Order supplies too early, and you’ll have to carry excess inventory for weeks or months. This will put you at risk of inventory deterioration and obsolescence. It can also drive up your storage, cooling, and insurance costs.
Order supplies closer to when you’ll actually need them, and you’ll keep inventory costs lower—but you’ll run the risk of having your production grind to a halt because of a simple shipping delay
The biggest challenge in all of this is lead time variability. You always aim to order supplies so they will arrive just in time to be used. But because lead times vary by season, this goal is nearly impossible to achieve.
How can you shorten lead time and avoid storing inventory for weeks or months? Predictive lead time software can tell you exactly when you should order supplies or products to have them arrive for any date you specify.
Can We Really Take the Guesswork Out of Lead Time Management?
Until now, supply chain planners have struggled to manage lead time. If you rely on your forecasts, you'll always be wrong. If you make decisions based on what was true last month or last year, you'll leave your entire supply chain vulnerable to whatever ends up being true this year.
And in a world of increasingly global supply chains, anything could be true this year. There are so many geographic variables to consider. The age of saying, “I don’t care about lead times as long as they’re consistent” is definitely over. Your lead times aren’t going to be consistent, period.
But enough about the problem—this frustrating, all-consuming problem that we’ve all wrestled with for decades. What would a potential solution look like?
The best solution would be a predictive lead time management module that does three simple yet essential things:
- Tracks every line item of every transaction.
- Runs this transactional data through a forecasting engine.
- Generates a lead time for any item you’re buying at any time of year.
Say you’re buying supplies that have seasonal fluctuations in production. Your predictive lead time system might tell you that to have product in hand for July 1, you’d need to order six weeks early—but for a September 15 delivery date, you’d only need to order three weeks early. The bottom line is that you’d always know exactly when to purchase any item to have it available for a specific date. In the process, you’d avoid holding inventory for any longer than necessary.
Reduce Supply Chain Risk
Having predictive lead time data at your fingertips would do more than just help you shorten your lead times, as important a goal as that is. It would also help you reduce the risk in your supply chain.
The great thing about our increasingly global supply chain is that you can now get the lowest-cost supplies from virtually anywhere in the world. You’ve probably consolidated much of your purchasing with the suppliers who give you the best deals. But what happens if a natural disaster or bankruptcy takes one of your go-to suppliers out of the game for weeks or months—or forever?
By running sophisticated analytics on your suppliers’ lead time performance data, you could identify unhealthy trends before they became major problems. With early warnings of trends such as lengthened time-to-fill or higher rates of product defects, you could take corrective actions to prevent potential disruptions to your supply chain.
The Good News: Your Predictive Lead Time Solution Is Here
If you’re craving the predictive lead time and lead time analytics functionality I’ve described above, there’s good news: it already exists in Demand Solutions DSX. Find out more about how this cloud-based platform can help you protect your business against uncertainty and risk by calling us today at 800-886-3737.