CHAPTER 13: THE
SIGNIFICANCE OF LEAD
TIME
LEAN MANUFACTURING
MAGDALITA, JOHN LOIS S.
What is Lead Time?
Lead Time is the time taken from the moment an order is placed,
till the moment it is delivered to the customer.
Benefits of Lead-Time Reduction
As a Business Advantage
Ohno was quoted “All we are doing is looking at the time line, from
the moment the customer gives us an order to the point when we
collected the cash… and we are reducing that time line by removing
the non-value-added wastes.” For Ohno, lead time reduction is a key
method in improving cash flow in the company.
As a Manufacturing Advantage
Two key characteristics that few businesses measure in any form but
that all businesses want are flexibility and responsiveness. They go
hand-in-hand. With one, you also get the other. Two lead times are of
critical importance and we will elaborate further on them. They are as
follows:
First-piece lead time is the time it takes for the first piece to finish
and be ready for packaging. The primary benefit of this metric being
short is that, typically, the last quality inspection is done just prior to
packaging and so this is the response time it takes to confirm that
either quality is good, or we need to change the process.
Shipment lead time is the time it takes to complete the entire
shipment. This, of course, is the key metric used in planning.
The major benefits of reducing lead times are reduced carrying costs,
streamlined operations, and improved productivity.
Here are a few more specific benefits of lead time reduction:
• Flexibility during rapid shifts in the market
• The ability to outpace your competitors with faster, more efficient
output
• Quicker replenishment of stock to avoid stock outs, lost sales, and
lost customers
• Meeting deadlines consistently and easily
• Increases in cash flow because of increased order fulfillment.
Methods of Lead-Time Reductions
The Background
The Product
The Process
The Assembly Cell
The Analysis
• The Lead-Time Chart and Minimizing Lot Size
• Balancing the Assembly Cell
• Reducing the Changeover Time
Making the First Run
• Starting Production
• Encountering Quality Problems
• The Process Smoothes Out
The Results
• Labor Efficiency Skyrockets
• Changeover are increased, with No Out-of-Pocket costs
Techniques to Reduce Lead Times
Seven basic techniques can be employed ot reduce lead time and
improve flow;
• Reducing Production Time
Reducing production time is a combination of eliminating unnecessary
processing steps and reducing production defects
• Reducing Piece Wait Time
Piece wait time is reduced by balancing, so the flow is synchronized.
• Reducing Lot Wait Time
Is the time that a piece, within a lot, is waiting to be processed.
• Reducing Process Delays
Process delays is the time an entire lot is waiting to be processed.
Often it is called Queue time.
• Managing the Process to Absorb Deviations and Solve Problems
Many sources of deviation increase production lead times, such as
machinery breakdowns and stoppages for quality problems, to name
just a few. All of these deviations cause inventories to rise, and
inventories are the nemesis in Lean Manufacturing- we want to reach
zero inventory if we can.
• Reducing Transportation Delays
One-Piece flow, synchronization, and product leveling all place
emphasis on transportation, which is a waste.
• Reducing Changeover Times
Whenever a machine has multiple uses, we must changeover between
production runs. To maintain production before and after the machine,
we install inventory buffers that, while they allow continuous
production, slow down the overall flow.
Why Lead Time Is the Basic Measure of Being Lean?
Short lead times and lead-time reduction is such a basic tool in Lean
that you will find it to be strong measure of leanness. In addition, if a
company has short lead times, several other inferences can be drawn
about the company. Almost without exception, you will find that they
have:
• Good inventory management
• Good quality
• Good delivery performance
• Good machine availability
• Good problem solving
• Low levels of variation
• Stable processes
