The competition for your customers business is great! Customers expect a lot more value added services from the suppliers they choose to give their business. The capability to respond rapidly to customer demand is a key market differentiator for the Lean manufacturer. Because manufacturing response time required to produce products frequently exceeds the customer-quoted lead time, the most common reason given by manufacturers for implementing a Lean operating system is the desire to reduce the long lead times in their factories.
No matter what product your company produces, new competitors seem to enter the market space every year. Each one of these competitors offers some differentiating attribute that appeal to customers in your market. These attributes are designed to distinguish your competitor from your company in the eyes of the customer. These value-added services are the differentials that separate one supplier from the other. One particularly important differential is shorter order-fulfillment lead time.
Customers have become quite fickle when making their purchasing decisions and have much less loyalty to long-standing, legacy business relationships. In a commodity-type market, the ability to deliver products faster often result in an increase in market share created by customers who require the fastest response time as the primary criteria for making their purchasing decisions. A Lean factory that can produce its products in only their sum of their actual work content time will achieve significantly shorter manufacturing response time (customer-quoted lead time) than competitors who continue to use traditional methods for routing products through their factory. The shorter the manufacturing lead time, the faster the response to customer demand. Lead time reduction is the most often-stated goal of a Lean transformation.
Manufacturing lead time is measured using the time from when purchased material enters the manufacturing process until it is converted into a completed product and shipped to the customer. By subtracting the sum of the value-added standard work content time for all manufacturing processes for a product from the current customer-quoted lead time, the actual product lead time can be identified. Since standard work content time is the only true value added work, all other time of the customer quoted lead time is considered non-value added time. This gap in time highlights the opportunity for lead time reduction in a Lean operating system. Total lead time can be reduced by identifying the non-value-added times embedded in the total time and eliminating them from the manufacturing processes. The goal of the Lean techniques is to eliminate the non-value-added time of customer quoted lead time.
Customers have greater expectations that their orders will be shipped within the quoted lead time or less. When manufacturing lead time is greater than a customer’s expected delivery time, customer satisfaction suffers. To keep customers satisfied, rapid response manufacturing strategies are necessary.