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Lead Times are Important
Unnecessarily ignoring them can close companies
Tom Solon, Applications & Sales Engineer, Kerk Motion Products -- Design News, March 3, 2003
Much of my day is spent working with customers who, rightly so, go to great lengths to save money. Together, we look at design options. We look at material options. We look at usage rates. We review manufacturing techniques and their ramifications. We ask questions, such as should they invest in tooling to cut unit cost, or go with higher labor content, saving the capital expenditures? We document the price breaks. We look for areas to shave costs.
Those reviews and brainstorming sessions are critical. I'm not "ranting" about the process. Often, together, we will find a better solution and we'll make it cost-effective as well as affordable.
So, we send out the final quote, spelling out the price breaks and the lead times with the critical dependencies. And we wait. And we wait. Then comes THE CALL. "Can we get those parts next week? We'll pay overtime or expedite fees."
Now, I've been there, too. So much time gets eaten up with design reviews, then sign-offs, appropriation meetings, and other activities. I gently remind the caller of all the things that make up the lead time, and then start leaning on our manufacturing department. And, of course, manufacturing always comes through.
No "rant" here either. This is the real world. But I bet you know what happens next: Nothing!
THIS IS THE "RANT:" No calls. No faxes. No emails. And then it comes. The purchase order. And the due date is next week!
At this point I must put in the requisite disclaimer. This story is purely fictional. It is not intended to represent the opinion of my employers or co-workers, just mine.
But, I wonder, why did we bother with so many weeks of work to save 13 cents per part? Now the customer is spending thousands of dollars to expedite and hundreds of dollars on overnight shipments. Many companies have FedEx Overnight as their standard shipping method.
Some companies never leave enough time for standard lead time on products they have bought for years. Any savings that could be realized are wiped out by expedite and shipping charges. This happens with companies of all sizes and ages.
Adding to the aggravation are the annual form letters informing us that, as a valued supplier, we are expected, of course, to provide our plan to reduce our prices by 10 to 30 percent.
Despite the way this may sound, I am not complaining. I am very fortunate to have the opportunity to work with some of the finest companies in the world. These companies are not buildings. They are collections of great people, working very hard to do something important. They are as frustrated by this cycle as we are. We all feel helpless, powerless to break the cycle.
This "Rant" is a plea. Can we all get a little better organized? Make decisions faster? Keep all our costs in mind? Unnecessarily ignoring standard lead times can cause a lot of ripple effects. It is a huge loss of efficiency, of capacity, of value. It makes companies less competitive. It closes companies.
Let's pay more attention to this important fact of manufacturing life.
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