In the most basic sense, lead time is the amount of time elapsed between a customer placing an order to when that order is sent out for delivery. In manufacturing, lead time is made up of three different stages:
- Preprocessing Lead Time: Preprocessing or planning lead time, is the time after an order has been submitted up until the first production step is initiated. For instance, a company operating under just in time manufacturing would measure the time from the order placement to when the first Kanban card is sent to the production line.
- Processing Lead Time: This is the total time it takes for the product line to be manufactured.
- Postprocessing Lead Time: The postprocessing time includes any tasks that must be completed (like inspection or quarantine) before the final product is ready to be delivered.
Looking at the lead time through the lens of Lean manufacturing can give managers direction in eliminating waste and improving efficiency. One way to do this is by creating a value stream map. Value stream mapping is the process of assessing the current state of processes by mapping out the flow of work. These maps are typically hand drawn and designed to show the entirety of the production system.
Value stream maps are a great way to calculate an accurate lead time. Beginning at the start of production, follow the path a product takes and map the flow of materials and information. Be sure to include the how long tasks take how often orders are placed. Once you have a line representing total lead time, it will be easy to see where improvements can be made. Value stream maps are used to highlight activities or tasks that do not add value and areas in the facility where interruptions in the flow occur.
Understanding lead time is critical to an efficient workplace. Working to reduce the lead time will lead to the reduction of a number of wastes like overproduction, excess work in progress, defects, and more. All activities, wasteful or not, contribute to lead time so it is important to evaluate how your facility is operating and ensuring only job tasks that add value to the product, customer, or the company are happening.