Lead times are a challenge that we all face. Some supply chains suffer more than others but there are challenges in all. This derives from many sources:
- Geographic distance between production, distribution, and customer
- Excessive distribution or production points
- Supplier lead time length
- Customer pressure for shorter lead times
- Lead times to secure enough labor or line time resources to manufacture the product
- Capacity constraint relief may require several weeks or months to improve without forward planning
The forecasting process and S&OP will generally help with #5 and #6 above and network optimization will help with #2, but let's focus today on a few focus areas that can help with #1, #3, and #4 above.
For #1, this has to be a topic of your strategic sourcing process as you try to locate new suppliers or distribution points. Distance between production and distribution along with reducing points of distribution is an undervalued contributor to supply chain efficiency and sustainability. New suppliers need to be agile and in close proximity to production/distribution.
#3 should also be a part of how you strategically source suppliers. However in addition, your teams should do a deep dive into the lead times of your existing suppliers. Review your longest first and reach out to them. Understand the root cause of the length. Sometimes utilizing demand planning to provide a forecast will get them to reduce. Sometimes combining a forecast with a guaranteed lead time prior to ceasing ordering or item termination will do it to take risk off the supplier. Besides, these things are simply being a good partner in the first place so it's a win-win for everyone.
#4 also requires a review of total system lead times. Which items and customers require the longest lead times? Review longest first, and partner with your customers. Let them know your lead time challenges. Seek from them either volume commitments, longer lead times, or over/short tolerance that they'll help you move through. Most of the time, people are understanding. Customers will work with you and progress toward a mutual beneficial program change that will reduce risk on each side.
When you focus on these things it doesn't eliminate the lead time challenges but it optimizes some. Takes away the excuses to carry inventory needlessly without visibility or a genuine effort to eliminate the need wherever possible.
We can help you with this. Let's partner with you to be a better partner with customers and suppliers throughout your supply chain!