Experience the power of a lead converter for Manufacturing

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[Music] this is a very short introduction into these metrics you might ask yourself what you need them for we have supported dozens of clients working with these metrics to improve their service level so they could make their customers happier let's have a look at manufacturing supply metrics in more detail you want to find out how supply actually works we have taken opep's favorite weekends beverage to run a study for you however we recommend to stay away from this product at least for the duration of this introduction video okay otherwise you won't know what's causing your headache afterwards but let's go through it step by step the customer orders what he wants the order is received the factory produces and finally the order is shipped let's start with the first metric service level service level is an indicator for your delivery performance in how many cases were you able to deliver the order service level is typically expressed as a percentage it is related to the ordering terms you have agreed with your customer for example our agreed lead time is four weeks the service level is measured against this agreement you aren't sure what the term lead time is stay with us for one more minute a typical metric for tracking your service level is otif otif or on time in full it not only tells us if we've shipped our orders in time but also how many of them were completed in full oops here the customer has ordered four cases but has only received two that's an otif miss um have we already mentioned lead time yes lead time is the time from order to delivery and tells us how fast we really deliver upon order working with lead time we don't care where the products come from it's just about how fast we were able to deliver this is why the blue box is a little bigger here okay let's take away the blue box lead time is very much determined by the supply model your company is operating with what affects lead time do you supply from stock or do you need to produce once ordered let us start with the first option you have product in your warehouse lead time the customer orders and the clock starts ticking the order is received the order is configured in the distribution center or warehouse the order is put on the delivery vehicle and is delivered to the customer safely delivered okay now the clock stops ticking this is the lead time here is the other route the ordered product is not in stock ok then we need to produce it again the customer orders now the clock starts ticking the order is received as before the order is processed however this time it means finding a production slot producing it and configuring it then shipping it has the customer receive what he wants now the clock stops this is the lead time here it's not an easy decision whether you make to order or whether you produce to stock of course this depends on your demands on your manufacturing processes and on your product complexity very often a mix of both concept makes sense and this is why it's a bit more complex chapter which we will tackle later throughput time throughput time is the time it takes one order to go through the process for example through production this is then the entire value-adding process or the so-called value chain picture yourself being a juniper berry yes one of the blue seed cones with its distinctive taste how long does it take you from harvest to being part of a fine gin bottled and delivered to the bar at opep's place this would then be the end-to-end throughput time capacity capacity tells us how much we are able to produce or deliver in a certain time for example how many bottles can we produce every day the more we can manufacture every day the higher our capacity is output rate the output rate is a measure of capacity telling us how frequently a product leaves the factory for example how many bottles do we produce per hour cycle time if you turn the output rate upside down you will see the cycle time cycle time means how long does it take from one product to the next for example what is the time from one bottle to the next bottle leaving the factory a comment while we are at fine liquor production here a whiskey distillery may have a cycle time from one bottle to the next bottle of one minute or less while the same whiskey has a throughput time of several years when including the aging time in barrels in order to understand whether our facilities have sufficient capacity to deliver to our customer we work with the metric tax time tact is the german word for rhythm or drumbeat in a lean production environment it is the boom boom boom theoretical and calculated time it should take from one product to the next strictly following customer demand tax time is the time between orders from the customer tact reflects the demand on the other hand cycle time is the actual time it takes from one product to the next of course ideally we want to match cycle time to tact and you can get an idea of how lean an overall production is by looking at how close each process's cycle time is to tact take a look here in this example cycle time seems to be keeping up with tact time and in this example ouch cycle time isn't keeping up with the requirement imposed by tack time we're now running into order backlogs do you want to find out where your problem really is then simply find out where your cycle time is lower than your tack time working with these metrics you can also identify your bottleneck and alleviating the bottleneck is a perfect way to begin improving your process we hope you've gained new insights into manufacturing supply metrics and we hope you've gained new ideas how this could help you in your daily business our mantra is if you want to improve start to measure and if you want to start to measure these metrics will really help you we offer fun interactive online courses on each of these metrics no matter which industry you are in and even if you do not produce gin subscribe and see our videos direct online we wish you much success you