When it comes to making supply chains efficient and reducing delays, lead time plays an important role. Even small delays in supply chain processes can lead to longer lead times in future processes. This is why it’s important to design a process that cuts down the lead times and increases the overall efficiency of the supply chain, whether it’s product sourcing, logistics, and inventory management. Take a look at the few ways you can reduce lead time.
What Is Lead Time In Supply Chain Processes?
Lead time in any supply chain management is the time it takes to complete one process or project. It can refer to a single process within a process or the total processes required to complete one project. When calculating the lead time, the company estimates the time it takes to manufacture the product and get it ready for shipping. Longer lead times can lead to a lag in the manufacturing processes, cost more money, and make it difficult to clear out the inventory on time.
Ways To Reduce It
Increase Order Frequency
One of the easiest ways to reduce lead times is by increasing the order frequency. If the company places bulk orders for the inventory, it’ll take longer to clear them out. This can lead to bottlenecks and longer lead times. On the other hand, placing smaller orders more frequently reduces the carrying costs, keeps the inventory manageable, and decreases lead times.
The time spent gathering parts from the inventory can also lead to increased lead times. A good way to mitigate this issue is by grouping inventory components based on usage to make it easier to find them during processes. This is called kitting and is quite helpful in increasing supply chain efficiency and decreasing lead times.
Reduced Order Processing Time
Once an order has been placed, it needs to be processed to ensure timely delivery to the client. Longer lead times can lead to delayed order processing. The process includes order placement, picking inventory, making the order, sorting, and packing. If any one of the processes is delayed, it’ll lead to delayed fulfillment.
Order processing software is typically used to prevent this issue. The software can monitor each part of the processing to ensure everything is on time. It also minimizes human error and fills orders accurately.
Based on your sales data, you can inform your supplier in advance about the next shipment. The faster the shipment arrives, the easier it’ll be to manage the inventory and keep the production smooth, leading to reduced lead times.
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