2.2 Lead Time Management

Lead time is not a static integer; it is a volatile variable that dictates the horizon of your liability. Treating Lead Time (LT) as a "set and forget" field in the Item Master guarantees schedule failure. If the market shifts from 12 weeks to 50 weeks (as seen in allocation cycles) and your ERP remains at 12, MRP will trigger buy signals 38 weeks too late. You cannot expedite physics.

Anatomy of Total Lead Time

MRP calculates "Order Start Date" by subtracting Total Lead Time from "Need Date." You must define the Total Lead Time (LT_total) as the sum of three distinct physical constraints.

LT_total = LT_supplier + LT_transit + LT_internal

Supplier LT (Production): Time from Order Receipt (ACK) to Ex-Works capability.

• Source: Vendor Quotation / Market Feed.

Transit LT (Logistics): Time from Supplier Dock to Your Dock.

• Reality: Air = 3–5 days; Sea = 30–45 days.
• Rule: Do not use "best case." Use the 90th percentile average.

Internal LT (Dock-to-Stock): Time from Receiving Dock to Available Inventory.

• Includes: Unpacking, Counting, Incoming Inspection (IQC), and System Entry.
• Standard: 2–3 Days. (5+ Days if testing is required).

Dynamic Update Logic

Lead times breathe. They expand and contract based on factory loading and raw material availability. The ERP must reflect the current reality, not the contract ideal.

Signal 1: The Quote Refresh

• Trigger: Every new quote or PO acknowledgement.
• Action: If Quoted LT ≠ System LT, update System LT immediately.
• Constraint: If Delta > 20%, trigger "Material Review" alert (Engineering may need to qualify a second source).

Signal 2: The Calculated Actual (Performance)

• Trigger: Quarterly Review.
• Logic: Compare Average(Actual Delivery Date - PO Date) vs System LT.
• Adjustment: If vendor consistently delivers late, strictly Increase the System LT to match their actual performance. Force MRP to order earlier.

Signal 3: Market Allocation

• Trigger: Industry alerts (e.g., "Global shortage of MLCCs").
• Action: Mass update entire commodity groups.
• Example: "Set all Murata 0402 caps to 52 Weeks."

The Buffer Strategy

Do not pad lead times arbitrarily. Padding creates "Nervousness" and excess inventory. Use calculated buffers based on risk.

• Standard Parts: Buffer = 0. Use Safety Stock to handle variance.
• Custom/Single Source: Buffer = +2 Weeks (covers raw material delay or yield fallout).
• Overseas Sea Freight: Buffer = +1 Week (covers port congestion/customs hold).

Pro-Tip: Never use "0" days for Internal LT. Even if you cross-dock, paperwork takes time. A defined internal LT of 2 days prevents Production from scheduling a build the exact minute the truck arrives.

The "Don't Lie to MRP" Rule

Rule: If a Lead Time is Unknown, Do Not enter a placeholder like "1 week" or "Standard."

Protocol:

1. Flag: Set LT = 999 Days (or System Max).
2. Effect: MRP generates an immediate "Exception Message" or "Reschedule In" message because the math breaks.
3. Result: This forces a Human Planner to manually investigate, call the vendor, and enter a real date.
4. Why: A fake number (e.g., 4 weeks) allows MRP to stay silent until it is too late. A broken number forces immediate attention.

Lead Time Governance Report

Review parameters periodically to prune data rot.

Report: LT Variance Analysis

• Frequency: Monthly.
• Owner: Master Scheduler / Commodity Manager.

Commodity	System LT (Avg)	Actual Performance LT	Variance	Action
Microcontrollers	16 Wks	24 Wks	-8 Wks	CRITICAL UPDATE. Increase ERP to 26 Wks.
Passives	12 Wks	8 Wks	+4 Wks	No Action (Buffer is safe).
Connectors	10 Wks	18 Wks	-8 Wks	Investigate. Vendor capability issue?
Sheet Metal	4 Wks	4 Wks	0	Stable.

Final Checklist

Control Point	Requirement	Critical Threshold
Definition	TLT includes Dock-to-Stock time	Yes (Min 2 Days)
Market Sync	Commodity LT Audit	Monthly
Vendor Performance	Update LT based on actuals	Quarterly
Unknowns	Handling of TBD dates	Set to 999 (Force Fail)
Logistics	Sea Freight Mode	≥ 40 Days
Allocation	Global Shortage Updates	Immediate Mass Update