Manufacturing Lead Time.Lead time is the time between commencement and completion of a process, for example in a manufacturing process, the lead time may be the time from raw material receipt through to the time an item of production finishes final inspection.
The formula for lead time = 1/Throughput rate. Where: Throughput rate = (Units Produced or Tasks completed)/ Time
Manufacturing Lead Time calculation in a Continuous Process.In the vast majority of instances, there will be numerous products or services being processed at any one time, therefore the lead time calculation needs to be modified as follows:
Lead time = Average time between completion of units.
Example: Consider a manufacturing facility, which is producing 100 units of product per 40 hour week. The average throughput rate is 1 unit per 0.4 hours, which is one unit every 24 minutes. Therefore the Lead time is 24 minutes on average.
Manufacturing Lead Time calculation for Batch Processing.Consider a pharmaceutical company producing product in batch format. Each batch may consist of 10,000 units of product. The lead time is normally calculated as per the continuous process previous, however, the batch is considered the unit of measure, so that the cycle time is given as a batch cycle time.
Example. In a pharmaceutical company, 100 batches of product, of batch size 1000 units are produced in a 40 hours week. The cycle time here is normally given as 24 minutes to produce a single batch of 1000 units.