Stop Making Your Customers Wait by Tracking Manufacturing Lead Time
People don’t like waiting.
That’s just a fact of life and there’s no getting around it.
Waiting in queue for twenty minutes for a cappuccino just doesn’t quite feel worth it.
And it’s the same deal with waiting for deliveries. The longer it takes, the less excited you get and the more you feel frustrated.
Most often the acceptable delivery time for customers is 3-5 days. On some products, like baby products, it can even be 1-2 days.
Which is why it's important for workshops and manufacturers to make sure they get their products out as fast as they can.
Here's a keyword to remember: Manufacturing Lead Time.
Yes, that’s a technical term, and if you’re a small manufacturer that cares about customer service then pay close attention.
Because it boils down to basically understanding how fast products move through your workflow. From when the order comes in to when it is made, and everything in between.
It’s a useful metric because it gives an overview on a major process that can have a direct effect on your product and delivery times.
The more you understand, the shorter you can make your lead times.
The shorter your lead times, the quicker your customer gets their delivery.
What Is Manufacturing Lead Time?
Let’s start with the basic definition of the term.
A metric which looks at the time period taken from scheduling production to completing production for a product. Or in other words from when a manufacturing order comes in until the time it’s completed.
Here’s an example so you can get a feel:
Imagine you make wooden model bicycles because...why not, they’re cute.
There are three basic steps.
You make the wheel. You make the frame. You put them together.
Each of these of course has its own processing time, BUT what about that the time in between?
Even if you’re managing to do all these processes at once, there is still time taken to transfer the items. And this is all taken into account for manufacturing lead time.
In fact, this metric goes one further too. Because it also considers any time spent making purchases and waiting for materials.
This is an especially important point when understanding the term. Sometimes people get it confused with the term production lead time or cycle time.
These are terms which can have varying definitions, but if we want to pit lead time vs cycle time then it comes down to when the clock starts ticking.
-Lead Time starts from when the order comes in
-Cycle Time starts from the moment actual work starts.
So essentially cycle time doesn’t consider the purchasing processes.
Although there is value to that metric as well, the focus should always be on manufacturing lead time.
At the end of the day, this is what the customer perceives. They feel the whole wait, it doesn’t matter to them why that is.
They don’t care how efficient your process is. They just want their delivery to be fast, so they can stick their magnificent model bicycle on the mantelpiece for the whole world to witness.
How to Calculate Manufacturing Lead Time
So now we get into the nuts and bolts.
How do we work out our manufacturing lead time?
Well we basically know that it is the time taken from when the manufacturing order is taken, to when it is completed.
But really understanding the concept is key to taking advantage of it.
There are two steps to consider:
-Preprocessing Lead Time
-Processing Lead Time
Preprocessing is the planning stage. This is when your purchase orders go out and no work has been done yet.
Processing lead time is the heavy-duty stuff. It’s the time required to manufacture or get hold of a required item. So, it’s the average amount of time for: materials to come in, processes to get done and the waiting times in between.
Let’s get back to those exciting wooden model bicycles.
The preprocessing stage is spent on determining what materials are required, sending out the purchase orders, scheduling the tasks, and any other processes that need planning.
The processing then goes into the actual making of the bike.
First you make the wheels. Then you make the frame. Then you put it together.
Now, for simplification purposes, let’s imagine that the product is made to order, or you are lacking stock.
In this case let’s look at how to calculate manufacturing lead time by adding up the following times:
Order received -> Planning and purchase orders made -> Wait/delay time -> Materials received -> Wait/delay time -> Frame made -> Wait/delay time -> Wheel made -> Wait/delay time -> Put together -> Manufacturing completed
And finally we’re going to come out the other side with a glorious figure of time.
It could be hours, days or even weeks. It all just depends on your own processes.
The point is we now have a metric to work with, and more importantly a strong overview on our processes.
This lays the foundation you need to start increasing your efficiency and begin to reduce that lead time.
How to Make Your Lead Time Count
Alright so now we got the golden ticket: our manufacturing lead time.
So what do I do with all this information I gathered?
