We are talking today about another critical time concept related to the lean world: lead time.
Probably it is the least relevant of the three time-terms: takt time, cycle time, and lead time. It must be considered anyhow, as it reveals valuable information about the efficiency of manufacturing processes.
It measures the time from the order placement to the product delivery to the client.
Lead time includes preparation time (changes of tools, cleaning, etc.), cycle time (of the whole manufacturing process), and delivery time.
It is important to note that there is a common misconception between lead time and cycle time. Whereas the former measures the time from order to delivery, cycle time measures the time it takes to complete a production process.
However, cycle time directly affects lead time, and manufacturing businesses can significantly reduce it by analyzing and improving cycle time.
Lead time example
Consider this example: Company A receives an order from Customer Z for Product B every three days, but the lead time for that product is five days.
To solve this issue, Company A must have extra inventory to fill those orders successfully.
However, if the lead time is shortened to 3 days, Company A no longer needs to store extra inventory. The key is that the lead time meets the takt time, so the production keeps pace with customer orders.
Bear in mind that excess inventory is a critical waste of lean that can damage products, add extra cost, and slow down processes. Reducing inventory waste will decrease lead time, and inversely, high levels of inventory will lead to longer lead times.
Added Value Ratio
This term derives from lead time and refers to the time percentage in which the process performs added value activities to the product.
For example, an added value ratio (AVR) of 10% means that if lead time equals ten days, only one day adds value to the product.
Follow the next formula to calculate the added value ratio:
AVR = (Added Value Time / Total Lead Time) x 100
How to reduce lead time with ISC
All activities, wasteful or not, add up to lead time. But just a few solutions will reduce it.
Time and Motion Studies
Finding out where most of the time is spent within processes is crucial to reducing the time needed to achieve a specific goal.
Time and motion studies examine every single step of a manufacturing process in a recording. They are the best way to understand a process in-depth and to identify, reduce, and eliminate waste efficiently.
DGM is the ISC solution for time and motion studies focusing on machines. With an average improvement of 30%, it provides a full set of tools specific for machine analysis.
With a 20% average performance improvement, DGI is the ISC specific software for the time and motion studies of manual operations. It not only supports MTM-2 and lean ergonomics but also provides a full set of techniques intended for human works.
As seen in the example above, sub-optimal lead time creates inventory waste.
Line balancing can fix this problem by standardizing production and reducing idle time, thus minimizing work in progress (WIP).
As it reallocates resources properly (workers and machines), it will also eliminate bottlenecks and excess capacity on your line.
DGL, the line balancing software from ISC, will lighten the workload where there is inventory waste, and move it to places that can absorb more work.
The software is easy to use and straightforward: Draw your line, configure your preferred balancing strategy, and get the results within seconds!
DGL also provides a Simulation module that allows you to launch customizable simulations from your balanced line. This way, you will discover the future line behavior and anticipate new bottlenecks.
Lead time conclusion
Companies should focus on lead time as an indicator of their production efficiency. By optimizing it, they can obtain better flexibility and responsiveness, as well as safer planning.
Among other features, DGM and DGI reduce cycle time, and DGL removes inventory waste, balances your line, and finds out the optimal WIP value.
ISC is thus shaped as the complete optimization solution for mass production businesses