Cycle Time in Manufacturing - Improving the Speed of Sales to Shipping

From the moment a purchase order is made by a customer, the clock starts ticking for the producer of the product they desire. For the customer, there is an expectation of delivery based upon criteria such as the importance of the need and a prior history of delivery time. On the other hand, for the manufacturer there is another expectation of delivery based upon completely different criteria such as the lead time given by the customer, materials inventory, and present/future work loads. Herein lies the friction that is often encountered between manufacturers and their clients when it comes to the concept of cycle time--the time it takes for a job to move from the sales order taken to a product shipped out the door. That is to say, in a world of shortened lead times and unforgiving expectations of on-time delivery and production perfection, how does a manufacturer reduce order-to-delivery cycle times while also maintaining quality?


Just take a look around job shops or make-to-order manufacturers that have not streamlined their production processes and you'll see one of the reasons why, for them, on-time deliveries, much less quick ones, are rare. What you'll see is that much of the order-to-delivery cycle time in non-streamlined operations is stretched out by waiting. Indeed, shop floors are often filled with personnel waiting for set-ups or break-downs to be finished, waiting for bottlenecks to be cleared, waiting for design alterations, and/or waiting for production problems to be fixed. The result is poor cycle time: low throughput, poor finished piece quality, too much inventory, and an abundance of non-value added activity. The critical results, though, are missed delivery dates and dissatisfied customers.


To overcome waiting in the manufacturing environment and to compress cycle time, streamlining through enterprise resource planning (ERP) is a best and necessary solution. According to the AberdeenGroup's 2007 study of ERP in globalization, "Companies that automate and streamline workflows...produced 66% more improvement in reducing total time from order to delivery". For example, in an ERP operation, just-in-time purchasing will automatically buy to the job and interface with sales and inventory to ensure on-hand material when it is needed. Furthermore, ERP scheduling systems use real-time data to anticipate bottle-necks before they occur. In short, the better the on-time delivery, the more satisfied your customers and the more orders they place. And, the more orders your customers place, the more utilized is your capacity to produce and profit.


Cycle time is one of those overlooked areas in the manufacturing process where even minor improvements in compression along the system flow result in exponential savings of production and on-time delivery down the line. To reduce cycle time is merely to undertake a process of self-examination to find where savings of production time can best be made--in short, streamlined. For the customer, this means on-time delivery. For the manufacturer, this means a satisfied customer.