Lead time is the period between the start and the conclusion of a process. Lead time is very important for any company or business. Businesses consider lead time in product manufacturing, supply, and project management before processing , during processing , and after processing levels. Lead time enables a company predict its sales, make operations efficient, and improve customer satisfaction. Besides, lead time indicates the flexibility of a business. The total lead time of a product from the time of order placement involves the order processing time, production lead time and the delivery lead time.
The order processing time is the period between the time of purchase and production time of the product. Before processing of the product begins, the order is always administered. This enables the company or business identify the product that the customer needs, the type, quantities, colors, quality, price, and even the delivery time that the customer expects their product. When a customer places their order, it enables the company or business to minimize their production or avoid overproduction of products that may lead to wastage of the company’s resources. The order processing time is therefore, very important in enabling a business or company manage its production rates and save on resources and manufacturing materials.
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The production lead time is an important period in the total lead time of a product. This is the time of product manufacturing, processing or production. It also includes the time of the availability of raw materials and product completion time. The manufacturing time however, depends on the product being produced. It might take few minutes, hours, several weeks, months, or few days. The quality of the product is always tested before being prepared for delivery. Shorter production lead time is efficient for the flexible running of the business as compared to longer production time of products. Reducing the manufacturing time enables increase the business or company output and revenue.
The delivery lead time is the period a product takes to be delivered to the customer. This is always done once the product has been well processed and all activities such as quality checking have been dealt with (Leanmanufacture.net, n.d). Customers are always pleased with fast delivery of their products. Late deliveries can lead them to find other alternatives. Besides, the delivery lead time should be flexible enough to provide customers with alternatives in case they find the first product unsatisfactory. The delivery lead time also includes quick response to complaints addressed by the customers. These complaints should be dealt with accordingly so as to avoid future mistakes. The production time thus needs to be shortened so as to enable fast delivery lead time.
Proper lead time is most important in aspects like customer satisfaction and the inventory. Client satisfaction is the most important aspect of any company or busy. The more the customers a business acquires and retains, the greater the growth of the business. Quick delivery of products is one way of acquiring and retaining customers. This can be achieved by increasing the manufacturing and delivery lead time. According to Editors (2019), a fast turnover in inventory is very valuable for a business or company while a slow moving inventory is an indication of a wasted and an unproductive business or company. Therefore, lead time is very important in business. Furthermore, increasing led time is more efficient for any production company or business. It is of importance therefore, to establish proper lead times.
References
Editors, B. T. (2019). Lead Time - Definition, Examples and Quiz. Business Terms. https://businessterms.org/lead-time/.
Leanmanufacture.net. (n.d). Customer Lead Time or total lead time. Lead time - Customer Lead Time or Total Lead Time. http://www.leanmanufacture.net/kpi/leadtime.aspx.
