Delivery time management ensures actual delivery times match those given to customers. Project managers manipulate lead times for different components to ensure availability. Effective management enables efficient use of resources and helps set customer expectations.
The lead time is the time required between the order of a product or service and its delivery. Delivery time management is the process of ensuring that actual delivery times match those given to a customer. In a manufacturing environment, it can also apply to ensure that the production of the items starts in time to prevent the warehouse or storage facility from running out of stock.
Project managers are often responsible for managing delivery times. This often includes manipulating different lead times for various components of a project so that all pieces are available when needed. Often, some pieces are needed to create other pieces; parts and final products have lead times. To calculate a global timeline, the project manager must accurately estimate delivery times for all items.
For example, a construction project requires the work of several subcontractors. The person installing the drywall may need four days to complete their job. He may not be able to start, however, until the electrician completes the inside-wall portion of his job. If the electrician needs four days and the drywall installer needs four days, the actual turnaround time for this part of the project is eight days. Effective lead time management will take into account the order in which these jobs need to be done and allow sufficient time for both.
In a custom manufacturing environment, managing lead times is similar. Purchasing managers have to order raw materials and the delivery times of those materials have to be factored into the overall production lead time. Delivery times must also be included. Only by including all of these elements can the company provide the customer with an accurate anticipated expiration date.
Manufacturers that make a certain number of stock items and ship as ordered need additional lead time management. In these cases, running out of product means disappointing customers and can mean lost sales. Most of these companies automatically resume production when inventory reaches a pre-set minimum. These minima are determined by the average number of products typically sold during a period equivalent to the lead time for that product. Usually, limits are set slightly above the actual number to allow for fluctuations or delays in production.
Effective management of delivery times has many advantages. It enables manufacturers to use manpower and machinery efficiently and helps set customer expectations. It is also critical for estimating the cost of capital when a job is billed in arrears.
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