This document discusses strategies for reducing lead times in supply chains. It defines lead time as the time it takes to complete an operation or process. Long lead times are caused by factors like setup times, wait times, and decision-making delays. The key is to map the current supply chain process and identify non-value-added activities. Reducing lead times can increase capacity and sales by cutting bottlenecks. Strategies include line balancing to even out workloads, reducing complexity, and integrating processes through automation. Measuring and comparing production and customer demand times helps determine where to focus optimization efforts.

1. STRATEGIC LEAD-TIME
MANAGEMENT
INTERNATIONAL SUPPLY CHAIN MANAGEMENT
EDMUND SIAH-ARMA
CARINTHIA UNIVERSITY OF APPLIED SCIEN

2. AGENDA

3. WHAT IS LEAD TIME?
Lead Time/Throughput Time:- number of minutes, hours, or days that must be allowed
for the completion of an operation or process, or must elapse before a desired action takes
place.
COMPONENTS OF LEAD-TIME
PROCUREMENT LEAD TIME
MANUFACTURING LEAD TIME
DISTRIBUTION LEAD TIME
LOGISTICS LEAD TIME
SETUP TIMES
WAITING TIMES
DECISION-MAKING TIMES

4. CONCEPT AND CATEGORIES OF LEAD-TIMES
SCP Lead-Time:- clock time spent by the supply chain to convert raw materials into final
products and to place them in the hands of distributors or customers
ODP Lead-Time:- time elapsed from when customer places an order till the instant he is
delivered the product
 Value-added lead time:-the time required to actually manufacture a unit of a product.
 Non-value-added lead time:- the time that a unit of product sits in inventories or moves
unnecessarily.
CAUSES OF LONG LEAD-TIMES
Long setup times (the effort required to prepare an operation for a new production run)
Move time
Queue time/Work-in-precess
Waiting time
Viswanadham, N. (2000): Analysis of Manufacturing Enterprises: An Approach to Leveraging Value Delivery Processes to Competitive Advantage. Massachussets: Kluwer Academic Publishers.p. 242ff.

5. Product-Oriented Layout / Product Cells:- Organizing work around the products
Process-Oriented Layout:- organizing work around processes
Employee involvement:- The use of teams organized in product cells, rather than just
efforts of isolated individuals
Pull Manufacturing / Kanban:- Producing items only as they are needed by the customer
Zero Defects:- Poor quality results in increased need for inspection, more production
interruptions, an increased need for rework
DEALING WITH LONG LEAD TIMES

6. Time Elasticity of Price:- the price that customers are prepared to pay is often related to the
delivery speed.
 P-Time (Production time):- the time it takes for a product or service to go through a SC
pipeline
D-Time (Demand time):- the time for which a customer is willing to wait to have their
demand fulfilled
P:D RATIOS
Stalk, G/Hout, T. (1990):Time management; Delivery of goods; Competition, International; Comparative advantage (International trade). New York:Free Press
P-Time = customer makes order deliver product to customer

7. WHEN P-TIME IS GREATER THAN D-
TIME
Source Make Delivery
Customer’s order cycle
Order fulfillment: D-time
Logistics lead time: P-time
P-time － D-time
Assembly and Test
Harrison, A/Van Hoek, R. (2008):Logistics management and strategy: competing through the supply chain. 3rd ed., England: Pearson Education Ltd. p.150ff

8. WHEN P-TIME IS GREATER THAN D-
TIME
Harrison, A/Van Hoek, R. (2008):Logistics management and strategy: competing through the supply chain. 3ed., England: Pearson Education Ltd. p.150ff
Short Term
•Make-to-order
•Make-to-stock
Strategy When P-Time > D-
Time
Long Term
•Marketing
•Product development
•Process improvement
•Control
•Simplify
•Compress
•Integrate
•Coordinate
•Automate
 Optimizing throughput and improving process capability
 Untangling process flows and reducing product complexity
 straightening process flows and reducing batch sizes
 Improving communications and implementing teams
 Adding customer-specific parts as late as possible
 Using robots and IT systems

9. 1. Create a task force
2. Select the section of the SC pipeline to map
3. Observe and collect data from the current state map
4. Visualize/flow chart the process
5. Identify value-adding and non-value-adding processes
6. Construct a time based process map
7. Generate a solutions for a future state map
HOW TO MEASURE TIME IN A SUPPLY CHAIN
PIPELINE

10. CURRENT STATE MAP OF A SAMPLE SC PIPELINE
How can we
shorten our
lead-time?
0.8
D1
D2
G1
G2
TOTAL TIME 4.2 HRS/UNIT
G3

11.  OPERATING TIME= 8 HRS/DAY
 OUTPUT = 5 UNITS/DAY
HOW MANY SECTIONS DO WE NEED IN THE PIPELINE?
TOTAL TIME = 4.2 HRS
CYCLE TIME = 1.6 HRS/UNIT/PIPELINE SECTION
CALCULATIONS: REDUCING LEADTIME BY LINE
BALANCING
1.6 HRS/UNIT/PIPELINE SECTION CYCLE TIME
2.6 PIPELINES Nmin (theoretical minimum) 3
PIPELINES (rounded)
RULE OF THUMB: Longest task to the work station first
PIPELINE #1
1.6 HRS
PIPELINE #2
1.6 HRS
PIPELINE #3
1.6 HRS
PROCESS TIME SPENT TIME LEFT PROCESS TIME SPENT TIME LEFT PROCESS TIME SPENT TIME LEFT
A 0.3 1.3 E 1.1 0.5 G2 0.5 1.1
F 0.6 0.7 D1 0.1 0.4 G3 0.8 0.3
B 0.4 0.2 D2 0.1 0.3
C 0.2 0 G1 0.1 0.2
IDLE TIME of 0.5

12. PROPOSED FUTURE STATE MAP OF SAMPLE SC
PIPELINE
SUM OF ALL TASK TIMES
ACTUAL NUMBER OF PIPELINES
4.2 HRS
11 PIPELINE SECTIONS
EFFICIENCY, E CYCLE TIME
CURRENT EFFICIENCY Ec 1.6 61.10%
100%
FUTURE EFFICIENCY, Ef
4.2 HRS
3 PIPELINE SECTIONS
1.6 224%
B
A F
D2
E
D1
G2
G3
C
G1
A
C
B
CUSTOMER

13. SUMMARY (1)
High quality and low cost is not enough
First and fast in getting products and services to customers
Successor tasks should begin simultaneously or before conclusion of a predecessor task
(strategic lead time management)
Reducing cycle time increases capacity/production volume/sales
To increase capacity/production volume/sales, reduce the cycle time by reducing the
bottle neck
Cutting lead time does not always increase capacity/production volume/sales
To reduce lead time, cut order processing times, work in process, inventory
Reduces queuing/waiting time of customers
Increases customer satisfaction

14. SUMMARY (2)
The longer the pipeline form the source of materials to the final user the less responsive
to changes in demand the system will be
Delivering products and services on time
Receiving payments on time
Dealing with customer queries and complaints on time
Lead-time is directly proportional to inventory

16. A Competitive Manufacturing Enterprise