2018.005: Supply Chain Lead Time Reduction Tips

Summary

In this video, Jeffrey McDaniels discusses lead time reductions and how they can make an organization more responsive, adaptable, and efficient. He outlines five key steps to reduce lead time: understanding its components, evaluating value vs. non-value time, collaborating with internal and external partners, prioritizing improvement opportunities, and planning, executing, and monitoring changes. By working cross-functionally and with suppliers, companies can streamline operations and significantly cut lead time, as demonstrated in a real-world example where a 72% reduction was achieved. These steps are crucial for achieving supply chain excellence and improving overall operational performance.

Takeaways

• 😀 Lead time reductions improve responsiveness, adaptability, and efficiency, not only from external suppliers but also through internal process improvements.
• 😀 The total lead time is comprised of four major activities: order preparation and release, supplier lead time, transportation time, and receipt and inspection.
• 😀 Understanding each element and its corresponding time requirements is crucial for identifying areas to reduce lead time effectively.
• 😀 Tip 1: Gain an understanding of the elements that make up lead time and the amount of time needed for each stage.
• 😀 Tip 2: Use value and non-value evaluations to identify areas of non-value time that can be reduced to streamline processes.
• 😀 Non-value time accounts for a significant portion of total lead time—reducing it can improve overall efficiency.
• 😀 Tip 3: Collaboration with internal and external partners, including suppliers, is key to effectively reducing lead times.
• 😀 Developing a cross-functional team and securing executive support are essential for successful lead time reduction initiatives.
• 😀 Tip 4: Prioritize improvement opportunities in collaboration with partners, ensuring mutual benefits to encourage active participation.
• 😀 Tip 5: Plan, execute, and monitor improvement initiatives, using after-action reviews to continuously refine processes.
• 😀 Successful lead time reduction can result in significant improvements, as demonstrated by reducing total lead time by 72% in a real-world example.

Q & A

What is the main goal of lead time reduction in supply chain management?

The main goal of lead time reduction is to make operations faster, smarter, and cheaper, enhancing overall efficiency and responsiveness of an organization.

How is lead time traditionally defined, and how does the speaker propose expanding it?

Lead time is traditionally defined as the time from the receipt of the purchase order to the delivery of goods. The speaker suggests expanding this definition by considering a process approach that includes internal and external factors such as procurement, supplier preparation, and transportation.

What are the four major components of total lead time?

The four major components of total lead time are: 1) Order preparation and release, 2) Supplier lead time, 3) Transportation time, and 4) Receipt inspection and movement to the point of use.

Why is it important to understand the elements that make up lead time?

Understanding the elements that make up lead time helps identify areas where improvements can be made. It allows organizations to pinpoint both value-added and non-value-added activities, leading to opportunities for lead time reduction.

What is the value/non-value evaluation, and how does it help in reducing lead time?

The value/non-value evaluation helps identify time spent on activities that add value versus those that do not. By reducing or eliminating non-value-added time, organizations can significantly reduce total lead time.

What role do internal and external partners play in lead time reduction?

Internal and external partners, including suppliers, transportation providers, and other stakeholders, must collaborate to achieve lead time reductions. The success of lead time reduction initiatives relies on cross-functional teamwork and support from both internal teams and external partners.

How does collaboration with partners help in lead time reduction?

Collaboration with partners helps in setting shared goals, timelines, and action steps, ensuring that both parties are aligned. It also fosters a trust-based relationship where both sides work together to eliminate inefficiencies and improve the supply chain.

What should be the focus when selecting improvement opportunities for lead time reduction?

The focus should be on identifying opportunities to reduce non-value-added time and working collaboratively with partners to find the most effective solutions. The selected opportunities should have clear benefits for both parties involved.

What is the importance of setting a communication plan in lead time reduction initiatives?

A communication plan ensures that all team members and stakeholders are informed about the progress, objectives, and challenges of the lead time reduction initiative. Effective communication helps in maintaining alignment and accountability throughout the process.

What is the benefit of conducting a pilot before rolling out lead time reduction initiatives across multiple suppliers?

Conducting a pilot allows organizations to test the lead time reduction process with a smaller scope, learn from the experience, and refine the approach. It ensures that the initiative can be scaled successfully without overwhelming resources or causing disruptions.