My recent research report on the Amazon effect says that 67% of manufacturers and distributors feel customer service gaps when compared to Amazon-like offerings. One of those key areas is lead time. When looking across my clients, which resemble a well-diversified portfolio of manufacturing and distribution companies, customers are demanding a 20% decrease in lead time at minimum with expectations up to 50% reduction on average.
Time is one thing no one has! A few of my most successful and rapidly growing clients pride themselves on a 24-48 hour turnaround and prioritize their people, processes, systems, inventory strategy and the like on this objective. It certainly seems worthwhile to take note!
Lead time reduction is not something that can be dictated. Even high inventory levels do not mean you’ll be able to successfully support short lead times on an ongoing basis. Instead, it means you need to have a process change somewhere in your supply chain to be sustainable. Have you taken time out of your manufacturing process? Perhaps you’ve implemented a few lean concepts. Or, it could mean that you have increased your collaboration with suppliers and customers to better support your supply chain needs. You could have used tools such as SIOP (sales, inventory and operations planning) to achieve this objective. Or, have you further leveraged or upgraded your ERP system and implemented functionality that allowed you to take out or minimize process steps? Or have you provided additional training and education for your planning team so that inventory, service and efficiencies can be optimized?
There are countless ways to design your supply chain to slash lead times.