As an electronics manufacturer, you’re likely focused on optimizing your lead time.
After all, if your lead time for electronic components and sub-assemblies is too long, your business suffers. Talk with your industry peers, and you will hear plenty of first-hand accounts of how a manufacturing line was forced to halt production simply because a 10-cent component was nowhere to be found in inventory.
Many electronics manufacturers avoid this issue by carrying excess inventory. But this involves investing capital in inventory that is likely to be better off invested in other areas of the business.
One way to shorten your lead time is through manufacturing transformation.
Top Four Causes of Long Lead Times in Electronics Manufacturing
Lead time, of course, is the total time required to create a product and provide it to your customer. You calculate your lead time by adding your pre-processing time, processing time, and post-processing time.
If your lead time is too long, you should examine your operations to identify the cause. Here are the top causes of long lead times in electronics manufacturing:
- Order handling takes too long: Because of manual processes, order configuration complexity, departments operating in silos, undocumented policies and procedures, insufficient workers, and other issues, manufacturers take too long to process customer orders.
- Supply chain is unreliable: Lack of communication or cooperation among entities along the supply chain, lack of visibility deep into the supply chain, inaccurate forecasts, and just-in-time changes all play a role in making supply chains vulnerable to disruption.
- Production takes too long: Naturally, if you take too long to manufacture your product, your lead time will be inaccurate. The length of your pre-processing time might be adequate, and your post-processing time might be within targets, but if your processing time is not optimized, eliminating all waste and non-value added activities, while still meeting quality, for all complex order configurations and types, production time will be unreliable.
- Delivery takes too long: When it comes to lead time for electronics manufacturers, patience is not a virtue. Customers do not like waiting an inordinately long time to receive their orders. If your lead time is too long, the culprit might be your shipping and receiving clerk, your shipper—even the ship your product is on.
How to Shorten Lead Times with Manufacturing Transformation
At MCA Connect, we define Manufacturing Transformation as the process of reducing waste, improving capacity, and globally optimizing constraints to achieve your P&L and balance sheet goals.
Manufacturing transformation involves reviewing your goals, establishing objectives, uncovering opportunities for improvement, and designing future state processes for transforming your manufacturing operation into an optimized, reaction-ready Manufacturing 4.0 facility.
Start your manufacturing transformation with a Gemba Walk of your back office and shop floor. Visit the places where orders are received and processed, products are manufactured, and shipments leave your facility. Ask your workers lots of questions. Keep your eyes open.
First, focus on processes, not people. Look for inefficiencies in how your staff executes processes, and in what order they complete these processes. Look for the 8 areas of waste (waiting, overproduction, for examples) and process improvements.
Next, map your current supply chain and order-taking process. Create a visual diagram of all the players and all the stages in your supply chain needed to get all materials, parts, components, and sub-assemblies to your facility. Then create another diagram that depicts each step you take to process customer orders, including who takes them, where, how, and when. This is visualized like a control tower for your supply chain.
Now move on to visualizing your production process. Create a VSM (Value Steam Map) that shows each step of the process, from start to finish. You can do this on a wall with sticky notes, or on large sheets of paper pinned to the wall, or on a whiteboard or better using software BPM, to it can be easily updated to remain current with the ability to do “what if” modeling. How you create your visualization is not as important as the completeness of your diagram.
Take the same steps with your post-processing activities. Map them out, step by step in a way that visualizes everything that happens from the time a product leaves the production line to the time it arrives at your customer’s facility.
Now you are ready for analysis. Identify where and why delays happen in your supply chain, order taking, manufacturing process, and post-processing activities, including delivery. You will end up with a list of items that describe your current state—and areas for improvement.
Now, map your future state. Using your current state as your guide, describe the actions you must take to eliminate delays and waste in your lead time. These actions might include:
- Replacing unreliable suppliers in your supply chain
- Automating order processing
- Implementing inventory-management software
- Sharing data with suppliers in your supply chain
- Completing as many processes as possible concurrently
- Finding a faster shipper
Implement your plan. Take your desired future state and act upon it. Change any processes, people or technology you need to so that you shorten your lead time and bring it within acceptable targets.
Finally, track your results. Shortening your lead time is not a one-and-done activity. You should expect delays to creep back into your supply chain, inefficiencies to pop up again in your order-taking procedures, and delays to show up again over time in your production processes and post-process activities.
Create key performance indicators that help you monitor your lead time. Then adjust each step whenever needed to remedy any causes of delays. Your target is continuous improvement.
The key to shortening your lead time as an electronics manufacturer is insights, followed by action, followed by ongoing measurement. You start by understanding where delays creep into your lead time. You implement a logical process for eliminating those delays. And you maintain your optimized lead time by measuring and monitoring the key metrics that show you how well you are doing.
By the way, if shortening your lead time is a priority for your electronics manufacturing business, talk with us about Manufacturing Transformation, our unique service that helps you reduce waste, improve capacity, and globally optimize constraints to achieve your P&L and balance sheet goals. Manufacturing Transformation is a comprehensive offering that reviews your goals, establishes objectives, uncovers opportunities for improvement, designs future state processes and leading edge IP solutions for transforming your manufacturing operations into an optimized “reaction ready” 4.0 facility. Learn more about Manufacturing Transformation.
Author: Doug Bulla, VP of Solution Development