5 Steps to an Improved Lead Time and Your Competitive Advantage
The lead time can have several different parameters, but I like to define it as the elapsed time from order acceptance to invoicing.
To improve (decrease) the lead time, consider the 5 stages that I take my clients through:
- Define what constitutes your lead time, and then break it down into stages, steps, tasks and activities. Until you understand what your current lead time looks like, you can’t begin to understand its impact and how it can be improved. You may need to do this by customer, product, service, volume or other variants to obtain a meaningful measure of time/cost.
- How much of the lead time measure actually adds value to your customer? Identify those steps that add value (VA) and those that don’t (NVA). Work out a percentage, time and if possible a £cost.
- Systematically remove NVA from your lead time. Question the need for every NVA item in your analysis. Can it be removed? Done elsewhere? Automated? Performed in parallel?
- Re-measure your lead time. Now, identify the bottlenecks and errors. Bottlenecks hold the rest of the process up. Identify how to reduce the impact of bottlenecks on your overall lead time. Where do errors happen? Why do they happen? Capture and correct errors before they impact on the lead time and your customer. Never make the same mistake twice.
- Start again! Continually improve your lead time by creating a new target and going back to stage 1.
How does your lead time compare to your competitors or industry? Is there a benchmark you can strive for?
Lead time reduction impacts your business by creating the ability to:
- deal with more work in a shorter period of time
- react to the changing needs of your customers
- react to the needs of new customers
- reduce the costs associated with the provision of your products and services
- increase profitability
- attract new business
What is your industry standard and how do you compare?