What is Process Cycle Efficiency?
Process Cycle Efficiency, also known as “Flow Efficiency” or “Value Add Ratio,” is a measurement of the amount of value-add time in any process, relative to lead time (the time between the initiation and completion of a production process). The higher the ratio, the more efficient your process. This metric quantifies waste throughout a system of delivery. One form of waste I want to bring attention to is waiting.
Why is this important?
Particularly in application development in large organizations, we often spend more than 95 percent of our time waiting. First, let’s start by identifying where we are waiting, by using value stream mapping. A software development value stream typically goes something like this: design, develop, test, and deploy. That’s pretty much everything you need to develop a working tested increment of the product. Simply put, value-added time includes those activities. Non-value-add (wasted) time would include waiting to do those activities.
When should you use PCE?
When you believe your lead time is too long and you’re not sure where the bottlenecks are. Once you have exposed the waste in the form of wait queues, you can work to reduce their duration or frequency.
What do you need to Calculate PCE?
At a minimum, you should
- Map your value stream
- Identify value-add processes (states)
- Identify wait queues for value-add processes
- Have a method to calculate time work items are in each queue or state
Calculation Formula for PCE
Where,
- Value-Add Time = Time spent in ‘In-Progress’ process states. (Designing, Developing, Testing, etc.)
- Non-Value-Add Time = Time work sits in the backlog, the time work is waiting for value-add work to begin, and of course, it includes the time work is blocked. Let’s also not forget time work is sitting because defects are being remediated.
Referencing graphic at the beginning of the post:
- Lead Time = 155.1 days
- Design+Develop+Test+Deploy= 15.1 days of value-add time & Delays (waiting) = 140 days
- 15.1/155.1 = 9.7% PCE
Source: Leading Agile
FAQ's
- How can I improve Process Cycle Efficiency (PCE) in my development process?
To improve PCE, focus on optimizing value-add activities, reducing wait times through efficient resource allocation, streamlining workflows using agile or lean methodologies, and continuously monitoring and eliminating waste in the process.
- How does reducing lead time impact software development efficiency?
Reducing lead time by minimizing waiting periods and optimizing processes improves agility, responsiveness to customer needs, and overall efficiency in software development. It enables faster iterations, quicker feedback loops, and enhances team productivity.
- What are some common challenges in achieving high PCE in software development?
Common challenges include unclear requirements, inefficient communication among team members, dependencies on external stakeholders, and inadequate resource allocation. Addressing these challenges is critical to achieving high PCE and improving overall efficiency.
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