Lead Time in Manufacturing, Purchasing and Distribution

This concept document explains how to manage lead time in the material flow. This document describes purchasing, manufacturing and distribution lead time. Customer order lead time is not described.

Outcome

The item's lead time is defined.

The purchasing, manufacturing, distribution and customer orders can be managed with regard to necessary calendar time.

The following tables are updated:

  • Administration lead time is specified per item/facility (M9LEA4/MITFAC)
  • Transmission lead time is specified per supplier (IDPODA/CIDMAS)
  • Supply lead time is specified per item (MBLEA1/MITBAL). For purchased items it is retrieved from via supplier file (IFLEA1/MITVEN)
  • Transportation lead time is specified for purchased items via supplier's term of delivery and delivery method. For distributed items it is specified transportation timetable (ITTRDY/MITDRT).
  • Inspection lead time is specified via goods receiving method (GRLEA2/MPGRMT)

Before you start

Basic data for items and inventory are defined.

Manufacturing lead-time

Manufacturing lead-time is the total calendar time required to manufacture an item, not including lower level purchasing lead-time.

For make-to-order products, it is the length of time from the release of an order, through the production process until shipment to the final customer.

For make-to-stock products, it is the length of time from the release of an order, through the production process, until receipt into a finished inventory. This includes order preparation time, queue time, setup time, run time, move time, inspection time, and put-away time.

Purchasing lead time

Purchasing lead-time is the total calendar time required to obtain a purchased item. This includes order preparation and release time, supplier lead-time, transportation, receiving, inspection, and put-away time.

Distribution lead time between two warehouses

Distribution lead-time can be defined as the sum of transport lead time and supply lead time for distribution between two warehouses.

Lead times in M3

Since the planning level in M3 for material and production management is the Warehouse level or/and Facility level, that is where we find the lead time connected to the item. In 'Item. Connect Warehouse' (MMS002), on the E panel, the 'Lead-time' field is the sum of the lead time components.

  1. Administration lead-time

    The time for activities required before a planned order can be released. Administration lead time is set on the facility level in 'Item. Connect Facility' (MMS003), on the E panel.

  2. Transmission lead-time

    The time to correspond and communicate with the supplier. Transmission lead time is only active when communication with the supplier is by paper. The value of the transmission lead time is set in 'Supplier. Open' (CRS620), on the E panel.

  3. Supply lead-time

    For manufactured items, it is the time to manufacture depending on the capacities in our own, or the supplier's work centers and the workload. For purchased and distributed items, it is the general time, including all lead time components, or just the supplier lead time. This is user-defined. Supply lead time depends on how acquisition is performed. For a manufactured item, the lead time is calculated by the system according to the product structure and capacity in the work centers. It is displayed in 'Product. Open' (PDS001/E).

    For a purchased item, the lead-time is set in 'Supplier. Connect Item' (PPS040),on the E panel. Supply lead time can also be set as a general supply lead time in (MMS002/E).

    For distributed items between two warehouses, the supply lead time is set in 'Item. Connect Warehouse' (MMS002).

  4. Transportation lead-time

    The time it takes to ship the goods from the supplier to us, or from another warehouse to us. Transportation lead time for purchasing is set in 'Supplier. Connect Transp Lead Times (PPS010). For distribution, it is set in 'Distribution Relation. Open' (DPS001).

  5. Inspection lead-time

    The time it takes to inspect the received purchased goods before putting it into final storage. For manufacturing inspection, see the Product Data Documentation. Inspection lead time is set in 'Goods Receiving Method. Open' (PPS345), on the E panel.

  6. The sum of the lead time

    The sum of the lead time is displayed in 'Item. Connect Warehouse' (MMS002), on the E panel. The lead time components are also displayed here.

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