Posted in Operations and Supply Chain Terms, Total Reads: 227
Definition: Complete Manufacture to Ship Time
“Complete Manufacture to Ship Time” is the total time taken by a firm after receiving an order to manufacturing the product and shipping it to the concerned client. It is used synonymously with “Lead time”.
Here, the counting of time begins with the receipt of the order from the client. This is followed by procurement of raw materials from different suppliers and storing the raw materials as inventory. Once the raw materials are procured, the process of production is initiated and. Production process consists of multiple activities which may take place one by one or parallel to each other in case the activities are independent an do not interfere with each other.
Once the production process is over, the product is sent to the Quality team for Quality Assurance and Testing procedures. After this, the product is sent to the packaging department. Now the product is ready to be shipped to the client using the appropriate mode of freight transport.
This is one of the important parameters which decides the level of inventory that a firm should maintain. A higher inventory entails higher holding costs and hence it is essential for a firm to understand the lead time and plan the inventory accordingly so as to optimize the inventory and save on inventory holding costs.
In the manufacturing industry, this is mainly divided into three parts:
1) Pre-processing time – Also called planning time, it refers to the time required to release a purchase order or manufacture the job from the time of realization of the product requirement.
2) Processing time – It is the time spent in procuring or manufacturing an item.
3) Post – processing time – It represents the time required to make the product available in inventory (including quality tests and inspections, etc.)