Updated: Dec 10, 2021
It is important to customers that they receive their products on time after purchasing them. The customer experience is impacted by lead time, so it is crucial to understand what lead time is, how to decrease it, and how to decrease it. You will be able to improve your business as a result of these insights.
The lead time refers to how long it takes for your supplier to deliver stock or materials. You are also covered for the time between when a customer places an order and when they get their order. We can also break down the lead time into different categories, including manufacturing lead time.
It is perhaps best to describe manufacturing lead time as the process of creating a product and delivering it to a customer. If your product isn't entirely made in-house, it can involve the time it takes to procure the materials and products from other vendors.
In some cases, the manufacturing lead time may seem out of your control if your products or materials are outsourced. You don't have to worry about your supply chain working faster just to meet your needs. Understanding how long it takes on average to complete a manufacturing process will allow you to control how lead times affect the business.
Manufacturers' Lead Time Factors
Out-of-stocks - You can only make a product in a timely manner if you have the necessary materials and equipment on hand when you receive an order. In that case, you need to order what you need immediately. Doing so increases total lead time and decreases customer satisfaction. This can be avoided by analyzing historical customer orders using inventory management software. The solution should provide forecasting and safe stock calculation to ensure timely delivery of customer orders.
Partnering with your suppliers - There may be a number of different suppliers of the same component with different lead times and constraints. This is because you are just multiplying the variables you need to control for your production timeline. To cut down on lead time, make sure you carefully select your suppliers based on reviews, product quality, supply ability, and geographical location. If they offer combined shipping, you can decrease lead times and shipping errors by consolidating orders and shipments, and reduce shipping costs. Choose a supplier that enjoys a close working relationship with your company. Based on real-time requirements, they could monitor your material usage and continuously fulfill your orders.
Everything must be shipped - Streamlining your supplier list reduces delivery delays. As shipping volume decreases, you become less susceptible to adverse events such as roadblocks, natural disasters or human error. When you build your relationship with a supplier, they may also make sure to utilize a reputable shipping facility and ensure the integrity of the order and supply chain.
Fine-tune your processes - Here's what we need to know about the factory. If your current model includes staff producing or building all parts of the final product on-site, then you may find your lead times greater than desired. You can investigate the option of engaging off-site production to complete sub-assemblies. It would help your staff to spend time assembling the final product to a high standard and increase sales and return on investment.
Ordering and lead time for manufacturing are intertwined with inventory management. The failure to control inventory results in either overstocked items or inventory that is under-stocked, both of which add to lead times or reduce revenue. Dear Systems inventory management software helps you track orders, raw materials, and lead times. It simplifies your life and ensures you have stock when you need it. This will help you keep your customers happy and your orders fulfilled.