Gerst 2/2/04 4:36 PM Page 1

CYCLE TIME REDUCTION

The Little Known Law

I
n physics, laws are a fundamental part of understanding how systems oper-
IDENTIFY A ate. E = mc2 is probably the most famous example. From these three sim-
PROCESS’S KEY ple letters, physicists have been able to improve their understanding of
how the universe works and make predictions about how things will behave
COMPONENTS TO under differing circumstances. It’s pretty powerful stuff.
Such laws also exist in the field of operations management. One stands out,
REDUCE CYCLE and managers should become much more familiar with it. It is called Little’s
TIME AND SAVE Law and is named after the man who first mathematically proved it, John D.C.
Little, former professor and chair of management science for the
MONEY. Massachusetts Institute of Technology’s Sloan School of Management.1
Little’s Law can be thought of as the master of cycle time because it defines
the critical relationships that dictate how long it will take, on average, to com-
plete the work tasks in any process. For example, it can determine how long
it takes to complete a manufactured good, process a customer order, serve a
patient in an emergency room or complete a construction project. And time,
especially cycle time, is money. By establishing the critical relations driving
By Robert Gerst, cycle time, Little provided the key to understanding process efficiency.
Converge A Look at the Law
Consulting Little’s Law states, “The average number of customers in a system over some
Group Inc. interval is equal to their average arrival rate, multiplied by their average time
in the system.”2 This can be represented as WIP = TH x CT, where:
• TH = throughput (arrival rate). This is the velocity or speed of production
and is calculated by determining how many items are produced and
dividing it by the length of time it took to produce them. It can, of course,
be computed from Little’s Law as TH = WIP/CT.
• CT = cycle time (average time in the system). This is the time it takes to
complete the production cycle or the average time it takes to produce
one unit. Generally, determining cycle time requires either direct meas-
urement or can be computed from Little’s Law as CT = WIP/TH.
• WIP = work in process (average number of units or customers in a sys-
tem). This is the number of items currently in production or being serv-
iced in some way. This figure must be measured (counted) directly or can
be computed from Little’s Law.
Little’s Law is now a fundamental part of queuing theory and has found
broad application in the design of computing systems, customer service func-
tions and logistics. But it has much broader application.
Even if you have never heard of Little’s Law, it may already be changing the
way you think about operations and production because organizations pursu-
ing lean production methods are pursuing an improvement strategy based on
the reality of the law. Lean assumes Little’s Law works.

