available to meet Customer Demand
Inspection, palletizing, routine maintenance, periodic quality inspections,
and any other activities that have their own cycles that happen regularly, but not with every Run Cycle.
Also includes setup change-overs between run cycles.
Approaches for how to handle Out of Cycle Work
- The most common practice is to deduct
most Out of Cycle Work from 'Work Time Available'.
See 'Work Time Available' (above)
- Your Standard Work Template
has special features to use 'Frequency' codes
that make Out of Cycle Work visible,
understandable, auditable, and controllable.
Bookmark = LeadTime
Also known as "Throughput Time", "Delivery Time", or "Turnaround Time"
Video: Lead Time
The time it takes
for one unit
of the thing being transformed
to go through every step of the process
(or every process of the entire value stream)
from start to finish —
including time waiting between steps
The Lead Time Chart in your value stream mapping template makes it very easy to see that Lead Time consists of:
the sum of Process Lead Times (time within a process)
+ the sum of Queue Times (time between processes)
(and your value stream mapping template makes it easy to include or exclude Pre and Post-Production processes. Learn more)
In practice, the term "Lead Time" usually means "Production Lead Time",
but lead time can also optionally include steps that happen before or after production:
Production Lead Time
The time it takes to physically make or deliver the thing —
from the receipt of production authorization to customer delivery.
Order Lead Time
The time between a customer placing an order and receiving delivery.
Production Lead Time plus everything that happens before releasing
Work Authorization, and after the product leaves the shipping dock.
Time between receiving customer order and receiving payment.
Time between receiving a customer request for quotation and receiving final payment.
(Of particular interest for make-to-order production environments)
Units of Measure
Your Value Stream Mapping template
has a Lead Time Unit of Measure Converter
that allows you to quickly convert between
Working Days, Calendar Days, Weeks, or Hours.
And also has features to easily calculate or override
both Queue Time and Process Lead Time.
Bookmark = QueueTime
Also known as "Waiting & Transportation Time" or "Inventory/Transportation Time"
The time between processes
Time that the thing gets shuffled around or sits around waiting for someone to work on it.
See advanced training for how to handle queue time for a shared process.
Bookmark = ProcessLeadTime
Process Lead Time
The time within each process
Unit of Measure
Process Lead Time is usually simply Process Time converted into the same unit of measure as lead time.
For example 60 seconds = a very tiny fraction of a working day
So tiny that it can often be simply ignored when you are doing a hand-drawn "As Is" process map.
But in other environments, this fraction is large enough that you ignore it at your peril.
If "the thing" continues to be transformed in a way that does not involve the operator...
(perhaps drying, curing, growing, fermenting...)
then you might override Process Lead Time, as explained in our training for Value Stream Mapping.
Bookmark = ProcessingTime
Also known as "Processing Time" or "Touch Time"
The time that the thing is being worked on by an Operator.
Video: Process Time
Processing time is observed with a stopwatch or video camera —
In an analytical environment,
Use a Time Observation Worksheet to collect and filter your stopwatch results.
Your Systems2win templates include multiple choices of Time Observations worksheets that are appropriate for different types of observations and different types of processes.
Be sure to coach your people to learn and follow
to the instructions
Process Time = Manual Work + Walking + Waiting
That portion of Processing Time that is performed by the Production Department is sometimes called "Operator Cycle Time", but Processing Time might also include time spent in sales order processing, engineering, approval cycles, etc.
Note that Machine Time is NOT included in Processing Time.
If the Operator has nothing better to do than stand around to wait for the machine to finish doing its thing,
then that is called 'Wait time',
and Wait Time is included within Processing Time.
Processing Time is all about the Operator
(not the machine)
Personal Fatigue and Delay
It would be impossible for any worker to maintain 100% efficiency, every working hour of every day.
Personal Fatigue and Delay is an adjustment factor multiplied by Process Time
to adjust for personal needs, fatigue, and work interruptions.
The U.S. Department of Labor requires a Personal Fatigue and Delay factor of at least 1.2 when paying piece work, and even if you're not paying piece work, it can be very helpful to adjust your capacity planning for a dose of reality.
