8 Practical Ways To Control Manufacturing Lead Time

In any industry, lead time is a crucial factor to consider and control if you don’t want your company to end up costing a lot of money. On-time, complete order deliveries are necessary to optimize cost and reduce time to market your products. For manufacturers, holding up production for any reason will cause clients to wait and it will create frustration. Clearly, it means, you are going to lose business if you cannot accurately forecast and reduce manufacturing lead times. Here, you need to streamline and automate your business operations using an ERP Software. 

Customers are your most valuable assets whom you cannot make wait just because you are running out of stock, or assembly equipment troubling you, or you are facing labor shortage issues; whatever it is, your reputation and customer satisfaction depend on order fulfillment in a specified time frame.

As a manufacturer, solution lies in reduced lead times. You need to control your processing time, quicken it and that also without compromising on the product quality. Moreover, you must respond quickly to the market changes and meet customer demand and expectations. You cannot afford your peers introducing new products quicker into the market and grab more shares.  You simply cannot bear the consequences of extended manufacturing lead times.

In this article, we will take a closer look into lead time, it’s components and how it can affect your overall productivity and in what ways you can improve it for higher revenues.

Manufacturing lead time and why it’s important:

Time taken from the start to the completion of an operation or a project. In manufacturing, it refers to the time period between order date to delivery date. The term is commonly used in manufacturing fields, project management and supply chain, having a direct relationship with inventory.

Shorter the lead time better it is. Else, you will have to stock up the excess inventory and in lean manufacturing overstocks are considered a ‘waste’ that reduces the operational flexibility.  

If you don’t want wastage of resources and production inefficiencies, you should review your processing times against production and delivery benchmarks. This could be best done with the help of manufacturing management software. It will help you find practical ways to improve manufacturing lead times.    

Don’t confuse lead time with cycle time – both are different despite seeming similar.

Lead time starts from the moment when customer order comes in and it involves the material purchasing process. On the contrary, cycle time refers to the order fulfillment cycle that starts when actual work begins and it doesn’t include the purchasing process. It’s a valuable metric too, but your focus should always be on the lead time because the customer doesn’t care about the process efficiency – clients just want their orders delivered fast.  

Factors influencing the lead time:

• Order type and scope
• Product complexity
• Raw materials supply
• Inventory control
• Labor shortages
• Natural disasters
• Human errors
• Transportation
• Shipping delays

Reduced lead time is mandatory for your manufacturing business success. For this, you need to focus on and control the planning and purchase orders, all sorts of wait or delay times, supply time of raw materials and components, production operations, manufacturing completion, and delivery of finished goods. Evaluate these processes and figure out how long it will take to complete each process. Any hiccup in any of these processes will leave a negative impact on your lead time, meaning that customer orders will be delayed and thereby, driving away sales.   

You need to remove production bottlenecks and resolve customer wait time. Eventually, you can reduce the manufacturing lead time.  

But how exactly can you do that?

Well, before moving forward you should know the key components of lead time to understand the concept – and, that’s the key to taking advantage of this metric.  

Primary elements to understand lead time: 

All the components of manufacturing lead time are related to time constraints you need to consider for timely completion and delivery of customers’ orders.

Pre-processing time:

This is the planning time after receiving a request for quotation (RFQ) or request for replenishment, understanding it and converting it into a sales order. You also need to create a work order to be sent to the shop floor and start production. All this time refers to preprocessing time.  

Processing time: 

This is the time when actual manufacturing process starts. This time starts right after receiving the customer order and sending it as a work order to the manufacturing plant to start producing the required items.

Supply time:

Now, this is the waiting time actually that’s taken between the material procurement to the time when all necessary items become available at the shop floor and the production process starts.   

Storage time:

This is the time when raw materials stay in the inventory before going into production and also the time when finished products stay in the warehouse awaiting shipment to the final destination.

Shipment time:

It’s the amount of time spent on transportation when the finished products are moved from warehouse to the customer-provided destination. It may also be considered as the time required to transport procured raw materials and components to your factory.   

Inspection time:

The time taken by the customer to check the product quality – whether or not it’s meeting the required specifications. Moreover, it also refers to the time spent on dealing with any unconformity client found in the order requested and delivered.

Decrease lead time in master production schedule:

Moving ahead, let’s take a look how you can control the lead time for optimized inventory management and improved production efficiency.

1. Maintain optimal inventory level
2. Keep safety stock to use as buffer
3. Source raw materials locally
4. Run and complete jobs in parallel
5. Eliminate non-value-added activities
6. Inventory and warehouse automation
7. Streamline supply chain and logistics
8. Quick and flexible shipping methods

Pro Tip: Always maintain the product quality while trying to shorten your manufacturing lead time. Customers want absolute perfection and quick order deliveries.

Let’s cut to the chase, you can get all this done with the help of a fully integrated and flexible manufacturing ERP solution like MIE Trak Pro implemented into your business.