Before pricing a lead-time improvement, separate queue time from paid processing time

[u/Trycos79]

Disclosure: I work in industrial product-cost consulting. This is a noncommercial method discussion, not a service offer. No company link. AI assistance was used in preparing the text.

A part can spend less time in a factory without requiring less machining or assembly work. I would separate those effects before putting a monetary value on a flow improvement.

A practical check:

- Define the boundary: order release to finished goods, or a narrower production step. Do not mix the two.

- Separate processing, waiting, transport and hold time using the same time basis.

- Measure average work in process, throughput rate and time within that same boundary and period.

- Test the cause of any improvement: less waiting, faster processing, changed product mix, or a different release policy.

MIT's Lean Thinking teaching material (January 2012) illustrates Little's Law: average work in process equals average throughput rate multiplied by average flow time. The terminology on a site's dashboard may differ, so define “cycle time” explicitly. It is a relationship between system averages, not a guarantee that cutting WIP alone preserves throughput.

Use consistent item counts and a sufficiently representative observation window; if WIP is building up or draining, do not treat a short-window comparison as a steady-state result.

The costing decision is separate. A reduction in queue time might support lower inventory, faster response or less expediting. It does not, by itself, establish fewer paid processing hours or lower conversion cost per accepted part. Any claimed labor benefit needs an actual resource change; an inventory cash release and a recurring expense change belong in different schedules.

Keep throughput, quality and delivery visible when testing a release-policy change. Moving a queue outside the chosen boundary is not the same as removing it. This is a measurement framework, not a customer case or a quantified saving.

Which boundary check is most useful for preventing a shorter reported lead time from being mistaken for lower processing cost? Please keep examples free of customer-confidential information.

[u/materialaccounting0]

Queue time vs processing time is the classic mixup that makes lean projects look better than they are. If you just pull the release trigger later, the part looks faster but nobody did less work

Little's Law only holds when you're measuring the same boundaries and the system is stable, otherwise you're comparing apples to a random Tuesday