Up to 70 % of manufacturing costs or about 50 % of operating costs in today's production companies are material costs. The longer the lead time, the higher the material costs.
The reasons for long production lead times are usually very diverse. Therefore, to reduce the lead time and increase inventory turnover, multi-layered measures in the sense of a system change are necessary.
Below you will find some of the typical reasons for long lead times and high material inventory.
Most production companies have multi-level manufacturing processes. Setup times, production processes and production cycle times are usually very different. In addition, production processes are rarely linear, but run parallel, merge or branch. There are also alternative resources (with different process times compared to the main resources) and alternative process routes.
Different products and different order quantities pose an additional challenge to the synchronization of production processes. Against this background, the reasons for non-synchronous processes may be:
Customer orders are not received evenly. The "art" is to plan the utilization of process capacities in advance and manage any necessary adjustments as early as possible (front-loading). The reasons for non-provision of process capacities in line with demand are as follows:
An ERP system calculates the production planning with fixed lead times and infinite capacities. The MRP calculation is then based on these incorrect or unrealistic premises.
Your suppliers use the same scheme to calculate their production and material planning. Since the proportion of purchased parts is often very high, lean know-how and experience in purchasing (supplier management) is just as important as the knowledge in your own lean production department. Missing parts and poor delivery reliability are due to:
An often-forgotten aspect of Just-in-time manufacturing is the delivery of 100% correct design drawings and technical/material specifications to the purchasing, material planning and production departments. This is particularly true for manufacturers with predominantly custom or made-to-order production. Receiving accurate design documentation “Just-in-time” is the basis for a reliable production and can be delayed by the following:
In our Kaizen consulting for just-in-time production to reduce operating costs, we follow the motto "only results count"!