A reduction in Lead Time is the goal and consequence of any project or initiative to improve productivity, competitiveness or efficiency and, at Itemsa, we are experts in helping our clients in these three aspects; that is why a reduction in Lead Time is usually one of the main goals of many of our projects.
What is Lead Time?
In an industrial environment, Lead Time is the time that elapses from the moment a part enters the factory as a raw material or component until it leaves it as part of the final product; therefore, any reduction of this time as well as of the possible waste in its management represents an improvement in the company’s productivity and in the efficiency of its manufacturing processes.
It is important to highlight that Lead Time is a concept that not only applies to the industrial world but that, apart from manufacturing lead time, there is also logistics lead time (referring to the management, preparation and delivery time of an order) or lead time GAP (which refers to the maximum time that customers are willing to wait).
How can we reduce lead time?
It is therefore evident that in a production environment in which lean manufacturing is applied, the reduction of lead time is usually one of the fundamental goals. The aim is to reduce the combined lead time, not only of the process in question, but also the various subprocesses that are part of that process. An optimal organisation of workstations, as well as of processes and working methods, will lead to a reduction in lead time. Thus, with the same number of resources (workers, machines, etc.), it will be possible to produce more output in a shorter time and, therefore, also at a lower cost.
Benefits of reducing Lead Time
As we have stated before, an improvement in lead time can be translated mainly into increases in capacity, productivity and competitiveness of the company, reductions in stocks and space, as well as greater process efficiency. But, apart from these, there are other benefits derived from these processes of reducing the manufacturing and/or delivery time of a product:
- Increased flexibility when there are sudden changes in orders
- Increased ability to outperform competitors with a faster and more efficient output
- Faster replenishment of stock, which allows avoiding excess stocks and extra logistics or storage costs.
- Meeting delivery deadlines and increasing customer satisfaction
- Increased cash flow due to increased order fulfilment
How is the Lead Time calculated in a company?
In order to calculate the lead time, those factors affecting each company must be taken into account; however, there is a basic formula to start with:
Lead time = desired date – date of receipt of order
Or other versions might be:
Lead time = date of delivery – date of receipt of order
Lead time = confirmed date – date of receipt of order
How can Itemsa help you to reduce it in your company?
At Itemsa we have been helping companies to improve their productivity and competitiveness for more than 30 years, be it through implementation of improvement projects or by training our client’s teams and/or by implementing our lean and industry 4.0 software, APPRODUCTIVITY4.0. Therefore, the reduction of lead time by this or any other name (cycle time reduction, elimination of WIP, etc.), is intrinsic in our DNA and is an important objective of all the projects we carry out.
At Itemsa we also promote the necessary cultural change to transform the situation, based on the concept of ethical productivity while training and involving the teams and, sometimes, also by way of implementation of our software tool, which was developed with a Lean orientation and designed for Industry 4.0- APPRODUCTIVITY4.0. It is a software that incorporates a large number of functionalities and modules that allow working in the different areas which contribute to a reduction of lead time. Read this post to find out how.