18 I F E B R U A R Y 2 0 0 4 I W W W . A S Q . O R G
Gerst 2/2/04 4:36 PM Page 2
A Production Example
So what are the law’s implications for managers?
Considering a typical production situation of accept-
ing new orders into a production process, let’s assume
we are running a process in which throughput (TH),
the number of units we produce, equals 25 units per
day. Our work in process (WIP), the number of units
in various stages of production, remains relatively con-
stant at 100. Given these conditions, our cycle time,
the average time it takes to complete one unit, would
be four days (CT = WIP/TH, CT = 100/25, CT = 4).
This means we can accommodate new orders of 25
units each day and the system will remain balanced.
But suppose we receive an order for 60 units, 35 more
than the standard order of 25. The WIP would
increase from 100 units to 135, and because TH would
remain constant at 25 units per day, CT would imme-
diately increase from four days per unit to 5.4 days per
unit. The increase in orders (normally a good thing),
immediately causes a decrease in production efficien-
cy (a bad thing). This is one of the strange but accu-
rate implications of Little’s Law: Significant levels of
new orders cause production efficiency to decrease.
Adding to the confusion is the fact that delivery
promises made to customers at the time the orders are
taken are typically based on historical cycle times. In
this case, the cycle time is four days, but the very act of
taking these new orders has increased the cycle time
by 35%, making it impossible to meet the delivery
times promised.
Beyond the obvious results of missed delivery dates
and cancelled orders, these new orders may increase
interdepartmental squabbling. Marketing blames slow
operations for the missed deliveries, and operations
blames marketing for overpromising on delivery dates
to make sales. Both are victims of Little’s Law. If your
organization is confronted with sources of friction
such as this, you may want to conduct some operations
research to evaluate the extent to which Little’s Law is
at work in your organization. Chances are you’ll find
it is—with a vengeance.
Implications for Project Management
Little’s Law applies to problems in project manage-
ment in the same way, but instead of producing units,
we are now concerned with completing projects.
For example, an IT department may take on addi-
tional projects for client departments (increasing WIP)
without realizing it immediately causes the project
S I X S I G M A
The Little Known Law
completion time (CT) for all projects to increase. This
may explain why so many IT projects take longer than
expected. New projects added to the department’s list
of active projects immediately cause the time it takes to
complete each individual project to increase.
The same holds true for construction firms taking
on new or significantly larger projects or companies
increasing the number or scope of change initiatives,
such as those brought about by Six Sigma. In these
cases, increasing the number of projects (WIP) would
immediately yield a decline in performance in the
form of increased cycle time.
This causes a general slowdown in the delivery of all
projects as resources become spread too thin and pro-
duction or operational bottlenecks emerge, resulting
in a failure to meet delivery times, declining opera-
tional performance, overall project failures and can-
cellations.
Little’s Law Is Everywhere
Little’s Law applies to any system, not just manufac-
turing or project management applications. Once you
become familiar with it, you will begin to look at every-
thing just a little differently.
For example, a social services agency may run a suc-
cessful counseling program that lasts five weeks (CT).
At any time there are approximately 50 people
enrolled (WIP) in the program, which means the pro-
gram is graduating about 10 people per week (TH).
This then, is the maximum number of new clients the
agency can accept each week if it is to keep its pro-
gram intact. If it decided to take on 15 clients in a spe-
cific week, the cycle time would increase to five-and-a-
half weeks. Schedules would immediately become
problematic and the quality of the program would
decline for those enrolled. This explains, at least in
part, how so many successful programs become the
victims of their own success.
Here is another favorite example of mine. Consider
the new wave of million dollar enterprisewide
accounting and information processing systems some
organizations are purchasing today. The general man-
agement consensus is that these new systems will make
for faster, improved decision making by making avail-
able more information of better quality. Well, maybe.
An argument can be made that such systems also
increase the amount of information (WIP) added to
the decision making process. With this increase in
WIP, the time it takes to make decisions (CT) will
increase. By making more information available for
F O R U M M A G A Z I N E I F E B R U A R Y 2 0 0 4 I 19
Gerst 2/2/04 4:36 PM Page 3
The Little Known Law
processing, these new systems will ensure decision
making takes longer, and the quality of decisions
made will decline.3
Other examples abound. What are the implications
of increasing classroom size in public schools, the
impact of growth on corporate resource departments
such as human resources and finance or the impact of
adding additional product lines or pricing schemes on
order processing? Plugging the numbers into Little’s
Law often yields interesting and surprising results.
How Long Does It Take?
It is surprising how many people, including man-
agers, executives and others involved in perform-
ance or process improvement initiatives, confuse
throughput (TH) with cycle time (CT). How many
times have we heard someone ask, “How long does
it take us to process a customer’s order, serve a
customer, move components from inventory to a
manufacturing station, process a payment or com-
plete a task?”
Any process owner should know the answers to
these common, essential questions as they all
demand a response in terms of CT. However, the
answer provided is often a variation of TH. This
occurs when the answer is calculated by taking TH
(say 100 units a day) and dividing by the available
time (eight hours in a day) to provide an answer of
12.5 units per hour or one unit every 21 minutes
(100 units divided by eight hours).
This answer gives the impression it takes 21 min-
utes to produce an item from start to finish, but this
isn’t the CT at all. It’s takt time or the inverse of TH.
In fact, given the data presented, we have no idea
what the CT is.
To find the CT we would have to physically time
units from the time they entered the production
cycle to when they left the production cycle. Or we
could use Little’s Law. To do so, we would just need
to know the level of work in process (WIP). If the WIP
was 800 units, the cycle time would be eight days
(CT = WIP/TH, CT = 800 units/100 units per day, CT
= eight days). This is a far cry from 21 minutes.
20 I F E B R U A R Y 2 0 0 4 I W W W . A S Q . O R G
The Law Is the Law
Most organizations and managers are unaware of
Little’s Law, and those that are aware of it tend not to
believe it. The implications are, at times, just too coun-
terintuitive. But the law is the law, and Little’s Law is
one you ignore at significant potential cost.
An increase in work, be it in the form of new or big-
ger projects, orders or customers, will tend to increase
cycle time for all items currently in the system, causing a
decline in system performance across the
board assuming throughput stays con-
stant. You cannot escape it.
To improve cycle time, only two
options are available:
1. Increase throughput. This may re-
quire process improvement or a signifi-
cant investment to increase the scale of
the system to better handle the increase
of WIP. This is fine when considering
longer-term system capacity. It is imprac-
tical, however, when addressing relative-
ly short-term variations in demand.
2. Reduce WIP. Only this option can be
used to effectively address these short-
term demand variations. Reducing WIP
may require some counterintuitive
actions, such as temporarily pulling
projects or orders out of the workflow
and setting them aside. With the result-
ing decline in WIP, cycle time drops and
the remaining projects get done better
and faster, so much so that projects orig-
inally pulled out of the workflow can
then be reinserted and completed on or
before the original target date. In other
words, by stopping work on a project, it
gets done faster. Now that is counterin-
tuitive!
If you don’t believe it, consider this
example from Boeing concerning the
production of the C-17 Globemaster.4 In
the early years, production of the C-17
was fraught with problems. There were
quality issues, significant cost overruns
and aircraft were constantly delivered
late to the customer, in this case, the
U.S. Air Force.
Figure 1 shows the delivery times rela-
tive to the schedule for every C-17 deliv-
ered to the Air Force from 1992 through
Gerst 2/2/04 4:36 PM Page 4

