Drastically crashing Lead time – What to focus on?

It’s a given that as an organization if the delivery of your product is on time or even before time than your competitors, it gives you a definitive competitive edge. To drastically crash the current lead time, first, let’s look at the components of lead time.

Components of lead time

The 2 components of lead time are

1. Processing Time or touch time – This is the time taken for performing a process on a job. For manufacturing, it could be designing, casting, machining, QA, assembly, painting, etc. For Sales, it could be making a quotation, Customer calls, sales visits, etc. For IT it could be designing, coding, testing, ticket resolving, etc., for the service industry it could be processing a document, etc, and so on and so forth.
2. Waiting time – This is the time that a job has to wait for someone to perform a process on it.

Contribution to the lead time

Do you know what percentage of the lead time is processing time and what percentage is wait time?

The answer will blow you off.

On average, waiting time contributes to 50 to 80% of the lead time. This means, if the lead time of finishing a job is 4 weeks, the job is waiting at some point or the other for someone to work on it for 5 to 8 weeks.

What to focus on? Isn’t it obvious !!!

The reasons for waiting could be many. Non-availability of resources, waiting for some information, breakdowns, waiting for clarity, etc.

But the point is, if I have to drastically reduce lead time, where does the biggest opportunity lie? It’s so obvious. It lies in reducing the waiting time no matter what the dependencies.

However, in my experience, most of the improvement initiatives that organizations take are to reduce the processing time. I am not saying that this should not be done, but there is a bigger opportunity to have a big impact on the lead time and in quick time as well. Why not focus on that first.

I have been using the tools and techniques given by Theory of constraints (TOC) to help clients reduce the waiting time by order of magnitude and thereby drastically crash lead time.

And the results have been nothing short of magical.