by It’s because no customer likes to wait when it comes to supply chain lead times.
Even if they must wait, it is usually because they have no other option. However, once they realize they have other options, you will be abandoned for keeping them waiting. That is for certain.
OEMs are the same. No OEM wants to wait longer than expected, or longer than the time you and your customer agreed upon.
Especially if OEMs are forced to postpone production simply because the spare parts they require are in short supply.
Long lead times will have a significant financial impact.
Long lead times can result in product shortages or even the loss of your product in the market. It could also imply that you need to keep more inventory in your warehouse.
And the absence of your product from the market provides an excellent opportunity for your competitors to take your market share.
Not to mention that your ability to deal with market changes is limited due to the long lead time.
And things can get even worse if it turns out that the item you’ve been anticipating has a quality issue. When that happens, you won’t have much time to react.
As a result, reducing and accurately estimating lead time is critical in the manufacturing process.
So, in this post, I’ll go over a few strategies for significantly shortening your supply chain lead time.
Table of Contents
8 effective ways to reduce supply chain lead time
Use local suppliers
Using a local supplier instead of an overseas supplier can significantly reduce supply chain lead time.
We’re not talking about a few days here, but weeks.
Yes, if you use a local supplier instead of an overseas supplier, you can reduce your lead time in a matter of weeks.
Not to mention the possibility of delivery delays due to misunderstandings caused by language barriers.
Increase order frequency
Purchasing goods in large quantities can be profitable because you can get lower prices. However, it may also result in longer lead times in your supply chain.
Increasing order frequency can help to reduce supply chain lead time.
It also means you risk losing sales because you have to wait longer for your order as a result.
The problem does not end there. When you order in large quantities, you must also keep more stock on hand for when your ordered goods arrive. And it will necessitate a significant amount of your time and effort.
So, what should you do?
Determine the optimal number of orders you need to place. Ordering a smaller quantity of goods on a more frequent basis can be much more profitable.
It is one of the most effective methods of reducing supply chain lead time and, of course, storage costs.
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Provide your supplier with a sales forecast
Your supplier must know when you intend to place your next order.
They must prepare everything in order to meet your requirements.
If you provide them with a sales forecast, they will be better prepared when your purchase order arrives.
Make standard components
If you require a one-of-a-kind component that will only be used by you, ensure that your supplier is a true specialist in that field.
If not, you should give them more study time.
Whenever possible, try to convert the components you require into standard components.
Why should it be a standard?
Because that would be preferable. It will reduce the amount of time spent on engineering and manufacturing processes. That, of course, means you’ll save more money.
Ensure that your designer and your supplier’s designer collaborate to learn which components can be converted into standard components. Of course, while adhering to the performance and quality standards you have established.
Consolidate suppliers
Managing supply chain lead time entails more than just managing suppliers.
With consolidated suppliers, supply chain lead time can be reduced.
Have you ever calculated the amount of time you spend managing multiple vendors?
Keeping operations running smoothly, managing multiple POs, and managing multiple suppliers can all have a negative impact on your goal of keeping your supply chain lead time as short as possible.
Take, for example, this. It’s understandable if you only have one backup supplier.
But what if there are more than two?
You should think about it. Is it really necessary to have so many backup suppliers?
The shorter your lead time, the simpler your supply chain. And the less time you need to manage it, the better.
You can also improve your efficiency by utilizing a vendor management system. Make the process more efficient.
Changing or consolidating suppliers can frequently add value to your supply chain.
Apply kitting method
Reducing lead time can also be accomplished by shortening the time it takes to pick up the items you require from the warehouse.
Organize the items you use frequently.
As a result, your employees will continue to work on a regular basis. They will have an easier time obtaining the items they require.
This is referred to as the “kitting” process.
This method has the potential to improve the efficiency of your supply chain. Employees are no longer required to count each item individually.
Give incentives
Consider the following scenario.
Your supplier has a lead time of 12 weeks. However, in order to compete with your competitors, you must receive goods from them within 10 weeks of your production.
Incentivize your suppliers who can deliver goods before the deadline.
What would you do if you were in that situation?
Giving them incentives is one way to accomplish this.
What is the incentive for?
Incentive because they can deliver your order sooner than expected. Of course, while maintaining the product’s quality.
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Communicate
This is a crucial point.
You must maintain contact with your supplier to ensure that your order meets your requirements.
It is also necessary to be able to identify any problems as soon as they arise.
Create key performance indicators (KPIs) for your suppliers. This will motivate them to meet your requirements and provide the level of service you require.
Conclusion
Long lead times may be acceptable to some manufacturers. They frequently postpone production.
They don’t believe they have the power to make a difference. I sincerely hope you are not one of them.
There is a lot you can do to improve these conditions. There are numerous methods for reducing supply chain lead time while maintaining product quality.
All you have to do is observe.
And the eight methods listed above can help you shorten the lead time in your supply chain.
You will be able to reduce the risk of interfering with your production in this manner. Not to mention the risk of income loss that you can avoid as a result of it.
Create strong relationships with your suppliers. Locate a dependable supplier. Who is invested in your mutual success?
Last but not least, to reduce the lead time in your supply chain.
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