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
Table of Contents
Bookmark = TheThing
The Thing being transformed
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.
In a medical environment, the thing might be a patient.
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 = LeadTime
Lead Time = the average 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
Also known as “Throughput Time”, "Delivery Time", or “Turnaround Time”
Lead Time = Sum of all Process Lead Times + Sum of all Queue Times between processes
In practice, the term “Lead Time” usually means “Production Lead Time”,
but technically, there are several more subtle and exact types of Lead Time:
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.
(Order-to-Cash Time might be shorter or longer than Order Lead Time)
Time between receiving a customer request for quotation and receiving final payment.
(Of particular interest for engineer-to-order production environments)
Learn more about the segments of a value stream
Lead Time Calculator
The Lead Time Unit of Measure Converter
on your Value Stream Mapping template
allows you at any time to quickly convert between
Working Days, Calendar Days, Hours, or Weeks.
WIP Increases Lead Time
Notice how the number of units of Work In Process (WIP) radically increases lead time.
This is one of several reasons that Lean is so obsessed with small batch sizes.
'Time delays between processes' are often the greatest contributor to Lead Time —
and often present the greatest opportunities for “low hanging fruit” to quickly eliminate waste.
Bookmark = QueueTime
Queue Time = The time between sub-processes that the thing gets shuffled around or sits around waiting
for someone to work on it.
Also known as “Waiting & Transportation Time” or “Inventory/Transportation Time”
See advanced training for how to handle queue time for a shared process.
Bookmark = ProcessingTime
Processing Time = The time that the thing is being worked on by an Operator.
Also known as “Process Time” or “Touch 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
Processing 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.
Just remember... Processing Time is all about the Operator (not the machine).
(with very little human interaction required)
On your Value Stream Map,
simply override Cycle Time
with the value for your Machine Cycle Time.
Bookmark = ValueAddTime
Value Add 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.
also known as Value Creating Time
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.
Because some non-customer-facing supporting value streams, (such as accounting, purchasing, IT...), won't have ANY Value Add Time (using the classic definition)...
some teams differentiate “Customer Value Add Time” from “Organizational Value Add Time”.
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
Machine Time = 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.
For example — 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.
Notice that Machine Time is very different from Machine Cycle Time.
In many production environments — “Machine Time” is used to measure any process
that does not require Operator involvement. Perhaps waiting for sediment to settle,
or for glue to dry...
Rather than trying to rename the field, we suggest educating your users to understand your unique use of the field — because all of the Lean literature uses the term “Machine Time” — even though it can be used in creative ways.
Bookmark = ProcessLeadTime
Process Lead Time = The time that the thing is “being worked on”
before it can be passed on to the next process.
Process Lead Time = Processing Time * Batch Size
Processing Time must be converted from the Cycle Time Unit of Measure
(usually seconds) into the Lead Time Unit of Measure (usually days)
If the Operator is involved in every moment of the process, and you have
a batch size of 1...
then Process Lead Time is simply Processing Time calculated into a tiny decimal fraction of a day.
The actual calculation takes into consideration the number of shifts, and breaks, and other factors — but the resulting number is so small that it can often be safely ignored.
What if the product is still “being worked on” in a way that doesn't require the Operator?
Machine Time has absolutely no effect on Processing Time — except to the extent that the Operator might be caused to wait for the machine to finish doing its thing. This “Wait Time” is included within Processing Time.
And therefore, Process Lead Time that includes Wait Time is still simply Processing Time translated into days instead of seconds.
What happens if the product is still “being worked on” in a way that doesn't require the Operator to sit around
and wait for it? (e.g. drying time, curing time, etc.)
Then Process Lead Time is NOT just Processing Time translated from seconds into days. You can override Process Lead Time to show that even though the Operator only needs to spend 30 seconds painting the product, it takes 2 days for the paint to dry — before the product can then be moved to the next process.
In this example — Processing Time = 30 seconds, and Process Lead Time = 2 days.
