SIP is not Takt Time

Kent,

I finally got around to reading the SIP paper you posted here in
December. I'm afraid I cannot agree with your definition of SIP.

You define it as the time taken for working code to emerge from the
value stream. This is known in manufacturing as Takt Time or in
plainer English, Lead Time or Cycle Time.

Lead Time is, in fact, the measure of efficiency in Lean Production,
though it is more usually referred to as "effectiveness". Business
Week, this week, has an article about GM and compares its' efficiency
with that of Toyota by displaying a graph of the "numbers of hours to
make a car" i.e. the time it takes for a car to emerge from the value
stream.

Lead time measures the "time to deliver value" or more accurately the
time to deliver "value-added" which is the difference between the
value of the output from the value of the input (raw material).

You are equating Takt Time with Inventory when you call it SIP
(software-in-process), i.e. work-in-process. You have probably read
about Little's Law which states that Lead Time and Inventory (or queue
size) are equivalent, though it should actually state that they are
directly proportional.

However, what is not stated in the high level books on this topic is
that Little's Law only holds as long as the production rate remains
constant. When the production rate fluctuates the linear relationship
between queue size (or inventory level) and lead time disappears.

Inventory is not Lead Time!

There was a recent thread "Is SIP an emergent property?" The answer is
"Yes" as long as it is using your definition which is actually Takt
Time. Takt Time is an emergent property of a production system.

However, Inventory is not an emergeny property of a the system.
Inventory is the input to the system. Inventory is often described in
units of dollars ($). This is because the important thing for a
business is to make money. Hence the value added by the business is
the value of the output less the value of the input (inventory).

Hence, reducing the time to produce value added from original
investment is critical to the profitability and return on investment
of the business. So Takt Time is a critical metric for Lean processes
but it is not Inventory. Why not?

Donald Reinertsen provides an excellent explanation of "why not" in
"Managing the Design Factory". Lead Time is known as a "lagging"
indicator. That means it can only be deduced after-the-fact and is
used for feedback i.e. Lead Time is an attribute of a reactionary
control system. Inventory, on the other hand, is known as a "leading"
indicator. That means it has the ability to predict the future and is
used for feed-forward control. Controllers which use feed-forward are
known as "predictive" controllers. Predictive controllers will always
out perform reactive controllers in measures of speed or time to
complete. Sometimes they do not perform so well in tasks of accuracy
or quality.

Takt Time is an emergent property, it is not an input and it already
has a name. It is not SIP. Hence, I believe that more work needs to be
done to get a proper definition for SIP.

In many other respects I agree with your sentiments about SIP. It is a
vital metric for Agile processes. However, in Lean, Inventory takes
second place to Value. With XP you always pushed working code as the
indicator of delivered value. I think you should stick with that as
the most important metric for Agile. Value is #1. Inventory is #2.
Takt Time (your current SIP) is #3 (though it is related to both Value
and Inventory). Last would be Operating Expense i.e. the cost of
operating the value stream - the development organization.

Regards,
David
--
David J. Anderson
http://www.uidesign.net/
The Webzine for Interaction Designers


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