Well this is the part where you can begin to dissect things and work out how to reduce that time. Because remember, the lower your manufacturing lead time the less your customers have to wait for their orders.
At first it might seem like a gory mess. There are so many pieces to investigate.
But it can be broken down depending on the situation.
Let’s look back at the wooden bicycle example.
We notice there is a lot of waiting time between the processes. And there are ways to decrease these drastically.
The first is to make sure you are taking your inventory management seriously enough. But how does this help?
Well it has a few effects.
For one it decreases your preprocessing time, by making your purchasing a more efficient process. You don’t have to spend as much time planning your purchases because you already know if there’s anything missing.
The other effect it has is to make sure that you always have the right set of materials in stock. This means no waiting around with your hands in pockets for a delivery of raw materials before anything gets done.
Aside from inventory management, you can also decrease the average manufacturing lead time by focusing on decreasing the process lead times.
That means digging in to your scheduling to make sure your resources are being spent well.
For example, if you know how much time and resources you have, then you can make sure that tasks that are independent of each other can be done simultaneously.
In the wooden bicycle scenario we had two processes that were independent:
-Making the frame
-Making the wheel
The only process which required precedents was putting them together. That’s because you can’t put the model together until both above processes are done.
So what does that mean?
Well it means that you can have two people working on frames and wheels at the same time.
Might seem simple, and it is here.
But depending on your own processes, things can get a little complicated. Though there is smart workshop software out there which has been created which helps you schedule efficiently.
Scheduling is one of those that key factors that is often overlooked to the loss of many a small manufacturer.
And if alongside other approaches, like inventory management, is taken seriously then your manufacturing lead time can be slashed overnight.
The Murky Dangers of Shorter Manufacturing Lead Time
Okay, so we got the idea.
Shorter manufacturing lead time equals shorter delivery times and happier customers.
In general that is a fair statement to make.
But the reality is that no metric is an island.
When decreasing lead time these two factors should always be in the balance:
You can spend all the time in the world scheduling to absolute perfection and managing your inventory. There are always however factors which are out of your control, because we all know that manufacturing rarely goes exactly to plan.
Margins of error need to be accounted for, and more than that you have to stay in touch with the floor level operations.
Often it occurs that workshops decrease their lead times at the expense of product quality.
It maybe that you can have two of your team members working simultaneously on making the bicycle parts.
But did you consider that beforehand they were using each other's free hands for quality assurance when working alternately, and now they can’t do that?
There are so many minute details that can be missed when reducing lead times, that often corners can be cut even without any malice intended.
Worst case scenario here is that there are knock-on effects on your customers satisfaction.
It’s important that you make changes gradually to processes so that you can keep track of your product quality and customer satisfaction.
If you start getting emails from customers that say they got their wooden bicycle with glass wheels, then you should probably start questioning the effects of your changes.
I mean some of them might like it, but the novelty soon wears off.
So, you always need to consider the balance struck between lead times and your final product.
There are dangers to fixating on one angle, because you might end up with tunnel vision. And then your hard work sadly just goes to waste.
Lead Time in Manufacturing: The Bottom Line
Get to know your manufacturing lead times.
It’s a useful metric which can give you a great overview on your operations product by product.
You’ll be able to sense with the averages how you’re doing, so that you can delve into the details and cut it down.
Because the great thing about this metric is that it considers all those fine points that you often overlook. The wait times and bits in between processes which really do add up.
The difference it makes can be massive.
Imagine you manage to cut down your lead time from 3 days to 2 days.
That means some customers who would have got their delivery after the weekend can get it on a Friday.
You just got their weekend off to a great start...brilliant.
Now you might be thinking, well this sounds like a lot to deal with. Trying to decipher this information from my spreadsheets is going to be hell.
And that’s true, it will be hell.
Especially in manufacturing where things can go awry at any moment.
Which is why Katana has created Smart Workshop Software that can keep track of your manufacturing workflow from top to bottom.
With it you can get to know your manufacturing lead times with full visibility on the details. More importantly though, you have control of the steps you need to take to make manufacturing lead times shorter without sacrificing product quality.