Kanban WIP limits: Why limit work in progress? - YouTube

Limiting work in progress is a characteristic  feature of Kanban. It is of paramount importance  

as to why the system works so well. When you  first think about it, it may seem counterintuitive -

are we telling people to work less? No. Limiting  WIP doesn't mean to limit work itself, but to  

limit how many tasks can be started all  at once. Kanban came from manufacturing,  

where businesses keep a production  inventory for use in their processes.  

There are normally three types of inventory: raw  materials, work in progress, and finished products.

Why is limiting WIP considered a good thing, and should it be?

You've probably heard people say that "cash  is king". In many cases, this is true.  

It's not always important how many assets the company  has if it can't convert them to, or otherwise  

generate the cash when it's needed. At the end  of each month, you can only sell finished goods,  

while any incomplete work becomes an expense - not  a value-adding asset. This singles out throughput,  

inventories, and operating expenses as three  main measures of productivity constraint.

So, why should we limit work in progress? To foster a culture of finishing work,

and reduce time to market. Your profit lies in the finished goods, not in WIP.

And - if you're running a cash type business - do  you want to have 30 items halfway through to  

being sold, or rather 10 items ready to go? If a company can sell only 10 items a month, focus on  

those 10 items, so they can be monetized, instead  of starting with 30, and adding unnecessary work,  

that can't turn profit. If you limit your focus  to just a few things, they will get done quicker,  

and you'll avoid having too much work started,  with nothing to show for it at the end of the day.  

Thanks to starting work only on what can  be finished, you are ensuring the process  

is running at its highest possible material  throughput. That means less waste and more sales.  

Furthermore, by forcing the team not to process new  items while previous ones are still in progress,  

you'd be implementing a true pull process  model. Limiting work in progress is good,

but if done incorrectly, other problems may  arise - like a company producing fewer items  

than it is capable of. It's important to look  at where in the process you should limit work.  

Let's look at an example. We have six people  split into three teams at a chair manufacturer, 

and they can produce three complete chairs a week.  The design team can design seven chairs a week,  

and the builders can produce five chairs, but the  painter can only paint three chairs a week.  

What would happen, if each team worked at their maximum  capacity? Remember, that WIP is an inventory item.  

We notice large stacks of inventory at the design  stage, and under chair assembly, but why are items  

piling up there? Because the chair painting team  is the bottleneck, the constraint of the process,

only completing three chairs a week. Here, we  would limit the chair assembly team to only  

produce three chairs a week. Ideally, the  other teams should help the painting team  

when they are finished producing their items. This would improve the system's throughput.

Suddenly, the company is producing more than  three chairs per week, and employee engagement  

is improving along with the throughput. To apply a WIP limit appropriate to your process, you need to  

analyze it, and find the slowest cog in the machine.  For a start, just walk your factory or office floor.

Look around for team members who are overloaded,  and have a lot of inventory on their desks. 

That's how you will find your bottleneck. Go talk to the team,  

working at the bottleneck step, and see how you  can limit work to them. It will help your whole  

company work faster and your employees will love  you for it. As your process changes, the team grows  

shrinks, or changes. The applied WIP limit may  need adjusting. Keep an eye on it, to maintain  

your optimal throughput levels. Now you know why limiting work in progress is a good thing,  

and how to apply it. Follow us, to learn more about WIP limits and productivity!