Lead time cut by half —
not by chasing

Long lead time looks like a slow shop floor. Walking an order end to end showed the problem was in scheduling, in materials and in the measures. Planning pushed work forward, injection moulding started early and added 20 days of stock in the warehouse; ERP lead times were not maintained, so MRP could not calculate correct dates for purchase orders and work orders.

The problem

• Scheduling ignored the constraint. Push scheduling with no capacity-based plan around the bottleneck (assembly); the injection-moulding shop started early and held an extra 20 days of stock.
• More stock was added for kitting. Another 7 days of inventory was added to protect assembly — and shortages still occurred daily.
• ERP parameters were missing. Most materials had no lead time, so MRP could not back-schedule purchase orders and work orders from the due date; it generated gross requirements without netting stock, producing both overstock and obsolescence.
• Two definitions of on-time delivery. One for the customer, one for the plant, and the numbers did not agree; plant-level OTD was missing or set incorrectly, so managers had no reason to care about shortening lead time.

What we looked at first

We walked the order with VSM and CF-VSM — order entry, MRP, purchasing, moulding, assembly, despatch — to see where it waited and for how long. Then we split lead time into four segments: order processing, material purchasing, production and despatch, and looked for the longest.

The walk showed a cumulative production lead time of 64 days, and the largest segment was not assembly but waiting for materials and early release. Chasing the shop floor would not have changed it; the scheduling and material rules had to change.

What we did

• One definition of OTD. Redefined on-time delivery to the customer's definition, converted late-delivery loss into money and put it into BI reports, split by responsible department.
• Feasible dates from capacity. Calculated assembly capacity load first, then back-scheduled release dates and promise dates; orders were scheduled to feasible dates, not forced into the dates customers asked for.
• Fixed ERP lead times. Repaired lead times for 7,000+ materials and cumulative lead times for 600 finished-goods SKUs, calculated and updated in bulk with a tool.
• Separated MTO and MTS. 98.8% was make-to-order, so the focus went on gross requirements for MTO materials; a small number of MTS items used Min-Max instead of mixing everything together.
• Buffer management. Orders and work orders managed by red / amber / green / black, with weekly review of buffer penetration, cause and owner; critical materials watched separately.
• Ran the day on BI. SO, MO and PO status on one screen and weekly meetings looking only at exceptions; SOPs fixed the feasible-date rule, the process and how the BI is used.

Results

Who this is for

• Make-to-order equipment manufacturers, high-mix low-volume, with frequent order changes.
• Lead time managed by chasing; sales and planning argue daily; two OTD definitions that do not agree.
• Companies whose ERP has MRP but the lead-time parameters are missing, so it cannot produce net requirements and planning stays in spreadsheets.
• Not for: pure stock production, single-product high-volume plants, or process industries.