Google Answers Logo
View Question
Q: Leadtime Information ( Answered,   1 Comment )
Subject: Leadtime Information
Category: Business and Money
Asked by: gigabit-ga
List Price: $25.00
Posted: 03 Nov 2005 12:18 PST
Expires: 03 Dec 2005 12:18 PST
Question ID: 588526
What is the importance of "leadtime data" or "product leadtimes" in
manufacturing?  CAn you include examples with a few reference links?
Subject: Re: Leadtime Information
Answered By: wonko-ga on 07 Nov 2005 07:41 PST
"Lead time is defined as the amount of time the lapses from the point
that an order is placed until it arrives.  In the production planning
context, interpret the lead time is the time required to produce the
item."  However, in its broadest meaning, lead time includes the time
to procure any materials from suppliers needed in order to produce the
finished item.

"Production and Operations Analysis" by Stephen Nahmias, Irwin (1989) page 136

Lead times play an important role in firm's ability to satisfy their
customers.  The longer the lead time, the longer the customer has to
wait to receive their order unless the firm elects to carry an
inventory of finished goods.  However, holding inventory is not free. 
Capital is tied up, and if the wrong item is produced, the production
may be wasted or may have to be marked down in order to be sold. 
However, particularly when lead times fluctuate and are difficult to
predict, there is often little alternative.

Since lead time reduction can lower a firm's overall costs and make it
more responsive to the marketplace by decreasing the amount of
finished goods inventory required, reducing lead times has motivated
many firms to adopt Flexible Manufacturing Systems (FMS).  Such
systems can perform many production steps at the same time, thereby
eliminating "substantial transportation time between work centers and
substantial queuing time at work centers.  Since an FMS reduces
transportation, set up, and change over time, it results in
significant reduction in lead time for production."

"Production and Operations Analysis" by Stephen Nahmias, Irwin (1989) page 616

Lead time is formally incorporated into inventory planning through the
Economic Order Quantity model.  Many versions of this model exist with
varying degrees of sophistication.  The least sophisticated version
incorporating leadtime assumes that lead times are always constant,
but more complex versions exist that incorporate leadtime variability.
 Both the average leadtime and its variability influence the amount of
inventory required.  The more variability, the more inventory is
needed to protect against times when the leadtime becomes longer.

A comprehensive definition of leadtime can be found here: "Leadtime"
Glossary of Manufacturing

This article describes the importance of minimizing leadtime in a
manufacturing operation: "Assessing your current operation - Competing
Ideas"  by Wayne S. Chaneski, Modern Machine Shop  (Feb, 2004)


Subject: Re: Leadtime Information
From: knickers-ga on 07 Nov 2005 06:21 PST
leadtime data is effectively a measure of your total manufacturing
process. They tell you how quickly you can convert raw materials into
delivered product to your customer. In the ideal world your production
process would be waiting for your customer order. When they give you
the order the manufacturing process kicks into action and out pops the
product to the customer door instantly i.e. no lead time. The reality
is that the manufacturing process is made up of many steps. Some of
those involve a manufacturing process whilst many are just moving
materials or product and waiting for materials or product. Having a
high leadtime could be an indication that your process is not
optimised and that you have a lot of wait time. It could also be a
measure of high work in progress (WIP) and a backlog of customer
orders. Hence you need to measure leadtime as this is an overall
measure of your total process and not just the manufacturing element.

Important Disclaimer: Answers and comments provided on Google Answers are general information, and are not intended to substitute for informed professional medical, psychiatric, psychological, tax, legal, investment, accounting, or other professional advice. Google does not endorse, and expressly disclaims liability for any product, manufacturer, distributor, service or service provider mentioned or any opinion expressed in answers or comments. Please read carefully the Google Answers Terms of Service.

If you feel that you have found inappropriate content, please let us know by emailing us at with the question ID listed above. Thank you.
Search Google Answers for
Google Answers  

Google Home - Answers FAQ - Terms of Service - Privacy Policy