Lead time can simply be described as the amount of time between the start of a process and its completion.
Take this illustration of a supplier who sells bags. Let's say it takes the supplier two days to source the materials to make a bag, it takes five days to manufacture the bag, and one day to deliver the bag, the total lead time for delivering a bag for this supplier is eight days.
Many factors impact lead time either causing it to lengthen or to reduce. In our example, if the materials supplier delays such that the materials for making the bag are made available 2 days late, the lead time for delivering the bag to the customer will increase by 2 days. Similarly, if the manufacturing process is made more efficient such that the bag is produced within 2 days instead of the usual 5 days, this will reduce the lead time. Reducing lead time is a sure way for an organization to streamline operations, reduce costs, and enhance productivity and overall profits.
Other benefits of reducing lead time are;
👉Satisfied customers: When lead time is reduced, customers will receive their orders faster and this will no doubt leave them happier and satisfied.
👉Increase in Order: When a customer realizes that an organization delivers within a short lead time, such a customer is likely to place more orders.
👉Reduced Obsolescence: When a product has a short turnaround time, it protects the organization against the risk of the product being obsolete. Longer lead time can mean that a product is obsolete by the time its production is completed.
So, when organizations review their lead time to compare with established industry benchmarks, they are able to find areas of inefficiencies and put in place processes that can improve lead time.
Here are five ways to reduce lead time, they include;
📍Use locally sourced materials: This is a way to save time that would have been spent waiting for raw materials to arrive from a distant location. In short, this can help any organization to quicken production, especially during an influx of high demand.
📍 Use locally sourced labour: No doubt labour is also one important factor that can affect lead time, using local labour will not just help to save costs but also help to reduce production time. When production time is reduced, there would be increased sales, happier customers and more profit.
📍Proper Inventory Management: With proper inventory management, organizations can track the amount of stock needed per time and restock as at when due so that the time between when a customer places an order and receives it can be reduced.
📍Cut out redundant processes: One effective way to reduce lead time is to remove any procedure that will lengthen lead time unnecessarily. For instance, several reviews of quality control can be streamlined to save additional time.
📍Choose a flexible transportation method: To streamline operational processes, it's better to choose the transportation method that works best for the circumstance at hand and not just apply a static routine because delayed transportation can lengthen the lead time.
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