Lead Time Management
Lead Time Management
Lead Time Management
Example:
In 1994, Compack Computers lost between 500m$ to
1bn$ in sales due out of stock laptops and computers.
Definition:
• Point Of View
– Customer.
• “Time Elapsed from Order to Delivery”
– Supplier.
• “ Time it takes an order to get converted into
cash”.
.
Order to Deliver Cycle [OCT].
JIT environment leads to
Competitive advantage.
Total Order Cycle
Cash To Cash Cycle:- Inventories
• Raw Material
• Work in progress.
• Goods in Transit
• Time taken in processing.
• Issue Replenishment orders.
• Time In Manufacturing
• Time in Queues.
• Bottlenecks.
Cumulative Lead time Build up
Bottlenecks
• High Inventory Holding Cost
• Reduction in Responsiveness.
• All Activities add Cost but not all activities add
Value.
• Demand Changes.
• Not Reliable Forecasting Tools.
• Traditional ways of doing things.
• Technology. Ex Safety Pins
Race Against Time
• Cost of Time.
1. Shortening Life Cycles
2. Customer’s drive for reduced inventories.
3. Volatile Market making reliance on
forecasts dangerous.
1. Shortening Life Cycles
Example:-
– Mechanical typewriter, Electro mechanical typewriter,
Electronic typewriter and Word Processor
2. Reduced Inventories
• Raw Materials
• Components
• Work in Progress
• Finished Products
Just In Time
Scrapping Old Model
Time Compression