The Seven Step Process to Reducing Supply Chain Lead Times

Are your lead times too long? Are customers and retail partners complaining that you move too slow? If you believe your firm’s lead times could be shortened, then they probably can. With these seven simple steps, you can work to optimize your supply chain and make the process more streamlined.

Choose Suppliers Closer to You

Many firms choose to source outside their home country in order to take advantage of lower labor costs. However, if your lead times are too long, it might be time to look for sources much closer to home! Domestic sourcing, although pricier for the labor, can be a way to cut down on both shipping costs, delivery inefficiencies, and lead times!

Order More Often

If your supplier moves slow, stagger your orders. Real simple, but many companies don’t do it due to their cash flow cycles being long. However, lower lead times also shorten cash flow cycles, so staggering your orders might be the change you need in order to start managing your cash flow more closely. But to know how often you need to order, you’ll also need to do the next step!

Implement Proper Sales Forecasts

Sales forecasting requires demand planning, S&OP planning, and a deep understanding of how products move out of your organization and into the consumer’s hands. Most importantly, let your suppliers know how much you plan to sell and how quickly. Of course, you’re probably providing them with forecasts already, but if you work on more accurate forecasts, your relationship with your suppliers will improve!

Use Standard Components

Your product might be a custom solution for various customers. That’s okay, but how can you standardize it? If you can make custom solutions out of standard components, you can avoid a big headache that custom manufacturers have.

Consolidate Suppliers

If you use multiple suppliers to create your product, managing them can be tough. Although you might think you have to use all of them for quality or price considerations, you might want to consider consolidating them. This is not an easy process, but reducing one element of your supply chain could help improve lead times drastically, especially if they’re a weak link.

Create Incentives

You might think suppliers work on their time and no one else’s. They don’t have to! Larger retailers can demand quick turnaround times because they provide a big incentive for the business to do so. You, on the other hand, can offer financial incentives for meeting lead time requirements. This could be the motivation your manufacturers need!

Improve Communication

It’s tempting to keep the supplier out of sight when they’re considered no longer necessary, but keeping in communication with them could really help improve your lead times. How? You could help prevent delays and address them when they happen. Suppliers only care as much as you matter to them. If your business matters to them, they’ll bend over backwards for you. Communication can help them understand that your business is important and that they want to make your business happy for time to come!

In Summary

Reducing lead times is a critical element of any manufacturing operation, and most importantly, it’s possible. There are seven simple ways that you can reduce lead times, and they mostly deal with managing your supply chain.

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