Lead time reduction is a great way to improve productivity, increase output of finished products and streamline operations. However, original equipment manufacturers (OEMs) often encounter road blocks that extend lead times, which can slow down and otherwise negatively impact the manufacturing process. Here are five issues you are likely to encounter that can drag production down, and how you can approach these problems when you’re working on reducing lead times.
It’s impossible to build equipment when you’re missing the the necessary parts. Whether you underestimated the amount of stock you needed or you forgot to place an order to replenish before you ran out of a certain fastener, bolt or other component, waiting for the new inventory to be delivered will eat up time and money. This is especially problematic if the parts are not commonly available, as the lead time can be weeks or months. There are a few different solutions to this problem. A vendor managed inventory (VMI) program allows you to automate stock replenishment from an off-site supplier who uses Just in Time (JIT) inventory management to order and deliver components based on your usage.
2. Lead time variability
When ordering parts like fasteners and class C components, the lead time can vary from vendor to vendor. This makes it difficult to predict when items will be delivered and even harder to coordinate production. Supply Chain Digest pointed out that the variability may create inventory surplus and stock-outs. While the latter is more likely to slow down operations, the former can be problematic as well. Ordering excess inventory strains your budget. One effective strategy to eliminate this issue is to consolidate your company’s suppliers. Rather than ordering from various providers and receiving shipments at random, having one supplier means everything will arrive together. This can help cut down on shipping costs and make it easier to schedule builds and get them done with less hold-up.
3. Shipping delays
This is perhaps the most unpredictable issue that may arise for OEMs. A number of factors can affect shipments, from raw material shortages to natural disasters to human error. For this reason, it is difficult to avoid problems, but it’s not impossible to reduce risk. Finding a supplier located close to your factory is not necessarily feasible. This is why working with a supplier who keeps inventory on hand in its warehouse and on order while continuously monitoring your usage is a best practice. Using fewer suppliers is also advantageous when you’re worried about delays. The fewer shipments you have coming in, the less likely an accident or other road block will extend the delivery date.
4. Too many processes
When factory workers have to build every component of a finished assembly, it will take longer to complete a project. This means your output is lower and your return on investment (ROI) is less than if you were able to produce more finished products in the same time frame. You may be able to unburden your manufacturing team of some of these tasks by having subassemblies built off-site. Then, they will arrive ready to go, saving countless hours of production. Your products will take less time to complete, so you can make and sell more, resulting in more profitability and happier customers.
5. Disorganized inventory
Keeping all of the parts to complete a build on-site allows you to easily assemble the finished product. However, if your component supply warehouse is at all disorganized, you can lose a lot of time hunting down the items on your build list. This is especially the case if you stock surplus parts, as the excess inventory can make this process even more challenging. If you have a VMI program in place, the supplier can keep track of your fasteners and class C components in an off-site storage facility. Then the only parts you’ll have on hand are the ones you need, so finding these items is much less of a wild goose chase.