Step by step to implement lead time in your company

In times of technology and increasingly immediate users, lead time becomes essential in any business that seeks an efficient logistical indicator . After all, you’ve probably heard someone saying the traditional phrase “time is money”, right?

In industry and big companies, this isn’t just a famous phrase, it’s a fact. The more time spent on production or internal administration, the smaller the result .

With that in mind, we prepared a complete article to explain everything about lead time and ways to implement it effectively in your business. Keep an eye!

What does lead time mean?

Lead time is the entire production cycle carried out from the beginning of processes, analysis, evaluation, creation, until final delivery to the customer . In short, it is the time spent from the beginning to the end of a production .

It is part of the Lean Manufacturing concept, originating from the Toyota Production System – the main reference for quality in the way of work for most factories and industries around the world.

Basically, lead time is a logistical indicator for the entire production process, designed to be increasingly agile, of quality and at a lower cost

Remember at the beginning of this text, when we said that ‘time is money”? That’s about it!

Implementing lead time in your business ensures time optimization to save and improve work processes .

That is, if you are a manager and seek agile methodologies for innovation and continuous improvement , lead time cannot be missing from your company’s way of working.

Now, to start a deeper understanding of the subject, learn about the main types of lead time and understand how each one works, according to the company’s profile.

Main types of lead time

Currently, there are several types of lead time already developed, but each one serves a specific type of business or need.

Therefore, it is essential to know about each one of them and understand which one should be used, the right time and how to use it. Check it all out below!

Production

As the name implies, the first type of lead time that we will present here is production . That is, ideal for the industrial sector, responsible for developing products and/or services for sale.

In this case, lead time works at all stages of production. It is possible to use the method to rethink steps, procedures or even to change logistics .

For example: increasing the deadline to obtain inputs or defining a minimum number of materials that must be prepared for possible emergencies.

Shopping

Next, we have the purchasing lead time, which specifically refers to purchasing processes for internal functioning and, of course, inputs for the service and/or final product offered to the customer.

In this type, the manager must think of efficient solutions for assembly, maintenance and improvements in the company’s stock and warehouse .

In other words, you must define details such as the supplier list, whether or not to have extra items and the best way to record what goes out or comes in. Ultimately, finding the best ways to make the purchasing sector work.

Logistics

Finally, we come to the logistics lead time, a very important type because it can frustrate the customer in many ways, therefore, a point of attention.

Basically, this type of lead time concerns the entire pre-production logistics part, during the process and, mainly, in deliveries to the customer .

For this, the tip is to look for modern software for real monitoring and to value care, in order to guarantee that the product is delivered intact. In the case of services, the idea is to think about offering the quality that the customer needs.

Finally, you already know the types of lead time and some practical examples of how and when to use them. Now, understand better about the factors that directly influence the work method.

What factors can influence lead time?

First, before identifying which factors are influencing lead time in your company, let’s recap the meaning of this method.

In short, lead time is everything that consumes time. Whether in production, deliveries, work format or leadership. That is: all the time you don’t want – and shouldn’t – waste in the company.

Now, let’s optimize your lead time, starting by identifying and discarding errors. Watch!

Pre-production

The search for raw materials, suppliers or equipment is a main villain in the history of large companies. Sometimes a supplier error can jeopardize months of work and profitability.

Therefore, the tip is to always have an extra stock of everything that is most essential and a good list of suppliers so as not to depend on just one , for example.

The ideal is to never give space to bad luck. Be prepared for possible errors, delays and/or changes in plans.

Production

In fact, production is the process that is most updated and requires constant changes. After all, it is always possible to do better.

In this way, production reflects a lot on your company’s lead time, since it has many important steps and without it, nothing gets done.

Therefore, the tip is to always look for possible improvements, test new methods or even outsource some parts of production that can be carried out more objectively and within shorter deadlines.

Here, lead time should be mainly focused on time optimization and continuous improvement, focusing on quality control .

Delivery

As we discussed in the previous section, delivery logistics is extremely important and should never be neglected.

Delivery is the “face” of your company to the customer and is the moment in which you can build loyalty or drive them away. This way, promote improvements in delivery lead time.

If possible, have more than one type of delivery and think of specific solutions for different groups, paying attention to their individualities.

Maintenance

We should also consider maintaining lead time, because it’s not just implementing and letting it happen at random.

As a manager, lead time should become an essential task in your daily life. It is a change, in which you will have a routine of inspecting, analyzing data and understanding if it is working or how and where you should make some type of adjustment.

In general, it is important to understand that all stages and characteristics of your business directly influence lead time . Therefore, it must be thought of in pre-production, during and after production.

Step by step to calculate lead time

Now that you understand better about lead time and all the essential factors in the ideal scenario of a company with a good logistics indicator, let’s go directly to practice.

Follow our step by step:

1. Overview

Firstly, start thinking about the customer journey in your company, everything you do from the beginning, to production and reaching the end customer. All processes must be broken down and thought about separately.

2. Control

Keep track of time spent , looking carefully step by step. Here, it is important to collect all possible information to understand when it is possible to optimize the lead time.

3. Calculation

Finally, with all the information in hand and aware of your company’s routine, it’s time to do the calculation using:

• Hours spent on each stage;
• Hours of waiting for inputs;
• Customer waiting time.

From this, establish the maximum time that should be spent, based on everything that was calculated. For example, if you are spending a lot of time with the input supplier, it is time to look for another alternative or negotiate shorter terms.

In three simple steps, a manager can already understand his own reality and implement improvements for an optimized result.

Finally, the next step is to efficiently implement lead time in your company