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“Lead time”: understand its influence on industrial results
“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, renowned sector specialist and partner at Borgatti Consulting, highlights the urgency of improving the management of this indicator. This time interval between the beginning and 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 and R$300 million of their cash flow just by improving lead time management. The question is: why are industries not 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 replacement of inputs to final delivery. Borgatti's focus is mainly on the industrial “lead time”, that is, the time between the selection of raw materials and the finalization of the product for storage.
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Ineffective management here can cause accumulation of semi-finished and finished products, leading to increasing storage costs and tying up 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 lead time even further, by up to four times,” says 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 Farmacêutica, which has used Cogtive technology to revolutionize its production processes. Replacing the old pen and paper 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 into cash, reinforcing the company's competitive position and allowing for more investments in innovation and development.
In short, 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.
