Revealed: The Sectors Cutting Product Lead Times Fastest

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It’s been a long two years for manufacturing and logistics businesses at the sharp end of rapidly-changing global events.

Covid restrictions, Brexit, labour shortages, rapidly-changing customer demand and the war in Ukraine, have all contributed to shortages of key raw materials and components – squeezing margins and causing long lead times and higher prices for customers.

Grain and sunflower oil are currently in short supply due to the Ukraine conflict, while the global appetite for electric vehicles is driving demand for lithium and semiconductors.

Compounding matters further are the ongoing labour shortages which came to a head in 2021 when the lack of HGV drivers reached critical levels.

Whether you work in precision engineering or pharmaceuticals, food and drink or textiles, achieving on-time, in-full (OTIF) has been difficult if not impossible. Some moved from just-in-time to just-in-case, even if this meant more cash tied up in inventory and a higher risk of waste.

But which sub-sectors of manufacturing and logistics struggled most to fulfil orders during the pandemic, and how quickly did they rally?

To find out, we have created a Product Lead Time Index using data from our inventory management software to track how product lead times have changed since the height of Covid-19.

We analysed 25 different sub-sectors of the supply chain industry to see which ones experienced the most severe shortages during the Covid crisis. We also looked at which recovered fastest as it subsided, and which are now fulfilling orders even quicker than before the pandemic despite the disruption.

Longest lead times during the pandemic

Sub-sector

Number of days for deliveries 2019/2020

Number of days for deliveries 2020/21

Percentage increase

Plastic and rubber products

19.27

37.32

93.71%

Printing and Publishing

10.85

18.74

72.63%

Spirits

11.03

18.31

65.97%

Confectionery

13.22

21.33

61.32%

Tea and Coffee

5.80

8.49

46.39%

General challenges at the time included factory shutdowns (particularly in China), labour shortages partly due to staff self-isolating, and unexpected high demand from consumers.

More specifically, demand for rubber gloves during the Covid crisis, along with labour shortages and adverse weather in Thailand and Vietnam, led to a surge in demand for rubber, which is consistent with our findings.

Lockdowns are also likely to have driven a surge in print book sales, which may be why the number of days it took to fulfil orders jumped. And, at a time when people probably needed a comforting cuppa more than ever, keeping tea on the shelves became more of a struggle due to lockdowns in India and Kenya.

Fortunately, it seems that pandemic-related disruption was short-lived and many firms were able to reduce their lead times relatively quickly, as the table below shows.

Biggest reduction in lead times since the height of the pandemic

Sub-sector

Percentage drop between (20-21 and 21-22)

Tea and coffee

61.91%

Plastic and rubber products

52.80%

Animal products

45.97%

Health, medical supplies and equipment

45.18%

Confectionary

40.96%

Finally, we looked at which areas of manufacturing had reduced lead times the most over the past two years, and are now in a stronger position compared to 2019. 

In fact, all the sub-sectors we analysed saw lead times drop – the only outliers were spirits (up by nearly 37%), and printing and publishing (up by just under 33%). However, it’s important to remember these two industries were also among the hardest hit by Covid and yet both still managed to reduce their lead times by 17.48% and 23.17% respectively between 2020/21 and 2021/2. This indicates that they’re on the road to recovery. 

Biggest reduction in lead times over the past two years

Sub-sector

Percentage drop between 2019-20 and 2021-22

Food (fruit and veg, prepared meals etc)

56.14%

Electronics, telecommunication

54.90%

Health, medical supplies and equipment

53.69%

Office equipment and supplies

51.73%

Clothing, footwear and accessories

49.86%

So how did some businesses manage to reduce lead times in the face of so much uncertainty? One reason is that manufacturers and logistics firms stepped up their digital strategies during this time in response to the crisis. Certainly, we saw adoption of our inventory management software rise by over 80% between 2019/20 and 2021/22.

Commenting on the findings, Stephen Jones, Head of UK & EMEA at Unleashed, said:

“Global supply chains are complex, and while the market has been more uncertain than usual, our data suggests that suppliers are working hard to build resilience. In fact, for many, the crises have only strengthened their resolve. Given how much lead times have dropped in some sub-sectors, their efforts are clearly paying off.

“Keeping a tight rein on inventory is essential at any time but particularly during periods of disruption. When product lead times are fluctuating, the right technology can quickly show you the actual vs expected lead times which allows you to manage customer expectations, or look for alternative suppliers who can deliver faster.”

Jordan Westley, ecommerce and order management system (OMS) expert at Mintsoft, adds:

“As well as keeping a tight rein on inventory, it’s just as important to ensure that warehouse operatives are picking, packing, and shipping orders as accurately and efficiently as possible.

“It’s impossible to express the importance of fulfilment and the overall effect it has on customer experience. With such a large shift to online shopping because of the pandemic, customer expectation has exploded and this is where keeping these delivery lead time figures to a minimum is key. Customers take for granted the effort that goes into fulfilling an order and unfortunately, is only really noticed when their delivery is delayed or contains the wrong item(s).”

Methodology

To create the Product Lead Time Index and learn how different sub sector’s lead times were affected by and since the Covid-19 pandemic, Unleashed analysed data gathered from its own inventory management software users.

The average delivery order time in days for 25 different industries for the last three years were analysed to work out an average day rate for each figure for the following ranges:

  • April 2019 – March 2020
  • April 2020 – March 2021
  • April 2021 – March 2022

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Greg Roughan - Unleashed Software
Greg Roughan

Article by Greg Roughan in collaboration with our team of inventory management and business specialists. Greg has been writing, publishing and working with content for more than 20 years. His writing motto is 'don't be boring'. His outdoors motto is ''I wish I hadn't brought my headtorch', said nobody, ever'. He lives in Auckland, New Zealand, with his family.

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