x Producing goods and raw materials to learn about Lead Time term? How is Lead Time playing an important role?
x Many manufacturing units, factories, businesses, ... have not grasped how to calculate Lead Time for the most accurate?
X You wonder what is the difference between Lead Time and Cycle Time?
What is the term Lead Time will be Proship.vn , providing all knowledge to know about Lead Time in logistics and production activities. At the same time, you also know how to calculate Lead Time to effectively apply to your own business.
What is Lead Time? How to calculate Lead Time?
Want to understand the term Lead Time and how to calculate Lead Time, read the following content:
Definition of Lead Time
What is Lead Time? Lead Time full name is "Production Lead Time", is the production time. This term refers to the passing period from the beginning of a production process until the end.
In particular, the stages must be guaranteed not to exceed the time customers require. It can be understood, LEAD TIME is the parameters used to measure the ability of the business to customers.
* For example, producing a car: Lead Time includes the time of ordering components, assembly time, quality control and product finishing. With a car, Lead Time can last from a few weeks to a few months.
How to calculate Lead Time
Lead Time is divided into many different components and is calculated by the formula:
Lead Time = Processing time + Processing time + waiting time
* In there:
- Processing time: is the purchase period, the time period that raw materials are taken and transferred to the production office or factory for processing;
- Treatment time: is the stage of production and creation of products;
- Waiting time: is the process of handling orders and transporting the final product to customers.
* Example: A steel manufacturing enterprise has 1 day of steel processing time, production time is 5 days and shipping time is 2 days. How to calculate Lead Time is as follows: Lead time = 1 + 5 + 2 = 8 (day).
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What are the basic types of Lead Time?
What are the common types of Lead Time? In the field of manufacturing and business, Lead Time has the following basic and popular types:
Procurement Lead Time
Procurement Lead Time is the need for businesses to find raw materials or basic items ready to create a complete product.
Order Lead Time
Order Lead Time is the concept of the total time from customers ordering at the enterprise until the customer receives the finished product.
Delivery Lead Time
Delivery Lead Time is the time calculated from the design of the goods finishing until it is delivered to customers.
Inventory Management Lead Time
Inventory Management Lead Time is the time from preparing a item for shipping, delivery, replacement order until the time of receiving new goods in the warehouse.
Shipping Lead Time or Manufacturing Lead Time
Shipping Lead Time (or Manufacturing Lead Time) is the total time from the time customers order to goods are ready to transport to customers.
What role does Lead Time in Logistics and production play?
What is the role of Lead Time in logistics and production activities? That is:
Process optimization
Understanding Lead Time allows businesses to find ways to optimize step by step in the supply or production chain. The unnecessary time reduction helps increase performance and reduce the waste of human resources and finance for the organization.
Measure performance
Lead Time helps to measure the performance of production processes and supply chains via Lead Time.
By monitoring and analyzing Lead Time, you can soon detect losses throughout the process and promptly offer appropriate handling measures. This will help increase the productivity of comprehensive products and save time.
Forecast and planning
Lead Time helps forecast future needs and plan production or transportation correctly. This helps avoid shortage or excess supply, and optimize the working schedule.
Inventory management
Lead Time directly affects the inventory level to be maintained to ensure warehouse available for customers. Understanding Lead Time helps to specify the amount of inventory that needs to be reserved and avoiding unnecessary inventory or excess.
Risk management
The ability to predict and manage changes in Lead Time helps businesses respond to incidents in the production or transportation process. This helps minimize the negative impact on the schedule and service quality.
See also: Get good cold container transportation
Distinguish the difference of Lead Time and Cycle Time
What is the difference between Cycle Time and Lead Time? Before learning and distinguishing the differences between Cycle Time and Lead Time, businesses not only need to know what Lead Time is, but also need to understand what Cycle Time is.
Cycle Time (production cycle) is the time from the start of the production work until the product is transferred to customers. Detailed comparison table Cycle Time and Lead Time details as follows:
| Measurement criteria | Cycle time | Lead Time |
| Measurement range | Focus on measuring a specific job in the production process and project. | Measure the entire time of all production stages from receiving orders to the product and delivery to the final customer. |
| Ingredient | Only calculate the time to perform the work in a process. | Calculate the waiting time and do the job. |
| Target | The goal of Cycle Time is to optimize the time to complete a specific job in the production process, helping to improve productivity and increase the ability to meet production requirements. | The goal of Lead Time is to optimize the time to complete the entire process in the project, help businesses minimize customer waiting time, increase flexibility in the production/project process. |
| Manage | Because a team directly works in managing and improving the work, finding solutions to optimize the working process to increase performance and reduce the time to perform the work. | Because the project manages/monitoring the project for each process of the process, ensuring the optimal interaction between stages and handling arising problems can increase Lead Time. |
What is the term and other knowledge needs to know about the shared production time. Lead Time is considered as the best solution to improve the situation of production, purchase, business, ... Any questions related to logistics specialized terms or if you need to use cheap multimodal transport service at Proship Logistics, contact 0909 344 247 .
