Dynamic planned lead times in production planning and control systems: does the lead time syndrome matter?

Abstract

Many companies in practice want to dynamically adjust planned lead times in their production planning and control systems in response to demand fluctuations. But for decades it has been recognised that this can lead to escalating planned lead times and realised throughput times. Authors have highlighted the negative impact of this ‘lead time syndrome’, especially in the context of Material Requirements Planning systems, prompting the development of alternative concepts intended to overcome its vicious cycle, such as Workload Control. Yet some authors have shown that increasing planned lead times has advantages – it can improve end-item service levels. To resolve this paradox, we conjecture that the effects of the lead time syndrome are limited when demand is independent of internally planned lead times, such as in make-to-order companies, and subsequently use simulation to prove this conjecture. We show that although dynamic planned lead times have a detrimental effect on performance in make-to-order systems, it is not an increase in planned lead times that leads to a performance loss. Rather, it is the decrease of lead times in low load periods that increases workloads in upcoming periods of high load. This questions the use of upper bounds (WIP-cap) in these contexts.