The Little Known Law

2000. The negative numbers in 1992 and 1993 indi- tasks at one station were not completed, aircraft were
cate late deliveries (slow cycle times). The improve- moved to the next station where personnel played
ments in 1993 and early 1994 gave program managers catch-up in assembly. Boeing believed it had to keep
at Boeing some hope. They thought they were making the planes moving to meet the schedule.
progress and deliveries would soon be on schedule. What Kozlowski did was make quality king by
But when it became apparent plane 12 was going to dethroning the schedule as the critical driver of pro-
be significantly behind schedule, Don Kozlowski, gen- duction. He decided no plane would move forward in
eral manager of the C-17 program, realized that to the production cycle until all tasks associated with that
have any hope of meeting the delivery schedule, station were completed and completed well. This
things were going to have to be done differently. What meant there were times when an assembly team had
he did was revolutionary. He temporarily took air- nothing to do while it waited for the station ahead to
planes out of the workflow (reducing WIP) so the complete its tasks. These planes in waiting were essen-
cycle times improved. In other words, Kozlowski tially taken out of the workflow (temporarily reducing
reduced the time it took to assemble a C-17 by stop- WIP) while work progressed on the plane holding up
ping work on selected C-17s in production. production. Once the plane holding up production
At the time, aircraft moved through various stations was capable of moving ahead to the next station, all
on the assembly line with a specific set of tasks con- planes in the workflow moved forward and work on
ducted at each station. Keeping the aircraft moving them proceeded.
through the stations was paramount. Even if all the The success of this approach is evident in Figure 1.

Figure 1. Delivery Time Relative to Schedule

1992 1993 1994 1995 1996 1997 1998 1999 2000

180
<= Days early =>

150

120

90
Delivery relative to commitments

60

30

-30
That’s it, hold the aircraft.

