LEAD TIME is defined as starting when the need for a product, part or service is recognized and ending when that product, part or service is available for use at the point of use. For example, manufacturing lead time would run from the time a shop order is issued until the product is available for shipment.
In many manufacturing situations the bulk of this time elapses while the product is sitting around waiting for something to happen. This time is called non value added time, as opposed to value added time when the product is having work performed on it. The longer the non value added time in a department, the greater the amount of Work in Process (WIP) inventory. Its like waiting in line to buy a ticket for a movie. The value added activity (buying the ticket) only takes a few seconds, while the amount of non value added time (how long you wait) depends on how many people are in the line (WIP). The lead time is the sum of value added and non value added time. An effective process has a high proportion of value added time to non value added time.
A manufacturer of leather ice skating boots had reduced its manufacturing lead time from 12 weeks to 6 weeks and felt it was getting close to optimum. However a study of total value added time in the process (the sum of the per unit time standards for all operations ) revealed that total value added time for the manufacturing process was about 2 HOURS!! That meant they still had 5 weeks, 4 days (on a 5 day week) and 6 hours (on a single-8 hour shift day) of non value added time.
One department that contributed non value added time to the process and had a great deal of WIP, was called the Muller (some shoe industry term of indeterminate meaning). Investigation revealed that there was NO value added to the product in the Muller, it was merely a holding area (in many manufacturing operations this is called a “Staging Area”) between two production departments. Shop Supervision claimed the Muller was necessary because the variable workload of the two departments involved required a large inventory or the 2nd department would continually run out of work.
Management had reduced the Muller WIP from almost 3000 pair of boots (over 1 1/2 weeks production delay) to a target of 600 pair (1 1/2 days production delay), but felt they could not schedule work precisely enough for further reduction to occur. Under the current method, WIP would be forced down to the target, then gradually creep up until, at about 1500 pairs (3 1/2 days production delay), someone in management would yell and the WIP would be forced down again.
The situation was resolved when the consultant, working with shop personnel, developed the following methodology. Two shop floor people were “cross trained” to be able to work in both production departments surrounding the Muller. Their work stations were positioned so they could both clearly see the Muller and each other. These employees were made responsible for the number of pair of boots in the Muller. They could make decisions on their own to work in either department, as needed, to balance the flow of work, without asking line supervision or management.
Three small spaces, called Kanban (a Japanese term that means “signal”) Squares, were identified and marked off in the Muller area, each large enough to hold about 50 pair of boots. Under the shop employees’ watchful eye, when the total Muller quantity dropped below 50 pair (less than one Kanban) or over 100 pair (more than 2 Kanban), they moved back and forth from department to department, increasing and decreasing the flow of work into and out of the Muller. This simple, physical control eliminated 1) the problem, 2) the yelling, 3) reduced WIP by 500 – 1400 pair and 4) reduced manufacturing lead time by about 3 days. In addition, several shoe holding racks were no longer needed and some space was freed up.
This case study illustrates several points:
- WIP = lead time and money. High levels of WIP indicate a poorly balanced and managed process. The less WIP needed to run a process effectively, the shorter the lead time and less resources tied up.
- Good process control doesn’t have to be complicated, technical and expensive. Simplicity is often best.
- The closer process control can be put to the process and the quicker the response, the more effective it will be.
Computer technology and good management are certainly necessary tools for the well run organization, but don’t overlook the principles of simplicity and visibility and the skill and knowledge of the people doing the job. If you have a specific operational problem, I would be happy to discuss it with you.