The vertical axis in this chart represents "quantity" while the horizontal axis stands for "time." The broken line shows the "amount received" and the solid line the "amount sent." Manufacturing lead-time is what fills any gap between the amount received and the amount sent. Wider gaps mean longer lead-times. Moreover, longer lead-times mean larger amounts of in-process inventory.
In other words, the relationship between manufacturing lead-time and in-process inventory can be described using the following two equations.
Manufacturing lead-time =
in-process inventory expressed in day units
Amount of in-process inventory =
manufacturing lead-time x daily production output
Although our example refers to in-process inventory, it can be applied similarly to inventories of products or materials. If we cut our product inventory in half, we need to cut our lead-time in half, too. The same goes for our material inventory. If we cut that in half, we need to cut the delivered lots in half and double the number of deliveries.
In the factory, problems crop up in all kind of areas, including delivery deadlines, quality, and inventories. None of these problems exist independently of the others. They are all interrelated, and we must learn how they connect.
Factories having trouble meeting delivery deadlines are probably also suffering from excess inventory, difficulty in switching to wide-variety and small lots, and ongoing missing parts and other defects. All of this relates to what we call the character of the factory." The most visible aspect of this character" is inventory. The inventory situation is so visible that a JIT consultant can generally appraise it immediately upon entering the factory.
Inventory is the JIT consultants best teacher.
The vertical axis in this chart represents "quantity" while the horizontal axis stands for "time." The broken line shows the "amount received" and the solid line the "amount sent." Manufacturing lead-time is what fills any gap between the amount received and the amount sent. Wider gaps mean longer lead-times. Moreover, longer lead-times mean larger amounts of in-process inventory.In other words, the relationship between manufacturing lead-time and in-process inventory can be described using the following two equations. Manufacturing lead-time =in-process inventory expressed in day units Amount of in-process inventory =manufacturing lead-time x daily production output Although our example refers to in-process inventory, it can be applied similarly to inventories of products or materials. If we cut our product inventory in half, we need to cut our lead-time in half, too. The same goes for our material inventory. If we cut that in half, we need to cut the delivered lots in half and double the number of deliveries. In the factory, problems crop up in all kind of areas, including delivery deadlines, quality, and inventories. None of these problems exist independently of the others. They are all interrelated, and we must learn how they connect. Factories having trouble meeting delivery deadlines are probably also suffering from excess inventory, difficulty in switching to wide-variety and small lots, and ongoing missing parts and other defects. All of this relates to what we call the character of the factory." The most visible aspect of this character" is inventory. The inventory situation is so visible that a JIT consultant can generally appraise it immediately upon entering the factory. Inventory is the JIT consultants best teacher.
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