From the course: Excel: Value Stream Mapping

Calculate total lead time and total processing time - Microsoft Excel Tutorial

From the course: Excel: Value Stream Mapping

Calculate total lead time and total processing time

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- [Instructor] After you fill out your value stream map, you can complete your preliminary analysis by adding up the total time spent adding value to a product and also the total lead time. Value added time is the amount of time that you're actually working on a product and lead time is the total time it takes to move through the entire process, including inventory time. So, I'll start by looking at the value added time and that is the process time. So, for limbs, that is 330 seconds, add that to 210 for the head and, for the back, it's 60 seconds and that comes up to a total of 600 seconds all together or 10 minutes. Now, we can look at the non-value added time which is, in this case, inventory time. So, we have 40 days at the first station, 30 at the second and 35 at the third, so we have 105 days. So, we have value add time of 10 minutes and non-value add of 105. With that information in mind, we can calculate our lead time and value add time. So, our lead time is all the time that we accounted for in the value stream map and that's 105 days and 10 minutes. Of that, the value added time is only 10 minutes. And, that might seem like an incredible disparity, but this is actually not an unusual ratio. Many companies decide to carry what they call safety stock. That is, if they can't get some components, then they want to have items in inventory to act as a buffer so that they can continue production and sale until they get their next shipment. Of course, inventory cost money to maintain, so it is in your best interest to get your inventory as low as possible and you need to weigh that against the danger of stocking out should you not be able to get the items that you need.

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