Your Standard Work Template allows you to analyze Process Time both with and without Personal Fatigue and Delay.
Bookmark = ValueAddTime
Value Add Time
also known as Value Creating Time
Time of those work elements or process steps
that actually transform the thing in a way that the customer is willing to pay for.
Although Value Add Time has a widely accepted definition,
there are many opinions about how to sub-categorize Non Value Add Time.
One popular approach is to differentiate:
- Pure Waste (sometimes called "Type 1 Muda")
"Gee, that's embarrassing... let's stop doing that..."
- Non Value Add Time (sometimes called "Type 2 Muda")
Things that currently "have to be done",
but don't directly provide value to the customer.
See our online training for Muda — the 7 Types of Waste.
Some non-customer-facing supporting value streams, (such as accounting, purchasing, IT...),
won't have ANY Value Add Time (using the classic definition)...
For this reason, some teams differentiate "Customer Value Add Time"
from "Organizational Value Add Time".
Lean Healthcare Example:
Time spent examining a patient is customer value add time.
Doing patient admission paperwork might be organizational value add time.
And waiting in the lobby is clearly non-value add time.
The important thing is for YOUR team to agree upon YOUR definitions, and then use them consistently.
Which tool to use for Value Add Analysis?
Many lean practitioners do Value Add Analysis using a Value Stream Map
but potentially complex processes
have far more useful features for Value Add Analysis
Bookmark = MachineTime
The time that a machine is working on the thing
Machine time is the total time that the machine is working on the product. Whether or not the Operator has something better to do than to stand around waiting for the machine to finish has no influence on Machine Time.
If an automatic machine is running for 60 seconds,
and the Operator has something valuable to do for 20 seconds,
and then has 40 seconds of "Wait time",
the Machine Time is still 60 seconds.
Machine Cycle Time
Machine Cycle Time = Machine Time divided by Quantity per Run
Example: If a machine makes 10 items at a time,
then Machine Cycle Time = Machine Time divided by 10
If your process is potentially machine constrained,
then you should be using your Machine Balancing template.
Although Machine Time is analyzed and charted in your Standard Work Instructions template,
it is important to understand that your Standard Work template is "all about the Operator".
Machine time is only relevant if and when the operator has nothing better to do than to wait for the machine to finish. Operator 'Wait' time is very important to that standard work analysis. Machine time isn't.
In your Value Stream Mapping template,
Cycle Time is usually calculated based on the Operator,
but there is the option to calculate Cycle Time based on Machine Time
for those processes that are constrained more by a machine than an operator.
Bookmark = CycleTime
also known as Exit Cycles
The average time between completed units "coming out the end of the pipe"
The cycle time of motors assembled at the rate of 120 per hour
would be 30 seconds per unit
Cycle Time in a Value Stream Map
Using your Value Stream Mapping template
Cycle Time = Time per Cycle / Qty per Cycle
or if those fields are blank... then...
Cycle Time = Process Time / # Workers
or you can manually override Cycle Time
in the cell to the right of each Process
Cycle Time in a Standard Work Combination Sheet
For Standard Work Analysis with more than one Operator:
Cycle Time = the operator with the longest Processing Time
Bookmark = EffectiveCycleTime
Effective Cycle Time
Also known as Output Pace
Cycle Time adjusted for all the factors that reduce Work Time Available and Productivity.
Video: Process Time
and Cycle Time
In other words...
If a new-hire comes running up with a proud smile and says:
"I just finished using a stopwatch to measure Cycle Time, and it looks like we will just barely make our schedule, because Cycle Time is just barely under the Takt Time that we need to meed customer demand."
Then your response should be:
"You're new here, aren't you? Does this process ever experience downtime? Scrap? Rework? Staff unavailability? Less-than-perfect performance? Does it have any change overs?"
Your Systems2win Value Stream Map has color-coded andons that will turn bold red:
- if your planned Capacity is too close to your customer Demand
- if your Effective Cycle Time is too close to your required Takt Time
so that you can have confidence when you answer the (common) question:
"Will we be able to meet our schedule?"
