Lead times play a huge role in inventory management. Lead times are the amount of time it takes for you to receive your products from the time you place a purchase order with your supplier. That means if you can reduce your lead time, the results will create a need to carry less stock, allowing you to spend less on carrying costs.
Gaining more productivity while saving money are two aspects of improving operations in the supply chain. Despite previous notions, there are actually ways to accomplish these two goals simultaneously. While some changes start off earlier in the supply chain, for example the factory floor, others will see upgrades and improvements that directly impact both the supply chain and the manufacturing process.
One way to do this is by looking at past suppliers and find weakness and opportunities to reduce lead times, some which might affect the way your company operates. Everything from inventory changes to revisiting the actual manufacturing process can result in lean creations that will both help your company save money and allow for the delivery of better-quality products in a timely manner. Here are the two best ways to reduce your lead times in the supply chain.
Automating information along the supply chain
Keeping tabs on all your products and writing individual purchase orders for all of them is a time-consuming process. And if your suppliers have structured their businesses in similar ways with multiple stages in the supply chain, it is little wonder you may be experiencing longer lead times.
To start automating processes it is best to look at using inventory management software. The perk is that you do not need to write out every purchase order manually any longer, as inventory management software can generate purchase orders once inventory levels hit a defined reorder point.
This saves time and money so why would you not automate as much of the process as possible?
Provide forecasts to your supplier
If you have ever had to ask your supplier to expedite shipping on a pending order because you are running out of stock, you know how costly this can be. You can share sales data with your suppliers, allowing them to anticipate an incoming order by referring to past sales data. If they know to be expecting a new order, they can speed up the fulfilment process by setting aside your usual order, ready to be packed and shipped upon receiving the purchase order. This is particularly useful if you are dealing with hundreds of SKUs, as it can be difficult to keep tabs on every one of them.
With business intelligence, you are able to access the latest sales reports and share these with your suppliers regularly. By sharing information with your suppliers and working with them, it becomes a mutually beneficial relationship. On your part, you may yield shorter lead times, as they may be able to adjust their output to better match customer demand.
Reducing your lead times will let you save on costs while improving your business efficiency. In order to do so successfully, a great way to start is by getting an inventory management software solution. You will be able to enjoy real-time updates on stock movements from all sales channels, and you will know the moment your inventory levels hit the replenishment point.