Process Throughput

Process Throughput

Process throughput measures how much of a completed product a process delivers in a given period.

In traditional Kanban systems, it’s the number of completed cards per day, week, or a given iteration time. Process throughput, or flow rate, as it’s also called, has a direct relationship with the cycle time: the time it takes to complete a process. It’s one of the Lean and Lean Six Sigma metrics used to evaluate process performance.

It is important to note, that process throughput deals only with completed items, in the form that they are accepted by the customer, work in progress is not taken into account.

What does process throughput help to determine?

  • How long it will take before an order is fulfilled
  • What are the costs of the process (throughput accounting)
  • Staffing & production capacity and requirements
  • The process efficiency

The above 4 factors affect how successful your business will be, making process throughput one of the best Lean ways to measure efficiency and profitability. Process throughput, work in progress, and the cycle time are players in the Little’s Law, centered around the predictability of flow within a queue.

Throughput Calculation

Where cycle time measures how responsive to new orders a process is, the throughput measurement indicates the overall speed of processing. Before you can improve your process throughput, first establish a baseline of what the processing time and complexity are, and compare them to the industry’s benchmarks. Doing this will let you know if your change efforts are having the expected results.

How is process throughput calculated?

There are a few different ways of process throughput calculation:

  • Conducting a physical count of the number of items that a process completes in a given period. This, of course, needs to be averaged to get a reliable indication of the metric.
  • Pulling a throughput report from an electronic Kanban system
  • Dividing the current number of items in WIP by the cycle time value

Whichever calculation is used, it’s important for it to also consider the following:

  • the number of items ordered
    The difference between how many items were ordered and how many were produced matters, since a process that produces more items than customers are ordering is not Lean, and generates waste.
  • the number of defects
  • the number of items that underwent second-round processing
    If, either due to a defect in the process or other reasons, a portion of items ends up having to be processed more than once, this impacts the actual throughput value significantly and needs to be noted down for clarity.

What’s rolled throughput yield?

The rolled throughput yield (RTY) is another Lean Six Sigma metric, that measures the probability of the process creating a defect-free item. RTY takes into account any reworked items to provide a clear indication of the actual throughput.

Rolled throughput yield

Example If a chair manufacturer works on an order of 10 chairs, and during the process, 2 chairs need to be repainted due to sub-par paint quality, and 1 other chair is rejected by the client who deems it “wobbly”, it makes their RTY 70%. (10-3)/10 = 0,7.

Using process throughput in a small business

Example Let’s again consider the chair-making business, which has four departments, producing the following completed items each week.

Process throughput example

The team could either consider throughput for each process or analyze the throughput of the entire production. The individual throughput for the Design process would be 14, 10 for Assembly, 6 for Painting, and the same for Completed and sold.

Besides applying WIP limits to the Design and Assembly processes, the company could focus on other improvements, to increase their volume of 6 completed chairs a week. They could move 2 people from Design to Painting, which would likely increase the throughput by 2 chairs, meaning a 33 % improvement.

If they sell each chair for $100 and produce 8 chairs a week, that’s a total of $800. If the company’s operating expenses are $500 a week, then the net profit based on throughput is $300 a week.

Net profit calculation based on throughput

Aside from giving you an overall insight to the process profitability, paying attention to process throughput will also make it easier to identify productivity issues and help with keeping an even, steady, predictable flow of work. Take a look at why process unevenness is a trait you may want to diminish, by reading about Mura.