DDMRP & DDOM

Metrics for Flow

Introduction

All meaningful operational improvement is rooted in flow. To manage flow effectively, organisations require metrics that reflect total system performance rather than local efficiency.

1: Metrics for Flow – Reliability

George Plossl stated that all benefits are directly related to the speed of flow of materials and information.

Flow describes how quickly materials and information move from demand to delivery. The first category of flow metrics is reliability.

Reliability answers a simple question. How well are we performing in the eyes of our customers?

The primary measure of reliability is Due Date Performance. It reflects whether the organisation delivers according to its promises and is a lagging indicator of operational control.

2: Metrics for Flow – Stability

Little’s Law states that work in progress equals flow rate multiplied by flow time.

This relationship explains why inventory and lead times are inseparable. High work in progress leads to longer flow times.

Operational stability is the ability to control how variability flows through the system. It does not eliminate variability but mitigates its impact.

A demand driven operating model based on pull principles is essential to achieving stability.

3: Metrics for Flow – Velocity

Velocity relates to flow time and is most clearly seen in cycle time from order to delivery.

In stable operating environments, cycle times naturally decrease. This is not achieved through pressure or expediting but is a by-product of improved flow.

Velocity creates competitive advantage when quality and capability are comparable.

Flow improvement follows a clear sequence. Reliability depends on stability. Velocity emerges once stability and reliability are in place.

Managing Manufacturing as a System

Introduction

Managing a manufacturing organisation is inherently complex. Variability, uncertainty, and interdependencies make it increasingly difficult to achieve objectives such as reliable delivery, shorter lead times, higher productivity, and lower inventory using traditional management approaches.

This series explores why manufacturing organisations must be understood and managed as systems, not as collections of independent departments. It establishes the systems perspective required before meaningful operational improvement is possible.

1: Key Objectives of Managing a Manufacturing Organisation

If manufacturing companies were simple, managing them would not be difficult. The reality, however, is very different.

Manufacturing environments are shaped by countless variables. Some are within a manager’s control, some can only be influenced, and others are entirely uncontrollable. These variables are also deeply interconnected, meaning a change in one area can trigger unexpected effects elsewhere.

Uncertainty further complicates matters. Market demand fluctuates, forecasts are often inaccurate, equipment can fail, and people, whether employees or suppliers, introduce additional unpredictability.

Given this reality, what should the objectives of managing a manufacturing organisation be?

Key objectives include simplicity, executable plans, flexibility, higher productivity, shorter lead times, improved efficiency, and lower inventory while maintaining or improving due date performance.

These objectives cannot be achieved by optimising departments in isolation. They require a systems perspective.

2: A Systems Approach – Part 1

Every organisation functions as a system. Manufacturing organisations, in particular, are best understood as complex adaptive systems.

Complex adaptive systems are dynamic, self-organising, and behave in ways that cannot be predicted by analysing individual parts in isolation.

• Non-linear interactions where small changes cause large effects
• The butterfly effect, where minor events escalate into major disruptions
• Disproportionate cause and effect, where low-value components halt high-value production

The implication is clear. Manufacturing organisations must be managed as systems, not collections of isolated functions.

3: A Systems Approach – Part 2

Most organisations are managed vertically through functional departments. Work, however, flows horizontally across functions.

This mismatch leads to poor overall performance, even when departments meet their local KPIs.

The reason lies in dependencies and variability. Delays accumulate across systems, while gains rarely do.

System optimisation requires coordination and synchronisation, not local optimisation.

4: A Systems Approach – Part 3

A manufacturing system can be compared to a chain, or more accurately, a network of chains. Like any chain, it is only as strong as its weakest link.

This weakest link is known as the constraint or control point. It is the factor that limits total system performance.

Improving non-constraining areas does not increase system output and often makes performance worse by increasing work in progress and lead times.

Identifying the constraint gives managers focus on what to improve and what not to improve.