Bookmark = TaktTime
Also known as "rate of customer demand" or "pace of customer demand"
Your planning drumbeat.
How often completed units NEED to come out the end of the pipe — as established by customer demand.
Takt Time = Working Time Available / Target Units to Produce
420 working minutes per shift / 210 Target Units to Produce during that shift = Takt Time of 2 minutes per unit
One common example of takt time is golf course tee times. Groups of golfers are scheduled to tee off according to the takt time schedule determined by the golf course operators. Doctors' office appointments (with patients scheduled every 12 or 15 or 20 minutes) are another example of takt time scheduling.
Operational Takt Time
In most real-world production situations,
"Takt Time" actually means "Operational Takt Time", which is customer demand adjusted (through a Sales & Operations Planning process) for factors such as:
- Seasonal demand
- Planned down-time
- New product introductions, etc.
In office, service, and other environments where it is hard to predict customer demand, it is common to plan for the demand the process or value stream is capable of handling — expressed in terms of both volume and mix.
The quoting process is capable of processing 5 quotes per day, and only 1 of those can be a complex quote.
Takt Time per Run Cycle
Your Standard Work Template features both regular Takt Time, and...
Takt Time per Run Cycle, which is calculated by deducting Out of Cycle Work from Work Time Available.
Bookmark = TargetCycleTime
Target Cycle Time
Also known as Planned Cycle Time, or Takt Time Per Run Cycle
Operational Takt Time adjusted for other factors
Other factors might include:
- Adjusting to shop floor conditions
such as absenteeism, different-than-expected yields, etc.
- Master Scheduler discretion
to plan for or react to the same factors that are considered within Sales & Operations Planning, but within a Sales & Operation Planning period, rather than across periods.
- Change Over Time
If your process has multiple machines that run mostly unattended,
then use your Machine Balancing template to determine the machine with the longest Change Over Time, and/or the Change Over Time for the machine with the longest total Machine Cycle Time, and then use that (one chosen number) as your Change Over Time for the entire inter-connected process.
It can be difficult to estimate/choose the number to use for Change Over Time, especially if it varies by products within the product families produced in a mixed model production environment, and it is very important to use your Machine Balancing template to re-evaluate your bottleneck or pace maker machine each time that you get a new machine, and each time that you do a kaizen event to improve your SMED Quick Change Over Setup Reduction for each machine.
- Unplanned Downtime
Refer to the DV sheet in your OEE template for all of the various Reason codes for Unplanned Downtime as well as Standby.
Note that Unplanned Downtime only considers small stoppages.
Catastrophic disasters cannot and should not be considered in your production planning.
If you have gaps between shifts, then Unplanned Downtime is usually NOT considered in your calculation of Target Cycle Time — because you can (and often should) handle unplanned downtime with simple tolerances (allowing a little extra time per shift to still fulfill production requirements even if a few small things go wrong), and/or overtime.
- Wait Time
When doing Staff Load Balancing for a process that is divided between several staff positions, it is common to need to add Wait time to the Standard Work for some staff positions in order for each sub-job to be synchronized to the same Target Cycle Time. (as depicted in the chart on the right)
Many consultants and lean professionals have differing
(and often strong) opinions about what factors to include and exclude from Target Cycle Time.
The important thing is to clearly define how Target Cycle Time is calculated for YOUR team, and then ensure that everyone calculates it the same way. A good place to document your agreed-upon factors to include and exclude from Target Cycle Time is the User-Defined Training section near the bottom of the Help sheet of each Systems2win template. (And remember, this is one of the many types of personalizations that will be automatically found and transferred each time that you upgrade your templates.)
Some lean professionals have equally strong opinions about whether to call it Target Cycle Time or Planned Cycle Time. It's a good thing your Systems2win templates can be so easily personalized to use a User Substitution to call it whatever you want.
In many environments, Takt Time, Operational Takt Time, and Target Cycle Time are all the same,
and the single term "Takt Time" can be used.
In other environments, especially High Mix / High Variability environments,
the differences can become important.
