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“Lead Time”: Understand Its Influence on Industrial Results
The “lead time”, or response time, is a vital metric in the industry, capable of capturing up to 30% of an organization’s revenue. Ricardo Borgatti, a renowned industry expert and partner at Borgatti Consulting, emphasizes the urgency of improving the management of this indicator. This time span between the start and the completion of a set of processes can be the key to industrial financial health.
By evaluating various case studies, Borgatti identified that some industries could free up between R$ 15 million to R$ 300 million from their cash flow simply by improving the management of “lead time”. The question is: why aren’t industries capitalizing on this potential?
Uncovering “Lead Time” in the Manufacturing Universe
In the vast world of manufacturing, “lead time” is a multifaceted concept. It can be applied from the replenishment of supplies to final delivery. Borgatti’s focus is mainly on industrial “lead time”, that is, the time between selecting raw materials and completing the product for storage.
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An ineffective management here can cause a buildup of semi-finished and finished products, leading to rising storage costs and freezing resources. However, by adopting “lean manufacturing” strategies, some companies have observed a reduction of up to 50% in “lead time”, significantly optimizing their inventories.
“By adopting advanced management practices, many manufacturers have discovered ways to shorten the ‘lead time’ even further, by up to four times”, states Borgatti. And this reduction has a direct influence on the capital needed for daily operations.
Technology as a Catalyst for Efficiency
An excellent example of this transformation is Apsen Pharmaceutical, which has used Cognitive technology to revolutionize its production processes. By replacing the old paper-and-pencil method with modern solutions such as the Internet of Things and Artificial Intelligence, the company now monitors all production in real-time. As a result, there was an impressive reduction of 46% in its industrial “lead time”, as pointed out by Márcio Rodrigues Mendes, Operational Excellence Manager at Apsen.
The Impacts of “Lead Time” go beyond operational costs. A long “lead time” can negatively affect reputation and competitiveness. On the other hand, efficiently managing this indicator can bring millions back to cash flow, strengthening the company’s competitive position and allowing for more investments in innovation and development.
In summary, in a world where speed and efficiency are valued, improving “lead time” is more than a necessity; it is a strategic imperative.
Source: Jaine Machado – Communication Engineering.
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