-60

-90
<= Days late =>

-120

-150

-180
P1 P5 P9 P13 P17 P21 P25 P29 P33 P37 P41 P45 P49 P53 P57 P61

P = plane number

S I X S I G M A F O R U M M A G A Z I N E I F E B R U A R Y 2 0 0 4 I 21
Gerst 2/2/04 4:36 PM Page 5
The Little Known Law
SOME COMFORT CAN BE TAKEN IN THE FACT THAT, IF YOU OR YOUR
ORGANIZATION IS PURSUING LEAN METHODS, YOU ARE ALREADY TAKING
ADVANTAGE OF LITTLE’S LAW.
While plane 12 was late, the plane behind it, number
13, was delivered to the Air Force slightly ahead of
schedule, and the program has never looked back
since. Cycle time to budget subsequently skyrocketed,
as did quality, with C-17s being delivered to the Air
Force in advance of schedule by as much as 170 days.
By stopping work on aircraft in production, Kozlowski
and his eventual replacement, David Spong, assured
they were completed not only better, but faster.
Neither Kozlowski nor Spong thought of Little’s
Law when they made the decisions they did. But aware
of it or not, both took advantage of its fundamental
principles.
Taking Advantage of Little’s Law
So how can you take advantage of Little’s Law?
1. Accept it. Managers who are aware of Little’s Law
tend not to believe it. Like the law of gravity, how-
ever, Little’s Law is not influenced by whether you
believe in it. You can refuse to accept it and watch
your production efficiency fall like a stone. Or,
you can accept it, using it to balance system
capacity with new arrivals and thereby maximize
the short-term efficiency of the system.
2. Determine cycle time. Unfortunately, cycle time is
often difficult to measure. With Little’s Law, how-
ever, you don’t need to measure cycle time directly.
If you know how many units (orders, people and
projects) are in the system (WIP) and how many of
these are completed during some specified time
period (TH), cycle time (CT) can easily be com-
puted. Little’s Law provides an easy and accurate
way of answering the question, how long does it
take? (See sidebar “How Long Does It Take?” p. 20)
Little’s Law and Lean
Many organizations today are pursuing improve-
ment strategies based on lean methods or lean think-
ing. Few realize, however, that lean methods are con-
structed on the foundation of Little’s Law. That may be
22 I F E B R U A R Y 2 0 0 4 I W W W . A S Q . O R G
why so much of lean thinking is also counterintuitive.
Traditional management thinking argues for large
production volumes to gain economies of scale. To do
so, companies produce large volumes of parts that are
later assembled in large volumes into finished prod-
ucts. The economics of this is obvious—make lots of a
specific item, and you can make it cheaply.
It’s not so obvious to those familiar with Little’s Law,
however. Lean thinking argues that these traditional
management practices also yield large levels of WIP.
With the increasing WIP comes increasing cycle times
and falling levels of system performance and efficien-
cy. This means large production volumes look eco-
nomical only when measuring the relatively narrow
cost of production for each individual part. When
looking at the larger system, including the cost associ-
ated with holding inventories, the total cost of pro-
duction tends to rise with large production volumes.
That is why lean thinking pursues methods such as
single piece flow, pull systems, kanban, takt time pro-
duction targets and complexity reduction. These
approaches are all designed to produce low levels of
WIP and, in keeping with Little’s Law, improve cycle
times.
Seeking Further Opportunities for Improvement
Some comfort can be taken in the fact that, if you or
your organization is pursuing lean methods, you are
already taking advantage of Little’s Law. Knowing
what is behind many of the lean methods makes it eas-
ier to see new opportunities for applying lean con-
cepts. A good place to start looking for these oppor-
tunities is wherever there is some form of system that
must respond to changes in input volume, such as
arrival rates, new order rates or new projects.
Some years ago, I was contracted to assist some
process improvement teams in their attempt to
enhance the efficiency of a large scale natural gas pro-
cessing plant in southern Alberta. This included help-
ing teams properly analyze and interpret plant data
using statistical process control.
A major issue for this plant concerned the number
Gerst 2/2/04 4:36 PM Page 6
of shut-ins. A shut-in occurs when the gas being pro-
