Lead Time

Definitions on Lead time

Customer Lead Time – the amount of time taken between order confirmation and order fulfillment (either pick up or delivery depending on the agreement with the customer).
Material Lead Time – the amount of time it takes to place an order with a supplier and receive it, from confirmed order to having it on hand.
Factory/Production Lead Time – the amount of time it takes to build and ship a product if all the materials are available.
Cumulative Lead Time – the total amount of time it would take from confirmed order to delivery of product if you had to order all the materials (if none were on hand). It is the summation of material lead time and factory lead time.

Choosing the right 3PL provider

Lead times are becoming increasingly important because the supply chain landscape is more competitive than ever. Securing the space you need is crucial because your competition could be going for the same area. And, it isn’t just a supply chain problem. Manufacturing, sales, or even customer service can cut into your truckload lead times.
Technology presents issues for 3PL providers because expectations and capabilities are constantly shifting. The issue is that keeping up with the advancements in technology can be expensive, and not all 3PL’s are prepared to foot the bill.
A motivated and talented workforce is the driving force behind any 3PL. It’s a difference maker for 3PL’s because maintaining a quality workforce ensures that customers will get a higher quality of service. Working in supply chain management requires an ever-expanding mix of skills and expertise to meet the expectations set by management.

Choosing the right mode of transport

Choosing the right mode of transport in freight transport is very important part of transportation, because it has to ensure the right parameters of transportation depending on the characteristic of transported goods, but also provides a suitable duration of transportation. Last but not least, the selection of a suitable transport system provides considerable financial savings. Choosing the right mode of transport is essential to ensure your import or export operation is efficient and cost-effective

Lead time from pick-up to warehouse/ customer

The transportation lead time is the in-transit interval from the date and time that a shipment leaves your warehouse (inventory business unit) to the date and time that it arrives at your customer’s receiving dock. Time in transit is affected by factors such as the warehouse location, the freight carrier, and the customer location. Additional factors such as the days of the week that the warehouse, customer and carrier are closed also affect the lead time.

Lead time with the 4 walls of the warehouse

The amount of time required from the start of a process to its completion, is called its lead time. If you sell products that are stored in an inventory within a warehouse, then when your customer asks you what your lead time is, they usually want to know your delivery lead time, which is how long it will take you to deliver an order after they place it.
Your delivery lead time will be the time required to process their order, pick, pack, and ship the order, plus the time required for the truck to deliver the product to your customer’s receiving dock, or front porch. Short delivery lead times mean more satisfied and loyal customers.
When your inventory of an item is getting low, you will have to place an order with one of your suppliers. Your supplier lead time, which is the elapsed time between placing an order with a supplier, and receiving the goods at your receiving dock, will determine how low you can allow your inventory to drop before placing the order.
You must always have enough inventory to cover your supplier’s lead time, otherwise you could stock out before the goods arrive at your receiving dock. The shorter your supplier lead time, the lower you can allow your inventory to drop. Less inventory means less carrying costs and reduced loss should the inventory not sell.
Your supplier in turn, has their own lead times. These could include the lead times of their own suppliers (or tier 2 lead times from your point of view). These suppliers ship raw materials and components that are used in your supplier’s manufacturing operation. Your supplier will also have a production lead time, which is the time required to manufacture products. There will also be an inspection lead time to check the quality of the finished product and a stocking lead time to place them in inventory.
If your supplier is doing a good job with their inventory management, then they will have anticipated your order. They will already have manufactured the goods waiting in their inventory when you place your order. At this point, your supplier’s delivery lead time to you will be similar to your delivery lead time to your customers. This is the total time required to process the order, pick, pack, and ship the order, and the time required for the truck to bring the goods to your receiving dock.

Lead time for final mile delivery

Final mile deliveries can be among the most expensive transportation segments in a supply chain. There are costs associated with scheduling times for appointments. If a delivery requiring a signature is missed because the recipient is not home, it can result in extra trips, more driver time, and additional administrative tasks.
Not only is final mile logistics costly in terms of assets and providers, but a poor home delivery experience can also have a negative impact on a company’s brand. In some instances, the final mile delivery is the first personal contact between the consumer and the product.

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