Kanban Metrics

What are Kanban metrics?

In Agile Kanban, the following tools help the team to track the metrics visually named Kanban Board, Burndown Chart, and Cumulative Flow Diagram (CFD).

Some of the key metrics are:
Lead time and cycle time that deals with the average amount of time taken for a task to move from start to finish. Improving cycle times by removing waste and blockers help to achieve improved results.

The Cumulative Flow Diagram (CFD) helps to understand the number of work items in different states. Using this tool, the throughput can be improved by identifying the bottlenecks that need to be removed.

Work In Progress (WIP) limits are another useful and key metric used in Kanban. This shows the number of cards in one particular column at one time, and when it reaches the prescribed WIP limit the new cards will not be pulled until they are finished and moved to the next stage.

Team velocity defines the number of tasks a team can deliver in a given time (say, a week or iteration). The accuracy of calculating velocity is achieved with the help of periodically reviewing known tasks of similar size. This helps in the predictability of the workflow better.

How does Kanban calculate WIP Limit?

WIP Limit is the key metric in Kanban, which can be set at electronic Kanban board columns easily. It takes a while initially to arrive at the number for a new team and the project. However, we can compute this as follows:

For example, Assume if the team size is 3 developers and each team member can work on 2 tasks at a time. The WIP limit of the team is = 6 (3 developers X 2 tasks per developer)

How WIP factor is calculated against the team size?

WIP factor is calculated in terms of generally 1 to 1.5 times the total team count. For example, if the team size is 4, max of up to 6 items can be in progress state at any given time.

What is Kanban number?

The Kanban number is a simple calculation that has a circuit between downstream and upstream. It applies for both “production” and “move” Kanban.
Number of Kanban = [ DD * LT * (1 + % SS) ] / Q
DD =Daily Demand
LT = Lead Time (in Days)
SS = Safety Stock
Q = Quantity in a Container

Assume, a downstream process that uses 150 tapes/day (on average) and the lead time is 5 days.
The Safety Stock in percentage is 20% (to compensate for any delays)
Every container is of 25 tapes.

Number of Kanban = (150 * 5 * (1 + 20/100)) / 25 = 36 Kanban

This implies that in the “circuit” between upstream and downstream 36 Kanban has to be present.

What is a Cumulative Flow Diagram?

A Cumulative Flow Diagram (CFD) is a visual tool used as a metric in Kanban to understand the health of the project, analyse the flow of work in various stages and if any impediments, and track the overall progress of work. The CFD is also sometimes referred as burn-up chart.

Is there velocity in Kanban?

Unlike Scrum teams, Kanban doesn’t use a time-box (sprints) to deliver the work, but Kanban follows a flow-based model for delivering work. Since there is no sprint, there is no need for estimating the capacity for work allocation thus deriving the velocity of the team. However, there is no restriction in defining the velocity in Kanban.

The cycle time works as equivalent to Velocity in Kanban, which is the time taken to start and finish the work. Kanban also tracks throughput (work item completed in a given time), WIP, work item age metrics. Above all, Kanban teams can measure their “velocity” by the number of tasks completed in a day, and an average of these over a week will give the velocity. This may help the teams to understand how much work the team would be able to pull through from the backlog and complete them.

Also, we can calculate the derived velocity of Kanban teams by multiplying the throughput by an average story size (typically 3 to 5 points).

How is Takt time calculated?

TAKT time indicates the maximum time/speed at which a product is manufactured to meet the demands of the customer. It is the elapsed time between starting work on two consecutive items.

Companies that follow Lean methodology uses TAKT time as a metric to set the threshold of production floors to meet their customer demands and maintain a continuous flow of work stream. The formula for deriving TAKT time is as follows:
TAKT Time = (Net Time Available for Production)/(Customer’s Daily Demand)

How throughput is calculated?

Throughput is the number of items getting completed in the process flow at any given time. The formula for defining Throughput is as follows:
Throughput = WIP average X average cycle time.

Assume that you calculate the throughput on a weekly basis for your organisation. For a 5 weeks period, if the team delivers 7, 3, 8, 5, and 5 tasks respectively.

Then the average throughput is calculated as:
(7 + 3 + 8 + 5 + 5)/5 = 5.6 or 6 (round up) tasks per week.

What is Lead time?

Lead Time or cycle time is the average time taken to complete from start to finish off one item in the workflow. It gives insight into the team’s ability to finish the work and if the lead time is greater, then it may indicate the opportunities for improving flow efficiency or removing wastages.

How is lead time calculated in Kanban?

The lead time is calculated with the formula:
Lead time (LT) = Order Delivery Date (DD) – Order Request Date (RD)

In the inventory management, this formula is represented accounting the reordering delay.
Lead time (LT) = Supply Delay (SD) + Reordering Delay (RD)

Supply delay: Time taken by the supplier to fulfill a customer order after it’s placed.
Reordering delay: Time gap between a fulfilled order and the placement of the next order.