How to optimize Lead Time in Manufacturing?
Estimated reading time: 6 minutes
When we buy online it is always preferable to receive a product on time, much better if it is before the estimated date, so we look for the option that offers us this service. Similarly, some can pay for the more expensive service to receive the product in record time. The same happens in the manufacturing industry; if the lead time is short and the order arrives on time, the customer will be more than satisfied.
An excellent example of this situation is during the Christmas season when products are in high demand, and we expect delivery to arrive before Christmas eve. But what is a manufacturing lead time, and how can I improve it? How does it enhance sales and make my business more competitive? Let’s find out.
What is a Manufacturing Lead Time?
Manufacturing lead time (MLT or Production Lead Time) is the total time it takes to manufacture or complete an order and deliver it to the client.
An excellent Manufacturing Lead Time will aim to be quicker and more efficient without damaging the quality of the product or service to warrant customer satisfaction and increase sales.
To calculate lead time, companies consider the period they might need to complete a process and meet consumer demand. In manufacturing, the lead time formula is:
Lead time = Pre-processing + Processing + Post-processing
- Pre-processing is the time it takes to authorize a client’s order and prepare supplies needed to start the production process.
- Processing is the manufacturing period.
- Post-processing is the shipping time and delivering the finished goods to the client.
Nevertheless, some factors can interfere with these processes, such as shortage of raw materials, problems with transportation, human error, or natural disasters. For these reasons, managing suppliers, inventory, and production processes in manufacturing lead time are essential to streamline the workflow and complete schedules on time, even with sporadic events.
Manufacturing lead time can be used as an essential metric for being the first option for a potential buyer. As a whole, lead time is the period from the beginning to the conclusion of a project. It starts with the client’s purchase, then the production process, and ends with the order’s delivery.
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What are the benefits of shorter lead times?
Having a shorter lead time makes your company more competitive in today’s world. The immediate advantages your company can get are:
- Less Labor Costs: To have a shorter lead time, companies analyze all their internal processes to create a better work schedule and eliminate unnecessary procedures. This optimizes efficiency and work quality.
- Improves Customer Satisfaction: If your company is efficient in delivering a productfaster than the competition, you will become a reliable supplier and therefore get more clients and sales.
- Better use of Resources: Raw material that is not being used or a more extendedperiod to produce a good can make an investment fall behind since it will take moretime to convert it back to cash. In addition, better stock management can also reduce costs, causing profits to be more visible.
How to optimize Lead Times in Manufacturing?
- Implement automated processes: The help of software such as ERP, MES, or a Method such as Just-In-Time (JIT) can optimize the processes carried out in a company by enhancing communication, analyzing information in real-time, and improving storage management. In addition, it will ensure that the schedule remains on time, even with bottlenecks or sporadic incidents.
- Choose the best shipping method: Look for the most efficient shipping method; it doesn’t matter if it is not the most economical; even look for those who are part of your supply chain to use the same shipping system to avoid delays in your purchase of material. This will ensure that production starts correctly and deliveries arrive at the expected time, leading to more satisfied customers.
- Better inventory management: A well-organized inventory can considerably reduce leading times. Regroup frequently used components in batches so workers can access them faster and get started more quickly.
- Incentivize your supply chain: Convince your suppliers to deliver an order ahead of time with a bonus. The investment can be worth it if your company offers better delivery times than the competition.
- Constant communication: Keeping track of your suppliers throughout the production process can help to manage any sporadic incidents and ensure that everything will arrive on time.
Several other tools can also aid this task, such as Single Minute Exchange of Dies (SMED), 5S, and Value Stream Mapping (VSM).
What are some factors that affect manufacturing lead time?
- Shipping delays: This factor is the most unforeseeable since a natural disaster or human error can cause a delay. Waiting for raw materials to arrive from another country can also be tedious and stressful, especially if there is a language barrier. A local or domestic supplier ensures faster delivery and improves your area’s economy.
- Out-of-stock material: If there are not enough resources to start manufacturing, it will delay the production process and prolong the lead time. This can cause a lost sale, pay for compensation, and, at worst, lose loyal clients. With sale data from past orders, your company can forecast when to anticipate a new demand. Let your supplier know this information, so they are ready beforehand.
- Bad work schedule: To have a complete shift is essential in the manufacturing process, but there are times when a worker needs a sick leave out of the blue. To ensure your production, an efficient time tracking system is necessary to share the availability of extra hours with your employees and fill the empty spot.
Don’t waste time, and make your company more profitable!
With today’s technology solutions, you don’t have to calculate the manufacturing lead time on paper or hope your shipment arrives on time to start work. Skyplanner APS production planning can help to streamline your processes and ensure that everything works according to schedule.
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