Target Cycle Time must be less than or equal to (and is usually equal to) Operational Takt Time.
Bookmark = TaktImage
Any visual, at-a-glance way to monitor whether a process is meeting its takt time.
Folders in an in-box. Colored chart. Heijunka box. A runner that comes around every Pitch Cycle to take away finished work and bring materials needed for the next Pitch Cycle.
Bookmark = Pitch
how often work is released and monitored
Pitch = Takt Time * Pitch Batch Size (the batch size in which work is released to the pacemaker process)
It is sometimes helpful to think of Pitch like a train station or a bus stop.
The bus comes around on a pre-determined schedule,
and you either make it or you don't.
The big difference is that the bus driver NOTICES that you're off schedule —
and immediately sends up a red flag that triggers a troubleshooter to very quickly show up at your workstation to do whatever it takes to help you get back on schedule.
If Pitch is less than Takt Time, then this is known as Inverse Pitch,
Bookmark = PitchBatchSize
Pitch Batch Size
how many things to be processed get released to the pacemaker operation for every Pitch cycle
Formula and Examples
If Takt Time is 10 seconds,
and pallet size is 1200 units
then pitch = 10 seconds x 1200 units = 12000 seconds (or 200 minutes)
Every 200 minutes — the production scheduling department releases instructions for the pacemaker work cell to produce another 1200 units of the thing to be processed
If Takt Time is 15 minutes
and new patients are assigned to doctors in batches of 4 client folders
then pitch = 15 minutes x 4 client folders = 60 minutes (or 1 hour)
Every hour — the physician's assistant releases another 4 patient case folders to each doctor
If you are just getting started mapping a value stream for the first time,
and your team isn't ready yet for "the Pitch discussion",
then just know that the only thing that Pitch Batch Size is used for is to calculate your Pitch time increment,
so you can safely just enter your typical or median batch size, and then perhaps just hide those rows, and come back to them as your team matures on their lean journey.
Factors to consider when choosing Pitch Batch Size (which in turn determines the Pitch time increment)
- The "delivery unit" that is delivered to the end customer. (e.g. pallet size, case size, the amount of time that the doctor needs for an average patient visit, etc.)
- In a mixed environment, the Pitch time increment should usually not be lower than the longest time to produce one "delivery unit" of any item in the product family.
- The batch size that is delivered between processes. (Inter-process transport considerations can be especially important if your product is large or cumbersome)
- You usually want to monitor progress at least 4 times per shift —
so Pitch should usually be 2 hours or less.
- It is always best if Pitch is rounded to the nearest increment of Takt Time.
Once you have chosen your Default Pitch Batch Size
(which you enter in the pink cell in the 'Values' column on your value stream map)
then you can optionally override Pitch Batch Size for any operation.
But usually not.
Usually every operation in the value stream beats to the same heartbeat.
If you do override, it is usually an increment of Default Pitch Batch Size.
(for example 2x or 3x)
It is important not to confuse Pitch Batch Size with Change Over Batch Size.
Bookmark = ChangeOverBatchSize
Change Over Batch Size
how many things get processed before a Change Over is needed (to reset or change equipment)
Change Over Batch Size can be identical to, or dramatically different from Pitch Batch Size (defined above).
While the pacemaker operation usually determines the Pitch Batch Size for every other process in the value stream, Change Over Batch Size can be (and often is) different for some processes.
To extend the above examples:
The doctor works on only one patient at a time — not 4 patients at a time.
Perhaps an intern might come in to re-set or change the configuration of the room between each patient visit.
The 1200 units in each pallet might be made in batches of 12,000 before equipment change-over is needed
or, (keeping in mind that one of the objectives of Lean is to produce in the smallest batch sizes possible...)
the 1200 units in each pallet might be made in Change Over
As explained in the books Creating Continuous Flow and Creating Mixed Model Value Streams, if you have a machine or process that requires a 'Change Over Batch Size' greater than the rest of your processes, then that process must be decoupled from the rest of your continuous flow process, using either:
Learn how to use your Systems2win Value Stream Map
to calculate the Smallest Change Over Batch Size for your pacemaker and/or bottleneck operations.
