TOPIC FOUR: LEAD TIME AND TIME

COMPRESSIONS
 Learning objectives

To emphasize the importance of

responsiveness to customer needs
To consider differing perceptions of ‘lead
time’
To explain the importance of lead-time
variability
To outline the component parts of lead times
To explain the need for expediting, how it is
prioritized and organized and how it can be
reduced
INTRODUCTION
 Time is THE resource

"Once it has gone, it has gone, it will never to

come back"
"What separates good and poor managers is
how they manage time"
"Time is a budget item"
"Unless suppliers get their act together on
lead times, then simply, we will change
supplier
 Lead time
Order time: Time of the order preparation
(self-manufacturing) and/or order (external
supply)
Delivery time: period from order up
delivery.
Transportation time
Supply lead time
 Supply Lead Time

Involves all of the following:

•The materials movement times
•The information flow times
•The payment and credit times
Preparation ,processing
 cont.…..

Who should pay, for unreliable supply lead

times?"
 Cont….

There may involved in unreliable supply lead

times, See the detailed example of chocolate

supply lead time (cocoa): 180 days on

average, Supply lead time (ingredients): 80
days on average, supply lead time
(packaging): 1–3 days : Production lead time:
1–2 days: warehouse and transit lead times
(distribution): 1–5 days
 Cont
If use 70 items per week, and supply LT is 2
weeks
Then, maximum stock is 140 items
But if supply LT is variable by +1- one week
Then, maximum stock is 210 items minimum
stock is 70 items
We may "play it safe" and hold 210 items
Supply Lead time perceptions
 Lead time categories

 Internal Lead Time

 From when the need is identified to when the order is
communicated
 External Lead Time
 From when the order is communicated to the actual
delivery and meeting the needs
Example assessing suppliers delivery
 Cont…

Demonstrate supplier who have the ability to

comply with delivery requirements.
Solution .
 Causes of long order lead times

•Excessive controls
•Lack of information
•Lack of synchronisation in materials movement
• Lack of proper training
• Limited co-operation
• Limited co-ordination
•Non-value-added activities
•Outdated information technology
•Poor communication
•Poorly designed procedures and forms
•Repeating process activities
Approaches to ensure effectively lead
time

Obtain reliable suppliers

Consider a relevant mode of transport
Automation in requisition and order
communication and approval
Optimal facility location
 stock holding facilities
 Production
Expediting
 Target-level replenishment
 TSL = D (T + P) + SS
Where D = average daily demand
T = lead time
P = review period (days)/operating
days
SS = safety stock
Example
A regional warehouse orders an item once a week from a central
warehouse. The truck arrives 3 days after the order is placed.
The regional warehouse operates 5 days a week (1 week = 5
days). Demand for the item is fairly steady at 20 units per day.
Safety stock is set at 2 days’ supply. If the quantity on hand is
90 units, how many should be ordered targeted to cover the
lead time?
 Scheduling Deliveries and Work
Schedule

Scheduling is the process of arranging,

controlling and optimizing work and
workloads in a production process or
manufacturing process and procurement
of materials/works/services.
 Key aspects in scheduling

In scheduling, three key aspects are

important: Duration, Work, and Units.
Duration: shows how long a task takes to
completed.
Work: shows the total effort to complete a
task.
Units is the number or amount of a resource
you assign to a task, such as three carpenters
or one engineer
 Methods of Scheduling

Forward scheduling: is planning the tasks from the

date resources become available to determine the
shipping date or the due: Start schedule as soon as
the job requirement is known
 Backward scheduling: is planning the tasks from
the due date or required-by date to determine the
start date and/or any changes in capacity required:
Start with due dates, by scheduling the final
operation first
Resource-driven scheduling method: This approach
is applicable when you want a task duration to be
based on the work performed by resources.
 Cont..

The resource you assign drives the task

duration. The more resources are assigned
the sooner the task get
completed.
Fixed-Duration Scheduling: uses task
duration you enter. The duration stays the
same whether or not you assign resources to
that task. It is appropriate
when the time to accomplish certain task is
known
 Benefits Scheduling

Process change-over reduction

Inventory reduction, leveling
Reduced scheduling effort
Increased production efficiency
Labor load leveling
Accurate delivery date quotes
 Real time information
 Sequencing

Priority rules used to dispatch or sequence jobs

 FCFS: First come, first served

 SPT: Shortest processing time

 EDD: Earliest due date

 LPT: Longest processing time

 Schedule Evaluation Criteria

 Standard measures of schedule performance used

to evaluate priority rules:
 Meeting due dates of customers or downstream

operations.
 Minimizing flow time (throughput or cycle time)

that the job spends in the shop.

 Minimizing work in process.
 Minimizing idle time of machines and workers.
 Example
JOB Processing time (days) Job due dates (days)

JOB Processing time (days) Job due dates (days)

A A 6 6 88
B 2 6
C 8 18
B 2 6
D 3 15
E 9 23
C 8 18

D 3 15

E 9 23
 FCFS Rule
Job Job process Job flow Job due date Job lateness
sequence time time

A 6 6 8 0

B 2 8 6 2

C 8 16 18 0

D 3 19 15 4

E 9 28 23 5

TOTAL 28 77 11
 Cont…..

Do the same process of calculations to other

rules given the sequence of jobs under each
rule as follows;
SPT =
EDD=
LPT =
 Comparisons of the rules
Rule Average completion Average latest time
time (days) (days) (total late
(Total flow days/number of jobs
time/number of jobs

FCFS 15.4 2.2

SPT 13.0 1.8

EDD 13.6 1.2

LPT 20.6 9.6

 Follow up Delivery (Expediting)

It is the obligation of supplier to deliver

ordered materials within time agreed. On the
other hand it is the responsibility to make
follow up. This can be done by making phone
call, emails or writing letters
 Prioritization in expediting

If we accept that expediting work is to be

undertaken, and that it ought to be proactive,
an obvious first question is: ‘Where do we
apply expediting effort?’
Criticality
Alternatives
 Critical

How serious are the consequences of late

delivery likely to be?
2 Is the material of:
a) high priority (e.g. raw materials, key
assemblies, fuel, production materials)
b) medium priority (e.g. standard
components, par ts for planned maintenance,
furniture, packaging materials);
c) standard priority (e.g. cleaning materials,
internal stationery, paint (for buildings),
office supplies)?
 Alternatives

If the material is late, do we have a

substitute?
Is there an alternative supplier?
Are stocks held somewhere?
Do we know another user?
 Seminar questions

Why on time delivery is important for

organization winning competitive advantage
 Ending quotes

Choose to study hard so you will run the

exams or choose not to study, then the exams
will run you.
And remember,
If you cant explain it simple, you don’t
understand it well enough.