duced is of insufficient quality and is denied access to
the outgoing pipeline distribution network, thus
being “shut-in” the plant. Without the usual outlet and
with the gas having to go somewhere, the plant is
forced to flare the gas—a nice way of saying they burn
it. Thus, thousands of dollars worth of production lit-
erally goes up in smoke.
In reviewing a few basic control charts, one process
improvement team noticed shut-ins occurred shortly
after any sudden increase in the volume of raw,
unprocessed gas flowing into the plant. These increas-
es in input volumes were driven by customer demand.
When sufficient new orders for gas came in, field staff
were directed to open the taps of field wells that led to
the plant. This increase in volume would then drive
the plant to a shut-in position even when the change
was well within the plant’s operating capacity. It wasn’t
the volume of input gas that was creating the problem,
it was the short-term variation in input.
We quickly recognized this as just another dimen-
sion of Little’s Law. Even though some of the assump-
tions of Little’s Law were arguably violated in this case,
the system represented by the gas plant was still oper-
ating in accordance with the law’s fundamentals.
Specifically, a change in input volume (short-term vari-
ation) slowed the processing cycle and drove efficiency
down to a point where the plant was essentially crash-
ing. The solution was simple: Limit the amount of new
input gas that could be turned on within a 24 hour
period. A simple protocol reflecting the new rules was
developed that day and communicated to field staff.
Plant shut-ins fell from several a year to zero.
Other Systems
What other systems might benefit from considera-
tion of Little’s Law? Here are a few questions to get
those creative juices flowing:
• What is the impact on hospital or medical system
efficiency given changes in arrival or referral rates?
To what degree are cycle times within a hospital or
emergency department impacted by differences in
arrival rates? What are the implications for medical
service design? In the context of Little’s Law, many
of the initiatives designed to improve hospital effi-
ciency seem destined to do just the opposite.
• How are engineering and construction compa-
S I X S I G M A
The Little Known Law
nies impacted by a sudden increase in the num-
ber or scope of construction projects? Little’s Law
infers estimation processes based on individual
project costs would not be able to assess the
impact of having multiple projects in process.
Thus, the ability to effectively estimate required
project resources should decline with the increas-
ing scale or number of projects in process.
• What is the impact of a company’s sales ordering
processes on its ability to deliver the products or
services sold? Do its scheduling or ordering sys-
tems specifically take Little’s Law into considera-
tion? If not, the company is likely sacrificing pro-
duction efficiency and customer satisfaction.
Little’s Law was originally formulated to address sys-
tem performance in the context of customer service—
specifically the ability of a system to serve a customer
given changes in arrival rates. However, the law can be
applied to any production system that is dependent on
input volume, including patient scheduling, gas plant
operations, project management, call center manage-
ment, and manufacturing and production planning.
Clearly, Little’s Law deserves even wider recognition
and application. Managers and those concerned with
efficient operations should heed the law’s inescapable
constraints.
REFERENCES AND NOTES
1. John D.C. Little, “A Proof for the Queuing Formula: L = λ W,”
Operations Research, Vol. 9, No. 3, 1961, pp. 383-387.
2. Ibid.
3. The full process of management decision making is considerably more
complex than I have described here, and in that context, enterprisewide sys-
tems may yield considerable advantages over older systems. My point is that
such systems present the real opportunity of yielding precisely the opposite
results of what they are designed to do, and these possibilities are rarely
identified.
4. I am grateful to David Spong, president of Boeing Military Aerospace
Support, for giving me permission to use this example from Boeing’s C-17
program.
WHAT DO YOU THINK OF THIS ARTICLE? Please share
your comments and thoughts with the editor by e-mailing
godfrey@asq.org.
F O R U M M A G A Z I N E I F E B R U A R Y 2 0 0 4 I 23