Process cycle efficiency (PCE): formula and calculation

Why it matters

Process cycle efficiency shows how much of the time a product spends in the flow is used for the transformation the customer wants. Work that creates the product's form or function right the first time makes up the value-added time. Waiting in a queue does not enter this time. Inspection may be necessary, but because it does not make the transformation wanted in the product, it is not automatically counted as value-added. The calculation is not an instruction to remove necessary work. It is a distinction that helps investigate why the times arise. If a product waits for a long time, a low ratio does not show that workers are slow. Approvals, transport and batch waits that build up around a short processing time may be determining the whole flow.

The meaning of the ratio depends on the start and end events. If you measure from entry into the first queue to the last accepted exit, the numerator and the denominator must come from within this boundary. The processing times cannot be taken from one family and the total time from another. Likewise, it is not valid to add the value-added times of different parts to the total time of one order. A single product, batch or order unit is chosen in advance. In a multi-product batch, you should not confuse the transformation time of one part with the total human work of the batch. The measure asked about describes the elapsed time of the product; it does not describe the sum of the working time spent by all the resources. A percentage whose boundary is not clear does not provide a reliable comparison, however many decimals it is given to.

The choice of time basis is also part of the result. A ratio calculated only with the minutes in the working calendar differs from a calendar ratio that includes closed hours. Both approaches can answer suitable questions, but they cannot be used in place of each other without explanation. In the main example of this lesson, the denominator is 1,500 working minutes of the same boundary; this time is not only the minutes in which the machine runs. Queue, transport and inspection also stay in the denominator with their scope in the working calendar. Taking waiting out and using only the active working time as the denominator produces a different measure. The heading of the result should show the product, the boundary and the time basis together. If these definitions are not preserved when comparing with the earlier state, the changed percentage may come not from an improvement but from a change of scope.

A high ratio does not mean a good result in every case. Slowing down value-added work enlarges the numerator share; the percentage can rise even if the total time also lengthens. For this reason, the lead time, the good-product output and the quality condition are tracked together with the ratio. The aim is not to lengthen the transformation to enlarge the ratio but to keep the necessary transformation safely and reduce the delay in the flow. The complement of the percentage is not time that can be removed immediately either. An approval, a safety check or necessary transport may not be achievable another way today. The necessity of the work and the cause of the delay are examined first. The decision to remove, combine or change the flow follows this examination. The ratio is not a single number that replaces the decision; it is a summary of evidence collected within the same scope.

Formula