Sunday, October 23, 2011

Manufacturing Lead Times

In this world of prolonged recessions many manufacturing companies have tried to offset some of their financial difficulties by decreasing the inventory they carry. While this have help their bottom line by increasing the number of inventory turns, it has far reaching effects on the flexibility that the manufacturing department has and therefore the lead times in which a company may be able to produce a given product.

The companies that limit their inventory are usually very financially savvy, at least in the short term. They are, however, limiting their ability to meet their customers' delivery requirements, especially as an economy exits the recession. Larger public companies tend to be victims of this short term focus where quarterly results rule the day. Their customers become secondary victims as a result.

Smaller private companies often have the flexibility not to get captured in this trap, as they don't answer to Wall Street. Res-net Microwave, Inc. is a great example of this. While many of their larger competitors' lead times have slipped to 10 to 12 weeks and beyond, their lead times for standard products remains just 4 weeks. Perhaps this is not the wisest thing from a financial standpoint, but if your goal is to delight your customers, it is the only this to do.