Why Lead Time affects your Inventory Optimization and How To get rid of it

Lead time management is a crucial factor that affects the performance of your supply chain. The main target for every manufacturer or company is to decrease lead times and make every little thing easier for everyone. Longer lead time may lead to a shortage of new products and a loss in the market. If this lead time increases it straight away indicates to carry more stock and therefore a risk of shortage.

Due to this, the forecast becomes less accurate. The lead time affects inventory optimization. The lead time moves to the change in the market, business influences and seasonality of the product. The ability to have a better lead time management, it decreases the safety stock management in the inventory. Therefore it means that what you ordered is not what your customer actually wants.

There are several things, which affect lead time management. This may include the delay in order processing by your business, late in the order processing of your vendor, then a late response in the order processing of your suppliers, poor capacity management by agents, delay in freight, delays at the ports where goods are received and further shipping, these several delays can add days or even weeks to lead time.

How to improve lead time management in the supply chain?

For manufacturers, the consequences of poor lead time management can go beyond and end up losing money from the organization. Lead time management is a critical element of any manufacturing operation. You can choose the local supplier which can automatically reduce your time one week or more.

You can increase the frequency of your order which can help you to do better lead time management.

You can provide the sales forecast which will actually help to manage the inventory well and can set your usual order aside. They can have your order ready to go whenever you say. There are various internal processes which can improve lead time such as grouping various components that are mostly used together in batches so that the workers can be organized and inventory can be used smartly.

Communication is also one of the most important parts to stay in touch with your supplier and ensure that the expectations are met. Providing them key performance indicators can also help to motivate your supplier. You can build a strong relationship that is committed to your success can help reduce the lead time.

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