Page 93 - How To Implement Lean Manufacturing

74 Cha pte r F i v e

1990. However, many people did not know, beyond the conceptual level, what lead
time really was, and few knew how to calculate it. Lead time made for good talk, but it
wasn’t really understood.
Then, in 1998, Mike Rother and John Shook published Learning to See (The Lean
Enterprise Institute, 1998). I consider it a landmark book, not only because of the con-
cepts they explored, but also because they showed the world how to do value stream
mapping (VSM). In the process of teaching VSM, they also taught readers how to reduce
two Lean metrics to numbers. These two metrics are the Percent Value Added Work and
Lead Time.

Benefits of Lead-Time Reductions

As a Business Advantage
In his book, The Toyota Production System, Beyond Large Scale Production (Productivity
Press, 1988), when asked what Toyota was doing, Ohno was quoted as saying “All we
are doing is looking at the time line, from the moment the customer gives us an order
to the point when we collect the cash … And we are reducing that time line by remov-
ing the non-value-added wastes.” For Ohno, lead-time reduction is a key method in
improving cash flow in the company. It clearly has this business advantage in addition
to its advantages in the manufacturing system.

As a Manufacturing Advantage
Two key characteristics that few businesses measure in any form but that all businesses
want are flexibility and responsiveness. They go hand-in-hand. With one, you also get
the other. I know of no company that measures manufacturing flexibility or responsive-
ness and posts it with the other business metrics, but it is critically important nonethe-
less. Ask any planner what they would like to have more of, and second only to accurate
forecasts is the ability to quickly change plans and still meet delivery dates. There is a
good example of how reducing lead times helped the Bravo Line in Chap. 15. Read that
now if you would like. It is made clear how lead time and lead-time improvements
were turned into business advantages with huge gains. Two lead times are of critical
importance and we will elaborate further on them. They are:
• First piece lead time, which is the time it takes for the first piece to finish and be
ready for packaging. The primary benefit of this metric being short is that,
typically, the last quality inspection is done just prior to packaging and so this
is the response time it takes to confirm that either quality is good, or we need to
change the process.
• Shipment lead time is the time it takes to complete the entire shipment. This, of
course, is the key metric used in planning.
Table 5-1 shows the data from the Bravo Line. Take a look at the flexibility and
responsiveness factors achieved by shortened lead times.
How might the advantage of flexibility work for you in your business? Well, let’s
say the customer calls up and wants to change the model mix. In the Original Case, we
have to tell the customer that we have a batch in the production cell now, it will take
about 6.2 days to clear the line, and then right behind that we can run their request