Saturday, August 23, 2008

Time Shifts and Causality

When there is a time delay between cause and effect we tend to make incorrect assessments of causality. If the input and response are discrete (digital) a late response can cause us to assume there is no causal relationship. If the input and response are analog a late response can cause us to assume the transfer function is different, usually lower, than it really is. How do we eliminate time lags? By reducing WIP. Lean product development permits us to do this.

Friday, April 18, 2008

Maximizing Value-Added Time in PD

Is it desirable to have a high percentage of time adding value in a product development process? Not if you understand queueing theory. Processes with variability produce large queues when they have no excess capacity. A queue on the critical path generates cost equal to the cost of delay of the items in the queue. When we increasing levels of utilization we linearly decrease non-value added but we exponentially raise the cost of the queue. It is very easy to create queues that are much more expensive than the savings associated with higher utilization.

The central fallacy in maximizing value-added time in product development is that it focuses exclusively on efficiency which is a single measure of performance, and one of very little significance in product development. Unfortunately, efficiency and capacity utilization can be inversely with queue size. We optimize PD processes by focusing on overall system level effects, not single measures of performance.