Lead Time Concepts

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Lead Time Concepts:

Lead Time Concepts Varun Bhatt


Definitions Scenario Productivity Tools Real life example JIT-II Synopsis Scope


A lead time is the latency (delay) between the initiation and execution of a process. For example, the lead time for ordering a new car from a manufacturer may be anywhere from 2 weeks to 6 months. Definitions

Supply chain management:

A more conventional definition of lead time in the supply chain management realm is the time from the moment the customer places an order (the moment you learn of the requirement) to the moment it is received by the customer. Supply chain management

Project management:

In project management lead time is the time it takes to complete a task or a set of interdependent tasks. The lead of the entire project would be the overall duration of the critical path for the project. Project management


In the manufacturing environment, lead time has the same definition as that of Supply Chain Management, but it includes the time required to ship the parts from the supplier, to know when the parts will be available for Processing plus processing days. Manufacturing


All organizations, whatever their products, face the same daily practical problem - that customers want products to be available in a shorter time than it takes to make them. This means that some level of planning is required." To meet customer demands it is highly important to meet customer demand at right time in right quantity at right price i.e , reduce lead time days. Scenario

Productivity techniques:

Productivity techniques


Kanban is not an inventory control system. Rather, it is a scheduling system that tells you what to produce, when to produce it, and how much to produce. The Kanban card is, in effect, a message that signals depletion of product, parts or inventory that when received will trigger the replenishment of that product KANBAN


Just-in-Time ( JIT ) is a production strategy that strives to improve a business' return on investment by reducing in-process inventory and associated carrying costs . Just In Time production method is also called the Toyota Production System . JIT eliminates inventory that does not compensate for manufacturing process issues, constantly improves those processes to require less inventory. JUST IN TIME

Slide 11:

Philosophy of JIT is simple: inventory is waste. Inventory is seen as incurring costs, or waste, instead of adding and storing value, contrary to traditional accounting In short, the Just-in-Time inventory system focus is having “the right material, at the right time, at the right place, and in the exact amount”-


The new basis of competition in many industries is time-based. This means that the focus is on reducing lead time by speeding up the design of new products or responding more quickly to customer demand for existing products JIT II, a customer-supplier partnership concept pioneered at Bose Corporation can aid in cutting both design and response lead time. This is done through system integration JIT II


System integration seeks ways to improve coordination between various departments or functional areas. The practice of JIT II links engineering, planning, and purchasing departments and bridges the inter-organization gap between customer and supplier. JIT II

JIT II : Gammon India :

At major sites Raw material supplier acts as store person. Supplier raises online bills (RTGS) Travel booking vendor & stationery vendor sits in-house Software Vendor deploys onsite support Web services for Document Retrievals JIT II : Gammon India

Advantages JIT II:

Reduces the paperwork associated with placing orders, eliminates the need to hire their own additional employees to order the goods, and eliminates the cost of holding the inventory because the vendor bears the cost. Good customer service and less stock out situation Advantages JIT II

Disadvantage JIT II:

One JIT benefit is actually sacrificed under this arrangement: the goods are stored at the customer's site, increasing the need for storage space. However, in our example at gammon we found that that the increase in the need for storage space is more than offset by the reduction in lead time or opportunity cost of stock out. Disadvantage JIT II


O rganizations have discovered that low inventories can make it difficult to respond quickly to customer demand, and they are willing to bear the cost of additional inventory to speed up lead times. JIT II partnerships are helping companies meet customer demand and still control cost and inventory levels Synopsis

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