What is manufacturing lead time and how to reduce it?

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For being viable and garnering profitability in your business, it is not natural but also makes sense for you to aim for generating a high demand for your product. To meet the market, you must plan and synchronize the deliveries to convert the market into supplies and revenues. It means that you have to pay attention to’ manufacturing lead time.’  We would discuss in this article what manufacturing lead time means and how we can reduce it.

It is most common for the industries to have an extended lead time from the stage of conception to implementation.  For instance, the typical lead time in the automotive industry is estimated to be between 18 and 24 months. Supply chain management visualizes two categories of lead time, (i) manufacturing and (ii) information lead times. Since the scope of this article is on manufacturing lead time, we would cover that only here.

What is manufacturing lead time?

Manufacturing lead time is the gestation period required to manufacture an item. From an operational angle, we must be aware that there are different types of lead times, and they explained briefly hereunder:

  • Preprocessing lead time is the time that is required to create a work order, which is otherwise called as planning time also. It is primarily in the form of paperwork.
  • Processing lead time is the actual time needed to manufacture the product you have planned.
  • The connotation post-processing lead time is used to denote the time required to receive an item from the dock to inventory. Depending upon the nature of the product, it could be anything ranging from inspection even to quarantine time.
  • Fixed lead time refers to a part of processing lead time, which is NOT DEPENDENT on the order quantity.
  • Variable lead time, on the other hand, is the lead time that is DEPENDENT on the order quantity.
  • The term cumulative lead time is used to indicate the time required to manufacture your end product. The cumulative time that you have, for the raw materials and components in the warehouse that would be needed from time to time to complete all the subassemblies.


How to reduce manufacturing lead time?

While some of the factors that contribute to the lead time are unavoidable, and you need relying on contract manufacturing. Or when it is not possible to stock large quantities of ‘big ticket’ items. Due to locking in of liquidity, it should form an exception rather than the rule cutting lead time has to form part and parcel of your business strategy. It links to your cost of production and marketability of your product. At times, may call for out of box solutions, some of which highlighted here.

Forming Small Teams

A team of core professionals should develop within your business operations. Whom you should entrust the tasks to try out by actually doing them rather than relying on the traditional approach of carrying out extensive amounts of analysis. The planning has to be towards risk mitigation instead of usual risk avoidance.

Adopting Parallelism in production

Instead of having a single large assembly line flow in which the sub-assemblies fed into, you can consider forming ‘clusters of production,’ which could receive the units in parallel. It would enable the imbalance, if any, observed in the capacity of the factory through another workflow without having to modify the production set up physically.

Consolidating the Suppliers

Reducing the lead time calls for initiatives that go far beyond managing just the existing suppliers on a standalone basis. Combining the suppliers would reduce the time you spend on multiple accounts. A vendor management software that is appropriate to the nature of business operation could help to streamline the processes by wading the inefficiencies and creating the synergies needed for enhancing productivity. Additionally, you need to keep in mind the businesses are susceptible to risks, all of which cannot foresee. It is prudent to remain in the list at least one backup supplier as otherwise. Supply disruptions can cause havoc to production schedules that can ultimately impact profitability or may even cause losses.

The key takeaways of this article are: Customers would neither understand nor like being kept waiting. And there is no choice on the part of businesses except to know the tenets of what manufacturing lead time is. And work towards keeping it to the minimum. If they do not do that, then they place themselves at the whims and fancies and vagaries of manufacturing cycles, which can pose harm to the very existence of their businesses. An active role has to be played by your team whose core responsibility would have to reduce the project lead times by converting the obstacles into opportunities. Lean operations have to put into practice. Which means, it is not the quantity of machinery or quantum of labor that matters. But, it has to be a core set of professionals who are competent to handle production along with high quality-oriented. And calibrated machinery, which should fill in your factory to make you stay ahead of the competition.




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