A few years ago I bought a new sofa. The confirmed delivery lead time was 5 weeks. Manufacturing the sofa takes a few hours. Where is the rest of the time spent? It’s spent by waiting in the work queue. The order waits until the next phase starts. This time spent in queue doesn’t add any value. Money will only flow in after the final phase has been completed, the shipment is done and the invoice sent.

A competitor that has noticed this opportunity may set up a process in which the order will be completed right away, without queues. The customer will get the delivery the day after tomorrow. Still no extra work will occur. In one case a company in textile business shrank its delivery lead time from 8 weeks to two days. This is 1/28 of original. Thus their capability to respond is 28 times higher, which is 2800 %. This can be called a real quantum leap in performance. And there was no need to touch the production. The manufacturing took an hour and they did it well already.

Cutting the lead time to one tenth is easier than is generally believed. The value adding part is known already. Now it’s sufficient just to get rid of the work queues.

What does this mean for profitability? Read further in an article Sacrifice sales margin a little, raise the profit a lot.