Page 421 - Six Sigma Demystified

Part 3 S i x S i g m a To o l S 401

which will remove the statistical bias of the out-of-control points by dropping
them from the calculations of the average and control limits. See “Statistical
Process Control (SPC) Charts” and “Run-Test Rules” for more detail.

Velocity

Velocity is a lean metric useful for prioritizing cycle time improvement oppor-
tunities.

When to Use

Analyze Stage

• To prioritize cycle time improvement opportunities

Methodology

Velocity is calculated by dividing the number of value-added steps by the pro-
cess lead time:

Velocity = number of value-added steps/process lead time
Little’s law is used to calculate the process lead time by dividing the number
of items in the process by the completions per hour (George, 2002).

Process lead time = number items in process/completions per hour

For example, if it takes two hours on average to complete each purchase
order, then there are 0.5 completions per hour. This is the denominator of the

equation for Little’s law. If there are 10 purchase orders waiting in queue (the
numerator), then Little’s law says that we need 10 divided by ½ equals 20
hours of lead time for the process. In other words, we can’t process any new
orders until the 20-hour lead time has allowed the existing work-in-process to
be completed.
If there are five value-added process steps in this process, then the velocity
may be calculated as 5 divided by 20 equals 0.25 steps per hour. A process
observation log (see Table T.21) is a useful tool for analyzing the velocity of a
process. For each step in the process:

• Classify the step as value-added (VA), non-value-added but necessary
(NVA type 1), or non-value-added and unnecessary (NVA type 2).