Bookmark = CycleTime
also known as Exit Cycles
Cycle Time = The average time between completed units “coming out the end of the pipe”
Example: 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 = Cycle Time adjusted for all the factors that reduce Work Time Available and Productivity.
Also known as Output Pace
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 = WorkingTimeAvailable
Working Time Available
aka Time Available for Work, or Work Time Available
To calculate Working Time Available, deduct breaks, meetings, beginning of shift set-up,
end of shift clean-up, planned maintenance, and most other planned non-working time.
Do NOT deduct unplanned downtime or change-overs.
Although Working Time Available is usually calculated in minutes,
it might need to be converted into seconds for templates where Systems2win has not provided sophisticated calculations to automatically convert time units of measure.
Bookmark = TaktTime
Also known as “rate of customer demand” or “pace of customer demand”
Takt Time = Your planning drumbeat.
How often completed units NEED to come out the end of the pipe — as established by customer demand.
Calculation = Working Time Available / Target Units to Produce
Example: 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.
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.
Example: The quoting process is capable of processing 5 quotes per day, and only 1 of those can be a complex quote.
Operational Takt Time
In most real-world production situations,
Bookmark = TargetCycleTime
Target Cycle Time = Operational Takt Time adjusted for other factors
Also known as Planned Cycle Time
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.
Examples: 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
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
If Takt Time is 10 seconds,
and pallet size is 1200 units
then pitch = 10 seconds x 1200 units = 12000 seconds (or 200 minutes)
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)
In other words...
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
Or 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)
then you can optionally override Pitch Batch Size for any operation, but it is very rare.
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
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.
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 a nurse 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 Batch Sizes of 120, or 12, or (ideally) just 1.
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 Value Stream Mapping Power Tool to calculate the Smallest Change Over Batch Size for your pacemaker and/or bottleneck operations.
Bookmark = OOCW
Out of Cycle Work = mid-shift operations that are not performed in every cycle, but reduce time available to meet Takt Time
Also known as Planned Downtime
Examples: setup change-overs between runs, inspection, palletizing, routine mid-shift maintenance, routine mid-shift quality checks, and any other activities that have their own mid-shift cycles that happen regularly, but not with every cycle.
There are several approaches for how to handle Out of Cycle Work:
- The most common practice is to deduct most (if not all) foreseeable Out of Cycle Work from the
“Work Time Available” that is used to calculate Takt Time in the first place. (See Takt Time above.)
- Another approach is to use a top-level StdWk sheet for a longer cycle.
(Long enough to include the longer recurring cycles)
And then roll data up from and drill down to sub-level StdWk sheets (or separate workbooks)
and/or other related documents containing the details of each sub-process.
For sub-processes that have a more frequent cycle than the top level —
simply multiply the linked lower-level Cycle Time by the number of cycles for that subprocess.
- Run (multiplying the linked rolled up Cycle Time by the number of cycles run per shift)
- Inspection (multiplying by the number of inspections per shift)
- Clean up
- Another (less popular) approach:
Your Systems2win Standard Work template also provides a User Defined field
(two rows beneath Target Cycle Time) — and the data in that field will generate a fourth line on the Standard Work Combination Table. This field can optionally be used to graphically depict Out of Cycle Work over and above regular Cycle Time.
(Note: This option only makes sense for processes staffed with a single operator, or multiple operators performing every operation — following each other in a circular work cell.)
You can mix and match any or all of the above approaches — making your own decisions for which work elements should be deducted from Work Time Available, and which (if any) should be handled differently.
In the above example — you might simply remove setup and clean up time from Work Time Available,
and then perhaps use drill down/roll ups for some other elements.
No matter how you handle Out of Cycle Work, you should document your supporting calculations —
in either a text box, the Custom Formula Zone, or links to related documents.
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?”
How to calculate 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 calcuate it
Using your Value Stream Mapping PowerTool
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 are very useful for hiding problems beneath the surface — 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”. Refer to Systems2win Lean & Kaizen online training.
More Lean Manufacturing 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 on our Kata training page.
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