.      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. Here is a lead time analysis for a product line at a plant we recently visited: Activity Total Days % Processing 3 7.5 In-transit .5 1.3 Set-up/ changeover .5 1.3 In queue 30 75.0 On hold-waiting for materials 4 10.0 On hold-quality 2 5.0 Total 40 100.1 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 causing unnecessary customer waiting. Reducing Lead Times 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-focused groups 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 accountability for 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. By employing these principles, many world-class manufacturers have shrunk lead times by 50-80%, gained market share, improved profitability and increased employee morale. .