Q. 164  Process Cycle Efficiency is considered an important Lean Metric. However, it can be argued that it is not the best indicator for Process efficiency. Provide your views. 

 

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Process cycle efficiency is the proportion of time a process or activity is involved in carrying out value added activities. Therefore, this is also sometimes referred to as VA/NVA ratio.

All the activities involved within a process or throughout the process can be categorized into value added and Non value added activities. In Lean terms the value added activities are those in which customer is willing to pay. Non value added activities, hence are considered to be the "WASTE" for the process and the organisation. These wastes can be summarized  in terms of TIMWOODS i.e., Transportation, Inventory, Motion, Waiting, Overproduction, Over processing, Defect and underutilized skills. 

Process cycle efficiency once calculated gives a clear understanding on how much waste exists in the process. Average value added proportion with respect to the Non value added is around 5-10% : 90-95%. Thus the Process cycle efficiency helps significantly a tool or enabler for improving the overall process performance. 

However, it is not considered as the best metric for process efficiency because of following reasons:

 

a. Process cycle efficiency does not include the dynamic performance related to the quality parameters associated with the process. Lets say, in the welding process of sheet metal components , we have done the value added- Non value added ratio mapping and separated the VA and NVA activities. But it does not involve the rejection associated with the process during the welding activity. Process cycle efficiency might not be  the appropriate metric.

 

b. Uncertain breakdowns : Process cycle efficiency does not involve the hidden issues lying with the process. During the normal operation, various issues can erupt which certainly impacts the overall efficiency of the process. 

 

c. Performance of the process is a dynamic concept, in the sense that, it keeps on varying in commensurate to various internal and external factors. Process cycle efficiency will be an inaccurate metric to measure and manage the same. 

e.g, The performance of the Tablet coating machine has many dependent X's like spray rate, inlet pressure, air flow rate etc. and there are also certain  independent variables which are unknown factors. VA-NVA analysis also Process cycle efficiency does in incorporate these transient factors and hence does not qualify to be the best metric.

 

In totality, Process cycle efficiency contributes to build a strong process efficiency, however it cannot be considered as the best metric for measuring the process efficiency. 

We have several Lean metric available which helps to measure and improve the process, for example : Overall  Equipment effectiveness, Yield , Turnaround time etc.

 

Benchmark Six Sigma Expert View by Venugopal R

 

Process Cycle Efficiency is defined as the ratio of Value added time to the total cycle time of a process. It is an indicator of the extent of value adding time in a process as against the total cycle time. Here, the definition of ‘Value adding process step’ is based on whether a customer is willing to pay for that process step, or whether the process step results in some transformation of product, or it should not be an activity of rework.

 

Process Efficiency is determined as the ratio of Output to Input for a process. For example the process performed by an internal combustion engine for a vehicle is considered to be more efficient if it gives more mileage for one liter of fuel.

 

When a process consists of more number of non-value added steps, it would consume more resources as inputs and hence the process efficiency is bound to dip. In such cases, process cycle efficiency is certainly one of the important contributor to overall process efficiency.

 

For Processes that have a sequence of steps involved, PCE becomes more significant. For processes where the output yield is more important than cycle time, PCE may not be an relevant of adequate metric. For example, if we have a reverse osmosis process to purify water, the volume of pure water that comes out as against the volume of water consumed would give us the process efficiency, where as the role played by PCE may not be significant or adequate in relation with the overall process efficiency.

 

For an assembly line process, the number of products assembled in an hour would be an important metric and the Process Cycle Efficiency becomes an important metric influencing the Process efficiency.

The chosen best answer is that of Sreyash Sangam - PCE if looked at in isolation, may not give the complete picture about the process health. Please also read our expert view provided by Venugopal R.