Issues in Sonoco :

Decentralised HR
INconsistane process
No Succession planiinh
Unaligned performance to compensation
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Glossary of Operations Terms
Bottleneck:The production resource that limits the capacity of the overall proce
ss. This is usually the production equipment at the step with the lowest overall
capacity, i.e., the longest cycle time. In some situations, the bottleneck reso
urces may be labor available at a particular step or steps.
Buffer: Interim storage where Work-in-process can be stored between steps in a p
rocess. In our laundry example, a laundry basket between the wash and dry cycles
could be considered a buffer.
Capacity: The maximum rate of output of a process, measured in units of output p
er unit of time. The unit of time may be of any length, a day, a shift, or a min
ute.
Cycle Time (CT): Average time between completion of successive units. It is dire
ctly related to the output rate. A process with an output rate of 4 units per ho
ur has a cycle time of 15 minutes.
Idle Time: The time when useful work is not being performed.
Lot Size (also called Batch Size): Number of units of a particular product type
that are produced before beginning production of another product type.
Manufacturing Lead Time (MLT): The amount of time each unit spends in the manufa
cturing process (sometimes called Throughput Time). This includes time spent act
ively being worked upon at each step of th the process as well as any time spend
waiting between steps. The concept of a lead time applies to the total time spe
nt in any process in which the start and finish are well-defined events. We can
talk about lead times, for example, in service operations, or in the entire orde
r-to-delivery process.
Operation, Operating System, (also Process): Any part of an organization that ta
kes inputs and transforms them into outputs of greater value to the organization
than the original inputs.
Process: For purposes of this workbook and these definitions, a "Process" may re
fer to the complete production process, such as doing a load of laundry or makin
g bread from start to finish, or to a segment of the complete process, such as t
he wash cycle or the baking process
Process Flow Diagram: Breaking a process into its discrete components and diagra
ming it as a series of small rectangles (processes), arrows (information and mat
erial flows), and inverted triangles (storage of goods).
Utilization: Ratio of the input actually used over the amount of the input avail
able. Labor utilization is the ratio of the actual labor time spent processing t
o the total amount of labor time available. Differences between the two can be d
ue to inefficiencies in the process that lead to lost working time, as well as t
o imbalances in the cycle times at each step of the process that lead to idle ti
me of workers at some steps while those at others are working. Capacity utilizat
ion is the ratio of the capacity actually used (i.e., the output of the process)

to th the total capacity available.

Work-in-Process: Number of units in the process at any point in time. If the pro
cess includes buffer inventories between steps, they the work-in-process is the
total number of units being worked upon as well as waiting in the inventory betw
een steps. The units in inventory are usually referred to as Work-in-process inv
entory, to distinguish them from raw materials inventory or finished goods inven
tory.
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Lead Time and Cycle Time are two important metrics in Lean and process improveme
nt in general. However, many people do not seem to understand the difference and
their relationship. In fact, many use them interchangeably. This can lead to co
nfusion in understanding the true problems in a process, and worse, poor decisio
ns in process improvement.
I often observe such confusion on internet discussions as well as in organizatio
ns I support in Lean Six Sigma training and deployment. Here is an example:
http://leanandkanban.wordpress.com/2009/04/18/lead-time-vs-cycle-time/
http://stefanroock.wordpress.com/2010/03/02/kanban-definition-of-lead-time-and-c
ycle-time/
Another example on the iSixSigma forum:
http://www.isixsigma.com/index.php?option=com_kunena&Itemid=151&func=view&catid=
5&id=183809#184000
Before I refer to a good source to help understand the definitions and applicati
on of these terms, let s consider a simple process doing laundry.
There are 3 steps: wash, dry, fold. If we assume the time to do each load is 30,
45 and 30 minutes, respectively, what are the Lead Time and Cycle Time of the p
rocess?
I encourage you to answer this question before going to the following link, whic
h used this simple process to illustrate these terms exactly 10 years ago (04/18
/2000).
http://hbswk.hbs.edu/archive/1460.html
You may notice that this link is not on Lean or Six Sigma but general business (
operations) management. These terms and concepts are not developed by, or limite
d to, Lean or Six Sigma.
In summary, here are what I use to help understand the difference and their rela
tionship.
1. Lead Time and Cycle Time don t have the same unit although their names are both
Time. Lead Time is measured by elapsed time (minutes, hours, etc.), whereas Cycle
Time is measured by the amount of time per unit (minutes/customer, hours/part,
etc.). It does not make any sense to add one to, or subtract one from, another.
2. Cycle Time is actually a measure of Throughput (units per period of time), wh
ich is the reciprocal of Cycle Time. This relationship is analogous to Takt Time
(amount of time per unit), which is the reciprocal of customer demand rate (uni
ts per period of time). Note that by definition, Cycle Time (or Takt Time) is an

average value.
3. Lead Time and Cycle Time are related by Work-in-progress (WIP) in the entire
process, in a relationship described by the Little s Law:
Lead Time = Cycle Time * WIP
Or,
Lead Time = WIP/Throughput
4. The Cycle Time above must be the process cycle time, which is determined by t
he bottleneck. Cycle Times of individual steps cannot be used alone to calculate
the process Lead Time without knowing the WIP.
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