The material throughput time is the time required to run through all business processes, for example, in a warehouse or distribution centre. The calculation of the lead time begins with Goods receipt and ends when the material is made available for outbound delivery and leaves the business process Goods Issue.

A smooth material flow has a positive effect on material throughput time and delivery time. The material flow has an effect on various components. These include, for example:

  • Circulating capital
  • Storage location
  • Buffer space

The relationship between throughput time, inventory and turnover is determined by Little’s law according to the following calculation:

Throughput time = stock/turnover

Effects of a high material throughput time

If the material is requested specifically on the basis of an external order, there is a condition that the material throughput time must be less than the required delivery time. Otherwise, bottlenecks in the business processes and the risk of missing delivery dates arise. The longer material flows through the processes of a company, the more the necessary storage costs increase. At the same time, capital commitment increases.

In order to keep the material throughput time shorter than the delivery time, precautions should at best be taken before external orders are received. A certain amount of material stocks can counteract the negative effects of delayed procurement or minimize negative consequences.

However, additional storage of material causes additional costs. It is therefore advisable to store material at the beginning of the value chain within the lowest possible value-added stage. In general, conflicts of interest often arise between the efforts to achieve short order throughput times and constant cost reduction. There are, however, strategies that can be adopted to shorten the throughput time and, at the same time, do not necessarily have a cost-intensive effect.

You can find more information on how to use the potential of existing systems under Retrofit in intralogistics.

Picture source: © Kadmy –

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