Cut Your Lead-Times in Half?

I am planning to offer a course, online and face to face, to take a business and people through the process of cutting their lead time. In the near future, I will publish a description of the course. The title is, "Cut Lead Times! Is the View Worth the Climb?" I plan to show the value of a cut is high, the risks are low and the effort is well within any business's capability. Any business or individual that may be interested should contact me to determine whether their operation meets the criterion to almost guarantee success.

I hope to get lots of feedback!

What follows is the article you may have already read in March 2022. I hope it will whet your appetite!

A frequent problem customers mention is lead times that are too long. They are under pressure from their customers, distributors and salespeople that shorter and reliable lead times are essential. Salespeople believe with shorter lead times they can gain new business more rapidly and that existing business will be protected from competitors’ actions.

Elsewhere I think I have written that waiting in a queue makes up 90 to 99% of production lead time. This means the making or transformation of an item is 1 to 10% of the production lead time. If you look at it graphically the potential to cut production lead time looks immense.

Where does the 90% queue time number come from??

If you have a batch of 10 and just 1 machine, then the last unit waits 9 times the touch time until it is its turn to be processed. The first unit waits 9 times the item touch time until the last unit has caught up. Only when the batch has been completely processed is it moved on to the next machine where the same thing happens again. With just 1 machine we have an item’s queues making up 90% of production time. Imagine what happens with larger batches and longer production lines. (It seems that the 90% queue time is optimistic!)

?The graphic shows a typical queue (90%), ‘touch time’ (10%) and total production time (100%). If we cut the production lead time by 50% ‘touch time’ does not change but increases its share of production lead time to 20%. In our example cutting lead time by 50% cuts the time an item spends in a queue by 56%.

After the cut to lead time, the queues are still 4 times the touch time.

If we cut queues and therefore also WIP (Work in Process) inventory, do we run the risk of starving machines of work? The risk of starving machines is certainly greater, but does it matter? Most machines’ capacity is not needed 100% of the time. If these machines would produce 100% of the time queues would become huge and the factory would be filled with semi-finished ‘stuff’. The fact that some machines from time to time run out of work is not a problem.

The constraint, however, should never be starved of work. WIP on the way to it must be in the queue in front of the constraint before it runs out of work. There is little risk of the constraint running out of work. It is the slowest machine with the highest takt time. It cannot run out of work unless the market is buying less than its capacity.

What will we do to cut production lead times in half? For many managers, this is the scary part!

1.?????Assumption: Current lead times are known and are 4 weeks.?

2.?????We check, Queues do make up more than 90% of production lead time.

3.?????Production scheduling stops releasing orders for a period of 2 weeks (half the current production lead time).

4.?????The amount of WIP is cut by close to 50%. After the first week, the factory begins to look empty – except at the slowest operation. That continues to have a queue.

5.?????The planning and scheduling group cuts all lead times in the ERP system by 50%.

6.?????After 2 weeks schedulers release orders again. From this time on all ERP production lead times are half of what they were.

7.?????With half the original amount of WIP in the system, queues are also halved, and lead times are cut by the promised ca. 50%.

Do it in one big step to get results quickly. If the recommendation seems too drastic, then do ? immediately and follow up with the 2nd?half of the cut very soon. The first time I did this we made the second cut about 1 month later. We waited that long because the Christmas holidays were part of that month. You can take the second step sooner. (Note that taking 2 steps means adjusting ERP lead time data twice.

You should expect lead time to be halved; WIP and finished inventory to be cut similarly; due date performance improves, and you will find capacity.

When we work with a client to implement our Theory of Constraints software, we make sure?

·??????the client cuts his queues and WIP.?

·??????The shorter and more reliable lead times are used to gain more business.?

·??????The capacity gained by cutting queues is used to produce more at no added cost (except the necessary materials and components).

·??????The software warns or blocks efforts to increase WIP and queues to maintain short queues, low inventory, and high due date reliability.

·??????Your ERP should be the guardrails to direct production and distribution processes towards the best level. The ERP should adjust parameters like lead times and inventory targets for the current situation. The optimum in the uncertain and changing environment should be sought continuously. Key parameters should change dynamically to keep your ERP up to date.

The last bullet point contains the word should many times. Make sure your software does dynamically maintain key parameters up to date.?