Bookmark = EPEx
Guaranteed Turnaround Time
Also known as GTT, Every Part Every Interval, EPEI, or EPEx
The longest time that your customer will ever wait
for any product variation within the product family produced by your value stream.
Provides a rock-solid answer to your customers' most common question:
"When can I have it?"
The formula for Guaranteed Turnaround Time =
(Average Time per Change Over * # Product Variations) / Time Available For Change Overs
This classic formula assumes that (of course)
you will be using the optimum Smallest Possible Batch Size.
Most people don't even know how to calculate the optimum Smallest Possible Batch Size,
and even if you correctly calculate it,
there are many legitimate reasons to use a larger batch size
(Container sizes, machine optimization, batch sizes of other processes in the value stream, pitch batch size, or perhaps your customer simply doesn't need it that fast so you'd simply rather make bigger batches)
When you use your Systems2win Value Stream Mapping Power Tool to calculate GTT,
your chosen Change Over Batch Size is taken into consideration,
so that the resulting Guaranteed Turnaround Time provides the correct answer to your customer.
The much easier way to calculate it
Using your Value Stream Mapping template
Guaranteed Turnaround Time is auto-calculated for any process when you enter data for both:
- Time Per Change Over
- # Product Variations
When to calculate Guaranteed Turnaround Time
For most value streams
you will calculate Guaranteed Turnaround Time for one (and only one) process
the one process that you chose as the pacemaker process for the entire value stream
Exceptions to that rule
you might also calculate Guaranteed Turnaround Time for non-pacemaker processes that are:
- Work Processing Cells
A powerful way to establish visual flow in an office or service environment,
by establishing a systems where everyone involved in a process works together on a process, but only at a specified time, which might happen on a less-than-daily cycle.
- Other processes that are in some way detached from the flow established by the pacemaker
Requirements for EPEx to be meaningful
Bookmark = StdWIP
Standard Work In Process Inventory
The amount of inventory that SHOULD usually be found at specified locations within a process
One of the methods of Lean process improvement is to clearly define exactly how much inventory should be located at each specific place within a process — and then reorganize the workplace so that there is only space available for exactly that quantity of inventory.
One objective of Lean is to reduce the amount of inventory required,
but buffer inventories hide problems
so be careful to "lower the inventory swamp waters slowly"
so that the rocks and alligators lurking just below the surface
of your process can be systematically identified and removed one at a time —
rather than "draining the entire swamp all at once".
Bookmark = PCA
Percent Complete and Accurate
The percent of deliverables that are received by the downstream operation or customer that do not need correction, addition, clarification, or rework?
Very similar to 'First Pass Yield' in a manufacturing environment.
Using your Functional Flowchart template, Percent Complete and Accurate is observed and entered directly.
When doing Value Stream Analysis, Percent Complete and Accurate is derived from Rework.
The formula is 1 minus Rework.
In other words, if Rework is 5%, then % Complete and Accurate is 95%.
The correct way to observe Percent Complete and Accurate is to ask the downstream recipient.
Don't ask the people doing the work. Ask the people that need to use their deliverables.
Bookmark = more
More Lean Glossary Terms
Bookmark = Gemba
The actual place where work is performed.
A structured way of thinking and acting that you practice until the pattern becomes a habit.
Learn more about Kata.
Bookmark = Sensei
Mentor, coach, teacher...
And every sensei needs their own sensei.
Bookmark = Consensus
Everyone feels that their ideas and concerns have been sincerely heard and listened to, and they are willing to fully support the agreed-upon course of action — even if it wasn't their first choice.
Consensus is NOT:
- Unanimous agreement
- Majority rule
OEE Overall Equipment Effectiveness
See the separate Glossary of terms for TPM Total Productive Maintenance and OEE Overall Equipment Effectiveness.
Bookmark = Reading
- Kaizen & Lean Training
- Value Stream Mapping Symbols and Concepts
- The full suite of Continuous Process Improvement Tools