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Material throughput time

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Material throughput time TUP GmbH & Co. KG - Warehouse Management Solutions

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Material throughput time is the length of time it takes to go through all the business processes, for example, in a warehouse or distribution center. The calculation of throughput time begins with the goods receipt. It ends when the material has been made available for delivery and leaves the goods issuebusiness process.

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

working capital storage bin buffer location The relationship between throughput time, inventory and throughput is determined according to the law of Little according to the following calculation:

throughput time = inventory/throughput

Effects of high material throughput time If material is requested specifically on the basis of an external order, the material throughput time must be shorter than the required delivery time. Otherwise, bottlenecks will occur in the business processes and there is a risk of missing delivery dates. The longer material flows through a company’s processes, the more the necessary storage costs increase. At the same time, capital tie-up increases.

To keep the material throughput time shorter than the delivery time, precautions should ideally be taken before external orders are received. A certain amount of material inventory can counteract the negative effects of delayed procurement or minimize negative consequences.

However, additional storage of material causes additional costs. Therefore, it is advisable to store material at the beginning of the value chain at the lowest possible value-added stage. In general, there are often conflicting goals between the efforts to achieve short order throughput times and constant cost reduction. However, there are strategies that can be implemented to reduce throughput time without necessarily increasing costs.

For more information on how to maximize the potential of existing facilities, see Retrofit in Intralogistics.

Image source: © Kadmy – Fotolia.com

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