Reducing Cycle Time May Be the Wrong Objective!
A few years ago many companies finally responded to an old wake up call
... shorter lead times solve lots of problems! This time the call came
from the Pacific Rim. Campaigns under the names of JIT, Lean Manufacturing
and others began to focus on cycle time reduction. And confusion set in!
Cycle time and lead time are not necessarily the same.
The drivers of this reduction effort included increased flexibility to
respond to customer needs, lower inventory, decreased working capital and
improved cash flow. Among the tactics deployed to reduce lead times was
grouping equipment into cells. One piece flow was a companion objective.
Process maps for manufacturing processes were drawn. Parts were found to
flow all over the plant floor ... in and out of functional departments
and sitting idle in WIP at each department. Before the flow was subjected
to "lean thinking," the material flow may have looked like this:
Once material arrived from an external or internal supplier, it was stored
in warehouses and waited it's turn in Q's at each department. When completed,
the material or product was sent to an internal or external customer or
warehouse. A key question was, "What date do I tell the suppliers to deliver
the material?" The answer depends on when it must go to "customers," and
then back off the lead time. The longer the lead time, the earlier we need
the material, and the higher the inventory. Also, longer lead times cause
us to base today's supplier deliveries on a "to" warehouse or customer
schedule (master schedule) that is farther in the future and more likely
to change. This causes material to often arrive earlier than needed ...
and up goes the inventory! Lead times of 4 to 14 weeks were not uncommon.
The Lean Process
Lean manufacturing challenged the traditional flow thinking. Equipment
was extracted and grouped into cells. Equipment in departments 102, 403
and 25 were pulled out to create Cell 66. The grouping was based on parts
that have a very similar process flow. For example, all large gears went
to the large gear cell. Small gears went to ... guess!
The Q and, thus, wait time were eliminated between operations formerly
done in the functional departments. Material was often delivered directly
to the cell or POU (point of use). Efforts were focused on reducing the
throughput time, or the cycle time, for the cell. These efforts were often
successful, reducing the time from start to finish for an item from weeks
or days to minutes. One piece flow meant the part went directly to the
next operation and was worked on immediately as each operation was completed.
But many times, the next piece started in the cell had to be the same as
the first one because the setup to time to switch from one part to the
next was several minutes or hours. Several pieces of the same item was
needed to manufacture cost effectively. The entire lot size was "snaked"
across the cell. In the old days, we called this splitting the lot. With
the cell, lot splitting could be done cost effectively.
Cycle time, the time it takes to go through the cell, was significantly
reduced. Lead times may not be reduced as much. For material planning,
the same key question beckons an answer, "What date do I tell the suppliers
to deliver the material?" The answer still depends on when it must go to
"customers," and then back off the lead time. The supplier needs to know
one lead time ... their lead time, which may be 2-22 weeks.
Assume the cell makes 5 different items, each with a cycle time of 30 minutes.
Each item must be run in a lot size of 100, which requires a week or more
to make the entire lot of one item. One item may have to wait four weeks
in Q, although the cycle time is 30 minutes per piece. What lead time should
be used for planning and calculating the delivery date from the supplier?
Thirty minutes is too short. A week is too short because the other four
items may be in Q and also needed. Some items may need to be run early
to get them all done on time and level the work load. The only safe lead
time for planning is five weeks.
Another issue ... capacity! What happens if the volume scheduled (master
schedule) causes a required capacity to exceed capability (demonstrated
capacity)? Material will flow in at a faster rate than it flows out. Actual
lead time through the cell will increase ... cycle times won't. Inventory
will increase. In fact, mismanaging capacity, with or without a lean process,
is the number one cause of excess inventory, long lead times and excessive
Reducing the Right Lead Times
processes, cellular manufacturing and cycle time reductions are all beneficial
activities, but beware! Increased flexibility, lower inventory, decreased
working capital and improved cash flow depends on shorter lead times. Shorter
lead times are realized when capacity is properly managed and lot sizes
are reduced by first overcoming obstacles and achieving a true mixed model
scheduling capability. Are you focused on lead time or cycle time reduction?