Integral Logistics Management — Operations Management and Supply Chain Management Within and Across Companies

1.2.3 Operation, Operation Time, Setup, Run Time, Routing Sheet, Critical Path, Interoperation Time, Production Lead Time: Process-Related Business Objects

Intended learning outcomes: Present in detail business objects such as operation, setup and run time. Explain the routing sheet, the critical path, interoperation time and the production lead time.

An understanding of the composition of the lead time is fundamental — particularly in terms of short lead times. The most detailed business object to examine is the operation. Factors affecting this building block of a business process have a strong influence on lead time.

An operation in logistics is a step in a process that is required for the design and manufacturing of a product. Another term used is routing sheet position or basic manufacturing step. Examples of operations are “cut,” “stamp,” or “bend” in industrial areas, or “serve,” “maintain,” “advise,” or “repair” in service industries.

Setup, or changeover, is the work required to change or prepare the production infrastructure (machines, tools, and other resources) for the next order.

Operation time is the time required to complete an operation. In the simplest case, operation time is the sum of setup time, or setup lead time, that is, the time required for setup, and run time for the actual work on the order.

Run time is, in the simplest case, the product of the size of the lot, or batch, that is, the number of the units of measure produced together, and the run time per unit, that is the total treatment time for one unit of the batch.

When the run times are planned as a series after setup time, the simplest formula for operation time is as shown in Figure

Fig.        The simplest formula for operation time.

Operation time can refer to either planned or real manufacturing processes.

Standard time, or standard hours, is the length of time that should be required to set up and run an operation. It assumes average efficiency of people and production infrastructure and is also frequently used as a basis for planning and incentive pay systems as well as a basis for allocating overhead costs. Actual time is the actual length of time for the execution of an operation in a particular order. It is often used as a basis for job-order costing.

The routing sheet, operation sheet, or routing of a product is a complex object; it is a list of the operations required to manufacture a particular item from its components. It includes information on the work centers involved (see the definitions in Section 1.2.4 and also [ASCM22]).

The critical path is the set of activities, or operations, that defines the (planned) duration of the network of operations. These activities usually have very little slack time, close or equal to zero.

The production lead time, or manufacturing lead time, is the total time to manufacture an item, exclusive of lower-level purchasing lead time.

Production lead time is measured along the critical path. It is made up of the three following categories of time:

  • Operation time
  • Inter­operation time, which can occur either before or after an operation and may be wait time, that is, the time a job remains at a work center before or after execution of the operation, or transportation time (move time or transit time)
  • Administration time, the time required to release and complete an order

Lead time projected on the basis of these three categories is a probable value only, because it is based on time averages, particularly for inter­operation time. Wait times depend on the current situation in production and its physical organization. In typical job shop production (see Section 4.4.3), inter­operation time and administration time make up more than 80% of lead time and are thus its main determinants.

A sequence of operations is the simplest and most important order of the operations. A more complex order of the operations makes up a network or repeatedly executed sequences of operations (see Section 14.1.1).

Continuation in next subsection (1.2.3b).

Course section 1.2: Subsections and their intended learning outcomes