The new year brought with it similar challenges. The difficulties 2021 didn’t go away when the calendar turned, so we need to continually bring innovations—not only the parts we design and manufacture, but also how we navigate the difficulties that come with managing logistics. One of the key factors of logistics is lead times. What are lead times, why do they matter, and how they can be reduced? That’s what we’re investigating today.
What Are the Most Common Logistics Costs? Click Here to Find Out
What Are Lead Times?
Let’s start with the basics. Lead times are the delay between the initiation and completion of a process. It’s the length of time it takes from when a purchase order is generated to when the item is delivered. Every element of the supply chain has its own lead time:
- The material lead time is the time it takes for an order of raw materials to be delivered to the factory.
- The production lead time is the time from when the factory gets an order to production and delivery of the finished part.
- Customer lead time is the time from when someone places an order in an eCommerce store to when the customer receives their order.
- Cumulative lead time is the amount of time it takes to manufacture the part from start to finish, including procurement of the raw materials and subassembly of related units.
All these together make up the total lead time for producing and delivering products. Often, the customer lead time is the most important marker of satisfaction since customers expect fast delivery.
Importance of Lead Times in the Real World
Imagine a steel company with locations all over the world. At one location in the Midwestern United States, they need new seals for their furnace. A delayed supply chain means they couldn’t get the parts from their Japanese headquarters, but they only have a few more days until they need to turn off the furnace, effectively shutting down the plant until the parts arrive. Out of desperation, they contact two providers to get the parts. In this case, they had a one-week lead time.
By the way, this is not hypothetical—this is a real-life story! To find out what happens next, read the full story.
The ability to get parts quickly can greatly reduce lead times.
How can Lead Times be Reduced?
The accuracy of forecasted lead times is a critical element of any manufacturing operation, but reduced lead times are also important. Here are a few tips to keep in mind to reduce lead times:
Maintaining communication with your supplier throughout the production process helps ensure that expectations are being met and that any issues are being addressed. This provides key performance indicators (KPI), which also help motivate the supplier to achieve the levels of service you expect.
2. Vendor-Managed Inventory (VMI)
VMI is a streamlined approach to inventory management and fulfillment. In this model, the supplier takes charge of replenishment, which allows them to proactively adjust inventory to customer demand. This improves responsiveness to seasonal changes, promotions, or initiatives. Customers also benefit from reduced purchasing costs.
3. Domestic, Local Providers
One of the keys to reducing lead times is using a supplier stateside. Partnering with a centrally located supplier will automatically reduce your lead time. At a minimum, it takes about 2 weeks for parts to ship from foreign countries. There is also the issue of the language barrier.
Located in Indianapolis, Indiana, Breiner Innovative has the experience and the expertise needed to reduce your lead times and get you the parts you need. It’s what we specialize in and what we pride ourselves on. We work with thousands of types of materials, so finding the exact material you need for the application you need the part for is what makes us the innovators we are. To learn more about what we do and how we reduce your lead times to get you the parts you need—when you need them—contact us today!