Cut Your Lead Time in Images!

“A picture is worth a thousand words.” Below you see the lead time situation before and after making a 50% cut

The first image is of the factory before making the proposed 50% cut.

What you see:

1.?????5 process steps with the processing time for 1 item.

2.?????The constraint has the longest processing time (50 sec).

3.?????Production lead time of 60 minutes 3600 sec.

4.?????Touch Time of 151 sec (30+5+5+50+27+39) sec.

5.?????Touch Time is 4.2% of Lead Time. According to TOC and me, there is a lot of potential to cut Lead Time.

The following image shows Lead Time, Queue Time, and Touch Time (the tiny green bit!).

Graphically Touch Time is minuscule. The tiny green arrow (that looks like a 6-pointed star) is irreducible. Even if you cut Touch Time in half the benefit is minimal!

Assume you make the 50% cut. What does the picture look like afterwards? Touch Time is unchanged; its share of the Lead Time increases to 8.4%. Queue Time at 93.6% of the new Lead Time is still a huge part!

Does the picture look like a risky thing to do? If there is a risk it does not come as a result of the cut.

It is important for everyone to remember what is stated in the next graphic. Most factories have Touch Times less than 10% of Lead Time.

By happenstance, I used 4.2% Touch Time. If you redo the graphics with 10% Touch Time or whatever your Touch Time is the picture will not change much. In most cases, a 50% cut does not look risky at all.

The complication comes from more complex operations, many different products, many different customers etc. True, but the concept and the result you should expect stay about the same. If your operation is complex, you may need software support. Alkyone can provide both the relevant software and consulting. Here are my contact details.

We are here to help. You can do this on your own. It is not so difficult. Depending on the complexity of your business you may be better off with software that can support you in the cut lead time endeavour.

Before I sign off, please reflect on the value a 50% Lead Time cut brings:

1. Less WIP and finished inventory
2. Greater delivery reliability
3. In many cases your capacity increases
4. A 50% cut in lead time usually gives the company a boost in sales. How much will that be?
5. A 10% increase in demand will double profit for a company with 50% variable cost and a current 5% return on sales.

Sounds good? Too good to be true? Then talk to me or us!

Here is what a 50% cut looks like if Touch Time is 10% of Lead Time before the cut.

The conclusion must be the same ... the cut has little risk!