Manufacturing lead times have a critical effect on the performance of every supply chain. The overall lead time is the time taken from before the start of the manufacturing process to when the product is ready for delivery.
Lead times can be experienced pre-production, during production, and post-production. Any delay impacts the overall manufacturing time and adds costs while leading to unhappy customers.
Lead times can be affected by:
The complexity of the product or service
The procurement of raw materials, components, and utilities
Ineffective inventory management
An inefficient production process
Poor design and layout of the plant
Access to skilled labor and reliable equipment.
Transport logistics challenges
Industries where lead times are most impacted include aerospace, automobiles, chemicals, clothing, electronics, heavy machinery, and the oil-and-gas sector.
How to measure manufacturing lead times
Overall, or cumulative, lead time can be measured by documenting the time it takes to complete a single unit from the initial order to the final delivery.
Other ways are to measure the average time it takes to complete a fixed number of orders or to count the total number of days it takes to complete the entire production process.
Examples of lead time are customer lead time, material lead time, factory, or production lead time, and cumulative lead time.
The different lead times in manufacturing
The main elements that make up lead time are preprocessing, processing, waiting, storage, transportation, and inspection.
These elements represent the three main stages of an order: the before (pre-processing), the during (processing), and the after (shipping). Depending on your industry sector, each part of the process may be affected to a different extent.
- In pre-production. It takes time for the customer to place the order and for the order to be processed internally. The procurement lead time is the amount of time it takes to source and purchase materials needed for the production process. This involves steps to research suppliers, contact them, negotiate prices, and place orders. Next, add the time from when you place an order with a supplier until you receive the raw material or component item.
- In production. The production lead time is the amount of time it takes to make a product from start to finish when all the required resources are available. Implementing a lean manufacturing system can help reduce lead times by streamlining processes and eliminating unnecessary steps. This can include introducing a just-in-time system and using software solutions to automate certain tasks.
- In post-production. It takes time for quality assurance, packaging, and preparation of items for delivery. The time it takes for the product to be shipped to the customer is the last element in the overall lead time.
6 ways to reduce lead times in manufacturing supply chains
Automating parts of the production and procurement process helps reduce lead times by making it more efficient. Automated equipment can work faster, is available 24/7 and makes fewer errors than manual labor. Automation tools include using barcoding, robotics, radio-frequency identification (RFID) systems, and organizational strategies that decrease the need for human intervention during operations. Many tasks in the Procure-to-Pay process from processing the order through to invoicing and payment can be digitized.
2. Streamlining work processes
Eliminating unnecessary steps reduces lead times by making the entire production process more efficient. This can include implementing lean techniques or software solutions to automate certain tasks. Establish where tasks can be completed in parallel to speed up workflow. For example, the purchase order process can be long and cumbersome, and sourcing from digital manufacturing platforms like Jiga helps companies reduce that time by weeks.
3. Selecting the right suppliers
Choosing the right suppliers is vital when it comes to mitigating lead times in importing parts and components. Negotiating shipping terms with your key suppliers can help. Selecting a supplier with a solid reputation, a reliable delivery system, and a good track record in managing disruptions will help reduce sourcing lead times. Any unreliable supplier that fails to support his commitments should be excluded.
4. Optimizing inventory levels
Using just-in-time methods can help reduce lead times allowing for better availability of stock and therefore faster production. Set reorder points and realistic safety stock levels. Automating your inventory management will allow you to monitor inventory movements in real time.
5. Establish clear expectations
Define your requirements when engaging suppliers by fixing delivery dates and setting up service level agreements (SLA) with each key supplier. Share your demand forecasts so that your suppliers are aware of large orders and seasonal changes in sales, strengthen collaboration with suppliers using electronic communication channels and provide more efficient problem-solving methods. Reduce your lead times through local sourcing and having parts manufactured closer reducing shipping time and cost.
6. Change delivery processes
Running your own transport can add to the overall lead time. It can be a distraction and an unnecessary complication when you should be focusing on servicing your customers. Consider outsourcing transport by working with a 3PL logistics provider. Outsourcing to an organization with specialized transport logistics experience allows you to focus more on getting your product to market more quickly and driving revenue.
Data visibility is the game changer
By leveraging data, manufacturers can monitor, predict and respond to the problems that impact lead times. These include transport and shipping delays, machinery breakdowns, inventory constraints, and geopolitical disruption. Technology is the enabler.
Benefits of reducing lead times
Reducing lead times involves interrogating elements in the overall process: before, during and after manufacture. This requires continuous monitoring and evaluation of every operation in the manufacturing supply chain. The benefits of reducing lead times include being ahead of the competition, staying flexible during supply market disruptions, and an improved cash flow. The overall objective is to provide customers with the right product, at the right time, and at the right price.