lead time reduction - part 01
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Lead Time Reduction
Part- 1
LEANSYSTEM.WORDPRESS.COM
LEARNING TOGETHER ABOUT INDUSTRIAL
ENGINEERING, LEAN PRODUCTION SYSTEM,
SIX SIGMA, AND ERP SYSTEM
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Reducing Lead Time the Most Important
Factor in Achieving World-Class Operations
In the 1960s and 70s, manufacturers competed on the basis of cost efficiency. In the 1980s, quality was
the rage and Zero Defects and Six Sigma came into vogue. Cost and quality are still crucial to
world-class operations, but today, the focus is squarely on speed. Nearly all manufacturers today
are under pressure from customers to cut lead times. And rapid-response manufacturing pays big dividends.
Let's clarify what we mean by lead times. Customer lead time refers to the time span between customer
ordering and customer receipt. Manufacturing lead time refers to the time span from material availability
at the first processing operation to completion at the last operation.
In many manufacturing plants, less than 10% of the total manufacturing lead time is spent actually
manufacturing the product. And less than 5% of total customer lead time is spent in the production process.
The cumulative cycle times of the processes in the value stream are the theoretical limit to how much we
can reduce lead times, without investing in different equipment. Clearly, there is ample opportunity to
reduce lead times in most organizations.
Reducing lead times doesn't involve speeding up equipment to cut the cycle times or getting plant personnel
to work faster. What is does involve is the rapid fulfillment of customer orders and the rapid
transformation of raw materials into quality products in the shortest amount of time possible.
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Reducing Lead Time the Most Important
Factor in Achieving World-Class Operations
Here is a lead time analysis for a product line at a plant we recently visited:
Activity Total Days %
Processing 3 7.5In-transit .5 1.3Set-up/ changeover .5 1.3
In queue 30 75.0On hold-waiting for materials 4 10.0On hold-quality 2 5.0
Total 40 100
At this company, actual production accounted for only 7.5% of the total manufacturing lead time. As in most
plants, the largest contributor to lead time is queue time -- the time product is sitting idle waiting to be
processed at the next operation. Waiting in inventory, tying up cash, adding no value and causingunnecessary customer waiting.
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Implementing Lead Time Reduction
The following guidelines will help you to reduce lead times in your organization:
Measure current lead times and set improvement targets. Lead times, as important as they are, are
not measured in most organizations. People may have a sense as to the planning horizon, but can't say
how long it took for individual products to cross the value stream. Things that are not measured cannot
be improved.
Change the organization from a functional orientation to a product orientation. If possible, all
resources required to produce a product should be located close to each other. These product-focusedgroups are called work cells or cellular manufacturing. Include office operations as these functions
often account for half of total customer lead time.
Cross-train plant personnel within cells in a number of operations for greater flexibility. Reducing
the number of job classifications and maintaining multiskilled teams on each shift is critical to rapid
response manufacturing.
Empower work cells and teams to take ownership for the entire value stream. Drive accountabilityfor product cost, quality and delivery down to the lowest appropriate level (ideally, the operators
themselves).
Continually reduce batch sizes between work centers. With operations in close proximity, transfer
batches can be smaller and WIP inventories can be minimized.
Institute local scheduling between work cells. Visual shop floor scheduling tools, like kanban systems,can be used to minimize WIP between cells and to eliminate queue time throughout the value stream.
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By employing these principles,
many world-class manufacturers have shrunk lead times by 50-80%,
gained market share, improved profitability andincreased employee morale on the shop floor.
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World Class Product Development and
Manufacturing are controlled
by several Laws: The Law of Focus :
The Law of Focus says 80% of the delay in any process is caused by 20% of the activities.
- Based on this we will look for constraints in any system.
The Law of Velocity :
Velocity of any given process is inversely proportional to the number of things in process and
the variation in supply and demand.
- We will always look to be faster, when we are faster we find mistakes earlier, have less
waste in the system and react faster to customer requirements.
The Law of Flexibility :
Process Velocity is directly proportional to the flexibility of a given process.- We will break down large systems into small more flexible ones that give us the
advantage of flexibility and speed.
The Law of the Market:
Customer CTQ Critical to Quality issues are always the highest priority.
- We must listen to the VOC voice of the customer, always satisfying the customer
critical to quality issues first. We only learn when we listen.
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Value Added vs.
Non-Value Added Activity
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Target: Waste = Muda
Value Adding Activity
This is what your customer is willing to pay for. Activities which transform raw materials or
information to fulfill the customer needs.
Non-Value-Adding Activity
Muda or Waste is the activity the customer is not willing to pay for. These activitiesdemand time, space or materials that add no value to the customer.
Non-Value-Added but Necessary
Non-Value Added but necessary activity is Muda or waste activity the customer is not
willing to pay for, but must be performed to complete the work. (e.g. transportation, packing)
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Measure Waste with Time
Time spent between value added steps
Total available hours Value added work time
= Waste (non-value added work time)
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Example: Value-Adding vs. Non-ValueAdding Processes
Incoming Fabric Inspection NVA
Spreading (Fabric Lay) NVACutting VANumbering NVASorting / decoration inspection NVADocoration (embroidery/printing) VATransportation to deco. Subcontractors) NVASewing VAIn-Line Inspection NVA
End of Line Inspection NVARepair / Rework / Re-Test NVAIroning VAPacking NVAFinal Inspection NVA
Which operations below add value?
Value-Added: VA ; Non-Value Added: NVA