Control WIP by Relaxing the Targets for a Unit Cost at Production

Notes

When WIP becomes high, you can relax the targets for a unit cost at production, allowing for higher defects. This strategy will free up development resources to work on other tasks, but it will also increase the product's variance, increasing the costs associated with fixing those defects.

The new variances are painful for manufacturing because they require more inspection, testing, and rework. But the WIP decreases are a relief for development because now they have time to work on other tasks.

This tradeoff can be good because you don't increase the cycle time.

Questions

1. What is the tradeoff between relaxing the unit cost target and increasing WIP?
2. How does this strategy impact manufacturing costs?
3. Does this strategy free up resources for development to work on other tasks?

Backlinks

• The Principles of Product Development Flow
• Demand-Focused Approaches to Control WIP