skip to Main Content

5 Ways to Reduce Lead Times in Your Supply Chain

Supply Chain Planning
07/11/2018

The single biggest frustration a customer will have with any business is waiting. The need for on-time fulfillment, to generate high customer satisfaction levels, is key to supply chain management. Delays can do a lot of damage to the reputation of a company, so cleaning up any areas in the supply chain that are lagging should be priority one.

An example of a well-known supply chain failure was Target expanding into Canada. Instead of rolling out slowly, province by province, they chose to open everywhere all at once to take advantage of a real estate opportunity. But it was too much, too fast, and the supply chain couldn’t keep up. The result was empty shelves and disappointed customers.

“A pink Barbie-branded SUV that seats two toddlers offers a surprising glimpse into the myriad problems that jammed up Target Corp’s supply chain…The toy was one of many products that piled up in bewildering volume at Target’s new distribution centers…Goods were coming into the warehouses faster than they were going out.” (SOURCE)

There were a lot of supply chain problems that caused the company’s entry to Canada to fail (they pulled out in January 2015), to the tune of $2 billion in losses. Long lead times, with retail choices made in the U.S. that weren’t popular in Canada, contributed to those losses. If they had, among other tactics, maintained shorter lead times, they could have carried less inventory and then been stuck with less obsolete inventory when the customer decided that the Barbie SUV was no longer the ‘it’ toy.

This is a simplification to illustrate the point that shorter lead times mean less inventory, less risk, and less frustration for the end customer. Other benefits to reducing lead time?

● Flexibility when the market shifts
● Faster output makes for a stronger competitive position in the marketplace
● Fast stocking to ensure customers aren’t empty handed
● Improved cash flow because of increased efficiency in order fulfillment

With these benefits in mind, what can you do to reduce your lead times?

Automate your inventory management processes

Relying less on manual data entry to manage supply is essential to speed up inventory management processes and reduce errors. Furthermore, integrating software for inventory management into your supply chain processes will help keep the whole chain visible, making it possible to anticipate disruptions or changes that will need to managed.

Provide accurate sales forecasts to your suppliers

If you can give your suppliers a head’s up as to what they might be expected to supply to you in the next quarter, you have a better chance of shortening the lead time to receive the items you need. They can manage their fulfillment process more effectively, which is a win-win.

Increase the frequency of your orders

Instead of leveraging a bulk order, which might save a little money but takes much longer to provision and creates longer lead times, try doing smaller, more frequent orders and then check the numbers. You might find that there is a cost savings, but you will definitely find that the shortened lead times make supply management simpler and more efficient, which is also a positive.

Use incentives to sweeten the deal

If your suppliers are providing lead times that you would like to shorten, make it worth their while! A bonus structure for early to on time delivery, based on your lead time requirements, might just get the job done!

Use domestic suppliers, where possible

Obviously, if your orders don’t come from overseas, you can cut your lead times significantly. Distance and shipping delays are two big factors in lead times from foreign suppliers. The cost of the goods relative to the shortened lead times need to be weighed in the balance to see which will benefit your supply chain, inventory management and ultimately your customer, more.

Make sure your reputation stays clean! If you are able to reduce lead time before provisioning, you will be able to deliver to your customers, on or ahead of time, every time. This is a huge plus for customers. And remember that a happy customer is a repeat customer!

Related Articles

Making Good Things Better – How High Growth Forecasts Keep History Straight

Every company would love to have explosive growth that helps ensure the health and long life of the enterprise. And they would all like to master accurate growth forecasts. But the reality is that most businesses have stable and predictable [...]

Three Keys to Agility

Agility is defined as ‘the ability to move quickly and easily’. And over the last few years, agile methodology has been applied to everything from project management to software development. But agility can also apply to supply chains as well. [...]

Capacity Planning in Today’s Uncertain Environment

Simply put, ‘capacity planning’ is the process businesses use to make decisions on how much capacity is needed to meet demand. Along the way, companies aggregate historical data, produce forecasts, and interpret market and sales data to make determinations that [...]

Safety Stock How Much is Too Much (or too Little)?

Do we really know how to get levels of safety stock balanced? Here’s a good analogy that might explain things. In the children’s story of ‘The Three Bears’, Goldilocks spends much of her time in the bears’ home looking for [...]

A Bridge too Far – Why ERP Systems Alone Short Change Supply Chain Planning

In business, the search for a “convergence” of devices and software allowing a single solution to address all problems has been an ongoing goal. However, the reality is that such equipment and software doesn’t exist. This is true of Enterprise [...]

Supply Chain Planning to the Rescue – Cash Flow Management During COVID-19

During the best of times, managing cash flow can be challenging. But during long-term disruptions such as COVID-19, cash flow management can become an existential exercise. As companies look to assess the damage from the pandemic, in order to define [...]

5 Keys to Managing Supply Chain Planning in Uncertain Times

With the world having been plunged into uncertainty during the COVID-19 pandemic, a critical issue for business managers is stabilizing their supply chain to a consistent flow of components and materials. One July report by the Institute for Supply Management [...]

Beating Disruption with Digital Supply Chains

In the past, companies relied on the shared knowledge of a handful of people within an organization - and sometimes just one person - to plan and manage supply chain requirements. Supply Chain Management (SCM) consisted of phone calls, desk [...]

A Comprehensive Guide to Predictive Inventory Planning and Management

Inventory management remains an important operational feature that determines the successes and failures of enterprises especially in the manufacturing and retail industries. For inventory management, the challenges for most enterprises are similar at a basic level. The mom and pop [...]

Advanced Planning Challenges in Brownfield Facilities

The manufacturing industry relies on its legacy systems and equipment to get work done. This has been the way for decades. A report on the state of the manufacturing industry states that only 26% of manufacturing plants believe implementing new [...]
Subscribe to our Blog
Back To Top