During the 95 to 99.95 percent of the time a product or service is not receiving value while in the value-delivery system, the product or service is waiting.
The waiting time has three components. These are the amounts of time lost while waiting for:
completion of the batch a particular product or service is part of,
completion of the batch ahead of the batch a particular product or service is part of, and
management to get around to making and executing the decision to send the batch on to the next step of the value-adding process.
Generally the 95 to 99.95 percent of time lost divides almost equally among these three categories.
The amount of time lost is affected very little by working harder. But working smarter has tremendous impact. Companies that reduce the size of the batches they process – whether the batches are physical goods or packets of information – and streamline the work flows significantly reduce the time lost in their value-delivery systems. For example, when a manufacturer of hospital equipment reduced standard production lot sizes by half, the time required to manufacture the product declined by 65 percent. After the production flow was streamlined to reduce material handling and the number of intermediate events requiring scheduling was reduced, the total time was reduced by another 65 percent.
While these improvements are dramatic, this company barely escaped the .05 to 5 Rule. Its time productivity increased over 200 percent – from 3 percent to 7 percent.