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Everyone involved in logistics and supply chain processes understands the importance of planning lead times . However , not everyone understands that to properly plan lead times that align very closely with transit times , you must look at three different factors .
Although fine tuning the lead time process can be time consuming , effective lead time planning is a crucial part of supply chain fluidity and there are three main factors to consider :
• Production time The time it takes a factory to manufacture the quantity required to fulfil the order and constitute a shipment must be analyzed . This assumes all materials are on-hand to complete production .
• Factory to distribution center transit time This needs to be factored into lead-time planning , but distance does not present a significant challenge in today ’ s global supply chain . If distance was the issue , then all local consumption would be of locally made goods , so clearly this is not the case .
• Collection and delivery process Coordinating the pick-up of goods and transport to the point of departure , followed by the pick-up of goods at the point of arrival , and transport to the final distribution center represents the area with the most room for error , and therefore , has the biggest impact on lead times .
Poor administration of the pick-up and delivery processes can dramatically add to transit time , which results in either excess inventory in the warehouse or , worse , the need to build buffer stock so that there is a cushion due to poor execution . Missed deadlines can result in cargo being stuck in warehouses . Likewise , buffer stocks may be an operational reaction to anticipated problems , and penalties a commonality because of failed deliveries to retailers .
Consequences of inconsistent processes
Increased lead times are required when supply chains are inconsistent and unpredictable . So , if the administrative process is consistent , then the outcome is predictable and lead times can be reduced to no more than slightly greater than the transit time .
Administration of supply chains is a lot like project management . There are several service level tasks that go into arranging
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