SUPPLY CHAIN LEAD TIME REDUCTION

What is the meaning of LEAD time?

Lead time is?the amount of time that passes from the start of a process until its conclusion.

The term borrowed from the manufacturing method known as Lean or Toyota Production System where defined as time elapsed between a customer placing an order and receiving the product ordered

In short, lead time = ordered received – ordered delivered

Lead time is a crucial metric for any business. It?assists the company in predicting sales, making operations efficient, and improves customer satisfaction.

It has a?strong effect on the size of your inventory?and its reduction should be a top priority in any organization on parts inventory control.

Too much lead time ties up cash in a large inventory which could be used to get more sales or to price your products more competitive.

Material lead time = Procurement time + Manufacturing time + Shipping time + Delays

Different types lead time: -

It’s all basically time required in terms of days, hour or months etc. between two process or events like

1.????Purchase order/Supply / Material lead time: -

Time between purchase order place & Items arrive at manufacturing or received at workshop floor

Material lead time = Procurement time + Manufacturing time + Shipping time + Delays

2.????Production /Manufacturing lead time: -

Time between order received at production & order shipped

3.????Delivery / transport /shipping lead time: -

Time between material shipped from factory & reached at the final destination.

4.????Cumulative lead time / maximum lead time: -

The longest length of time involved to accomplish the activity from conceptualizing, material requirements planning, reviewing each bill-of-material path, and whichever path adds up to the greatest number defines cumulative material lead time.

5.????Inventory lead time: -

Time between order received in warehouse and PO placed to restock products

6.????Demand lead time: -

Time between total demand present or current demand to anticipated delivery after next one reorder to replenish the inventory.

Lead time demand = lead time ?x ?average daily sales.?

7.????Customer lead time: -

Time between customer order received by salesman to order delivered to customer

8.????Business lead time: -

The number of days companies review lead time in manufacturing, supply chain management, and project management during pre-processing, processing, and post-processing stages.

(Manufacturing + Supply Chain Management + Project management) during pre-processing, processing & post processing stages.

9.????Payment lead time: -

Time between vendor invoice raised & customer to pay after satisfaction. It is also called payment terms.

Cycle time: -

Cycle Time?is the amount of time a team spends actually working on producing an item, up until the product is ready for

Cycle time = Net production time / No. of units produced

Ways to reduce supply chain lead times

Now what is supply chain: -

It is the all about handling entire production flow of goods or services starting from raw material / unit components up to delivering final products.

Supply Chain = Procurement + Manufacturing +QAQC + ?Warehousing + Transportation

Procurements: -

The act of obtaining goods or services, typically for business purposes.

Procurement generally refers to the final act of purchasing but it can also include the overall process like Budgeting, supplier relationship, accounts payable, cost , vendor capability development which can be critically important for companies leading up to their final purchasing decision.

Procurement = Purchase + Vendor development + Quality assurance + supplier relationship

Reduce lead time of purchase: -

·????????Appropriate funds availability

·????????Complete, detail specification with drawings, samples, special instructions of product or service against contract with tolerance limit should be available.

·????????Approved list of suppliers for the product or services availability

·????????Clearly identify source for non-competitive bid products and services that are unique, designated to match existing product or system.

·????????Purchase requisition should submit along with all documents (supporting datasheets, quotes, proposals, pre-hire worksheets, drawings etc.) in complete in same day

·????????Risk assessment should done & bring attention of buyer well in advance.

·????????Obtain approval for items required before submission of purchase requisition

·????????Use & developed a domestic supplier for faster delivery

• Increase order frequency with sales forecast to supplier for maintain flow.
• Convert to standard components to gain maximum availability.
• Consolidate suppliers of similar product & give smooth distribution.
• Consider kitting services.
• Create an incentive.
• Communicate.

Reduce lead Time of manufacturing/ production: -

·????????Remove unnecessary process & documentation.

·????????Prepare modular part manufacturing unit nearest different geographical area to cope up with continuity of production during adverse weather situation

·????????Preventive maintenance & proper planning / back up for equipment failures

·????????Prepare multi-tasking multi skilled labour force though continuous systematic training to tackle labour shortages.

·????????Prioritization as per business need.

·????????Maintain stage wise interrelated quality control for tracking missing or incorrect data.

·????????Proper risk assessment & maintain contingency fund for project mistakes

·????????Appoint right resources to handle identify & resolve conflicts fast.?

Reduce lead time of quality assurance: -

·????????Set quality parameter during start of procurement function

·????????Assess & select vendor based on the quality assurance rating

·????????Go for standardize & reputed product or service vendors.

·????????Proper testing & parameterising set up.

·????????Appropriate method & instrument with clear traceability to be maintained

·????????Set realistic goals.

·????????Team communication, awareness, quality related understanding

·????????Gather the right resources.

·????????Schedule carefully.

·????????Track and measure progress.

?

Reduce lead time of inventory management: -

·????????Proper tracking of inventory movement like it follow FIFO methods.

·????????Receiving, put away, picking, packing and shipping time reduction

·????????Accuracy of inventory data with regular audit

·????????Smart demand-oriented inventory keeping

·????????Systematic documentation with automatic bar code procedure

·????????Visibility enhancement for easy identification.

·????????Follow system documentation not manual.

·????????Categorization stock with high value, hazardous & other relevant area wise as per business requirement

·????????Smart inventory planning & management operation with different product portfolio

·????????Review adequacy of software used & back up planning for smooth shipping with server down condition

?

Reduce lead time of logistics & shipping: -

Packing

·????????Separate stocking & inventory conditional maintenance to avoid bad weather impact on packing.

·????????Proper identification of package individually & collectively to avoid & track lost package. Use proper bar code for identification

·????????Reduce volume of packages as much as possible & compliance to quality of packing

·????????Availability skilled packer

Logistics & shipping

·????????Availability of transporter

·????????Competent team for maintain proper documentation certification & clearance

·????????Complete, clear dispatch instruction, commercial & legal documentation

·????????Proper risk identification & its mitigation

·????????Location accessibility

·????????Vehicle condition & competent driver

·????????Information to delivery party, proper handling instruction & marking for product safety

·????????Weather & force majeure condition consideration.

·????????Dangerous roads risk delays

·????????Shut Down of Terminals

·????????Lack of personals

Conclusion: - There are several ways which already in practice of standard multinational for improvement.

Any organization can improve their lead by considering factor in area of supply chains