Lead Time Reduction

Lead Time Reduction 1

 Expectations
• Understand the drivers that impact lead time.
• Learn through example how to identify and
reduce lead time.
• Implement lead time reduction in your own
place of work.
• Sustain the improved process.

2
 Definition of Lead Time
• The total time required for processing a product or
service from the point the customer puts in the
order to the point the customer is satisfied with
delivery.
• Examples:
– Placing an order for a vehicle and picking up the
vehicle at the dealership
– Calling in a problem ticket on your computer and
getting it fixed
– Ordering lunch at a drive-through window and
receiving your order

3
 Objective
• To reduce lead time
• Example:
Time to get
Airline Tickets
Original—Travel Agent

Next—Airline Direct

Next—Phone and E-Ticket

Next—Internet with E-Ticket

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 Lead Time Concept

Lead Time

The total time required for processing a

Customer product or service from the point the Customer
Order customer puts in the order to the point the
Satisfaction
customer is satisfied with delivery.

= Value Added
= Non-Value Added

5
Examples of VA/NVA Activities

Value
Added (VA) All activities that transform a
product into its final form

People Machine Materials

Non-Value • Waiting for • Long change-over • Transporting
Added machine
• Waiting for parts
• Set-up time • Handling
• Unscheduled • Moving
• Fixing equipment
(NVA) • Sorting/Repairing
maintenance
• Excessive
• Storing
defects • Stacking/
production
• Searching for tools destacking
• Inspecting parts • Excessive capacity • Inspecting

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 Lead Time Reduction Goal
Although we can never eliminate all the
non-value added activities, the goal is to:

• Minimize the NVA portion of lead time

• Optimize the VA portion of lead time

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 Lead Time Drivers
DRIVERS LEAD TIME

- Inventory control JIC*

- Process control
- Cycle time
- Line balance
- Lot size
- Set-up times
- Maintenance JIT**
- Scheduling
* Just-In-Case
** Just-In-Time

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 Lead Time Reduction
The Process:
1. Identify the product/service provided. Lead Time Bar Graph
2. List all steps required to complete
product from start to finish.
IDENTIFY

VA
WASTE

3. Identify time required for each step. 8 NVA

4. Identify steps as Value Added (VA) 7 VA
or Non-Value Added (NVA).
6 8 NVA
5. Graph the process.
55

Time
6. Analyze and eliminate time 7
needed for NVA steps. 4 6 VA
ELIMINATE

7. Optimize VA time. 3 5 8
WASTE

3 6
8. Graph the proposed improved process. 2 5
2
9. Identify the ideal process. 3
1 1 1
10. Graph the ideal process.
Current Proposed Ideal
* Continuous Improvement *

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 Lead Time Reduction Process
Step 1: Identify the product/service provided.

• Identify the beginning of the process

• Identify the end of the process

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 Lead Time Reduction Process
Step 2: List all the steps required to complete
the product from start to finish.
• Walk through the process in
sequence
• Identify individual steps
• Number the steps
Chart the flow
Process Move/Handle Inspect/Repair Storage/Wait

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 Lead Time Reduction Process
Step 3: Identify the time required for each step.
• Follow one part and identify
associated measures (VA & NVA)
- Distance - Quantity - Time

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 Lead Time Reduction Process
Step 4: Identify steps as
Value Added or
Non-Value Added.

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 Lead Time Reduction Process
Step 5: Graph the entire process.

Lead Time Bar Graph • VA on the left

VA
8 NVA • NVA on the right
7
• Size of the blocks
VA
6 8 NVA
5
indicates time
Time

7
4
6 VA
3 5 8
3 6
2 2 5
3
1 1 1
Current

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 Lead Time Reduction Process
Step 6: Analyze and eliminate the time
required for Non-Value Added
steps.
• Use Problem-Solving Process

Possible Causes

NVA

Possible Causes

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 Lead Time Reduction Process
Step 7: Optimize VA time.
• Reduce or eliminate tasks
• Change, combine, or re-sequence
tasks
• Improve use of existing tools

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 Lead Time Reduction Process
Step 8: Graph the proposed improved process.

Lead Time Bar Graph • Use the results of

VA Steps 6 and 7
8 NVA

7 VA
6 8 NVA
5
Time

7
4
6 VA
3 5 8
3 6
2 2 5
3
1 1 1
Current Proposed Ideal

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 Lead Time Reduction Process
Step 9: Identify the ideal process by:
• Minimize/Eliminate NVA work
• Optimize VA work
Note: May require a long-term commitment
to continuous improvement

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 Lead Time Reduction Process
Step 10: Graph the ideal process.
Lead Time Bar Graph

VA
8 NVA

7 VA
6 8 NVA
5
Time

7
4
6 VA
3 5 8
3 6
2 2 5
3
1 1 1
Current Proposed Ideal

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 Key Points
• Detail your process.
• Use lead time reduction to identify and
track improvement.
• Minimize all Non-Value Added work and
simplify the process.

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 Key Points
• Implement on the floor and in the office.
• Implement continuous improvement plans and
sustain them.
• The use of lead time reduction will improve
overall competitiveness.

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 Self-Test—LEAD TIME
1. Which of the following group activities include Value Added
activities?
a. Waiting for machine, doing unscheduled maintenance, handling parts,
inspecting parts
b. Searching for tools, drilling a hole, sorting for defects, transporting
material
c. Inspecting parts, waiting for parts, excessive production, set-up time
d. Moving material, storing material, stacking parts, walking around
station
2. Drivers that affect lead time include….
a. Cycle time
b. Line balance
c. Set-up times
d. Maintenance
e. All of the above
f. None of the above
Lead Time Reduction 22
 Self-Test—LEAD TIME (cont’d)
3. The best definition for lead time is…
a. The total time required for processing a product or service from the point
the customer puts in the order to the point the customer receives the
product or service.
b. The sum of times associated with all the Value Added and Non-Value
Added activities involved in producing a product or providing a service.
c. Takt time.
d. The total time required for processing a product or service from the point
the customer puts in the order to the point the customer is satisfied with
the product or service.
4. If intense efforts are made, all Non-Value Added activities can be totally and
permanently eliminated from an operation.
True False
5. Lead time is not as critical an issue in the automotive industry as it is in many
other industries (food, photo development, computer hardware and software,
banking, etc.).
True False

Lead Time Reduction 23

 Checklist Questions on the Floor
1. How much lead time is there for material in this specific operation?

2. How many storage points and how much inventory are there?

3. Who is providing Non-Value Added activity?

4. Who can follow-up on the issues—inventory, handling, storage—that

are identified?

5. Can we reduce line-side and in-house inventory?

6. Is it presented in the right container?

7. Which parts are candidates for JIT or SPD?

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 Key Considerations

• Understand the impact of lead time reduction

– Look for better methods for moving material or for
reduced handling.
– Can visuals be used to prevent unplanned lead time
looking for parts?
– What improvements does reduced lead time bring to
other areas of the business?
– How much of what you’ve studied is done “just in
case”?

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 Lead Time Reduction Form

Lead Time Reduction 26

 Lead Time Impact Form

Part Name: ________________________

Current Proposed Impact %
Improvement

Distance

Quantity

Time

Ideas for Improvements

Time

1.

2.

3.

4.

5.
Current Proposed

Lead Time Reduction 27