Little's Law - Reduce Variation

["John McConnell" <wysowl@msn.com.au>]

A few weeks ago I made comment on Little's Law.  Quite a few queries were
received and references sought, so it seemed a good idea to provide some
more detail for those interested.

Little's Law states:

Throughput volume = Work In Progress divided by Cycle Time

This law explains why so many have been so keen to attack cycle time in
recent years.  If cycle time can be reduced, one can increase output or
reduce WIP, or a little of both.

A corollary of Little's Law is that as variation decreases, so too does
cycle time.  Here we are discussing variation in volume.  So, if we focus on
variation, as Deming suggested, cycle time will fall.  If WIP is held
constant, Throughput will rise.

One company did a count of product in the process every morning.  That gave
them a WIP figure.  They knew what was coming out of the factory, and that
gave them the Throughput figure.  They then calculated and plotted the cycle
time along with the WIP and Throughput, from memory on a weekly basis.  As
they attacked variation, a fall in cycle time was noted.  Because they were
holding the throughput fairly constant, WIP also fell.  These charts are
used to monitor the process and are useful indicators of the success of
their continuing work to reduce variation.

A good reference is Factory Physics, by Hopp and Spearman.

I have a short newsletter on the subject.  If it is of interest to you, drop
me a line at the address below and it will be sent to you.

Cheerio!

John McConnell
wysowl@msn.com.au
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