Lead time is the time it takes for your product to get to the customer from the placement of their order to the shipment of their goods. It’s built up of both value add time (time spent adding value to the product) aand non value add time e.g. time waiting between process steps.
Reducing lead time is one of the cornerstones of Lean and significant volumes of improvement initiatives focus on both measuring and reducing lead time. Why is this important? Lead time is cost! – waiting between process steps for example attracts cost of material and overhead – reducing lead times can have a significant impact on cost!
How to capture lead time
By far the best method for analysing lead time, in our opinion is the value stream map but there are other methods available for example a lead time ladder diagram can be used to review lead time and value add analysis.
To capture lead time you need to capture the steps in your business process (which must include non processing time) and get timings for each step the summation of all these timings is your leadtime
Forms of lead time
There’s a seemingly endless supply of contributors to lead time see below for some common examples that you might find in your business process
Processing time of demand
Material supply from supply chain
Processing and production time
Waiting time between production steps
Final quality inspection
Transit time
Reducing lead time
In assessing the business process the role of lean is to systematically strip away the non value add aspects of the process and find more efficient ways of doing the value add tasks. Achieving this will deliver lead time reductions.
However achieving this is no mean feat and it will involve many parts of the organization some non value add parts of the process may not be able to be removed while others can be eradicated (indeed when you review your process you’ll probably question why you didn’t do this ages ago!)
Start with the value stream
When assessing lead time we recommend stating with a value stream map this will really help in understanding the process and lead time and help identify potential improvements quickly.
Reducing lead time can bring many benefits from improving customer satisfaction through better availability of your products you can also attack your costs. if your serious about business improvement ensure you include lead to reduction as part of your initiatives.
