Confronted with the growing needs of high-demanding customers and delivering, in-time, high-quality services, supply chain players are compelled to implement strategic changes in their operations to better address those issues. Customers are expected to receive their orders as quickly as possible. But without clear visibility and real-time information on the flow of goods, it is pretty challenging to secure your goods and ensure customer satisfaction. Lead times are a crucial element in the quality of customer service but, above all, in your competitiveness.
By getting a proactive view of the pratical reality of the operations, it is possible to better assess the performance of your transportation plan and make the necessary adjustments to strengthen the transportation of your goods. Improving your lead times through enhanced visibility provides numerous opportunities for significant benefits especially in terms of in-transit inventory. The synchronization of your operations and the reliability of your carriers will be necessary to improve the effectiveness of your supply chain and thereby reduce your lead times.
To help you improve your customer experience and your cash flows, let’s discuss why lead time optimization can be beneficial to your business and how exactly you can reduce them effectively.
1- What benefits can be expected from shortened and reliable lead times?
One of the most important commitments in supply chain transport is to deliver goods at the right place, at the right time, in the required quantity and conditions to the final customer. Lead time reduction can be beneficial when it has a significant impact on customer service, inventory management, and demand forecast.
- Reducing in-transit inventory
Lead time reduction opens up scope for additional gains in goods stock, reducing money tied up in inventory because fewer goods have to be stored. The longer you keep inventory, the less flexible you are in addressing new customer needs. Shorten lead times result in goods being transported less long, so less in-transit inventory. Goods are moved more quickly between the moment when you had to paid to produce them and the moment you get paid for delivering them. Extended lead times usually end up in deadstock, revenue losses, and unsatisfied customers.
However, variability in your lead times can also impact your safety stock. It is not until you’ve managed to make your lead times reliable that you’ll be able to size your stock optimally. The more unreliable your lead times are the more oversized your safety stock will be.
- Improving customer satisfaction
What is crucial is above all to deliver to the customer on the agreed date, neither too early nor too late (not necessarily as quickly as possible). it is the reliability of lead times that is important. The reduction of lead times helps to reduce stocks, to be able to respond more effectively to a one-off variation in demand (peak, seasonality) other than by overstocking.
- Combining shortened and reliable lead times.
Reducing lead times involves minimizing the time it takes to process an order and receive the shipment of your products. When it comes to reliability in your delivery, you make sure that over time, the average traveling time is stable. In fact, if you succeed in reducing your lead time multiple times but not at the same level it could be very tricky to manage. Stabilizing your lead times can be very challenging and requires more effort than just speeding up delivery times. It’s about maintaining your lead time performance stable through smarter anticipation and optimization while delivering as fast as possible.
2- How to reduce your supply chain lead times effectively?
- Better coordination of your supply chain operations
To achieve effective management of your lead times, It is essential to detect the potential flaws and elements that might delay your logistic operations. Thanks to enhanced visibility and real-time alerts during transportation, you’ll be able to better monitor your goods and better deal with unforeseen events, ending up in better synchronization of your operations and accelerated supply flows. Real-time monitoring of your goods allows you, for example, to confirm the effective arrival of your goods at the arrival port and mandate post-shipment carriage.
Without reliable visibility and real-time information on your flows, you are likely to wait for several days for the information to be received. This is why tracking solutions bring value to sy synchronize operations. Solution such as IoTrack helps to process reengineering of your transport plan to reduce, in the end, your lead times.
For instance, Michelin shipments transited by Chicago with Safecube solution reduced its in-transit inventory by 1 day thanks to the analysis of transit time and real-time information about container unloading events in the rails station.
- Operations optimization: diagnostic, performance assessment, and decision-making
When it comes to in-land transportation, the main issue is avoiding chronic delays in your delivery. Your point of delivery has to be informed early enough to anticipate the rent of unloading docks and to make sure that people will be there to receive your delivery. You will be able to assess the level of service of transport alternatives and make an effective comparison with the contractual commitments that have been taken.
For all transportation solutions combined, you also have the opportunity to compare the performance of multiple carriers and make the optimal trade-off. Depending on the parameters you choose to prioritize whether it is the cost or delivery performance, you will choose one carrier over another. Having visibility on how your shipments are processed, allows you to optimize service levels and choose the carrier that better suits your needs of lead time reduction. Once the best option is chosen, it is essential to assess the outcomes, that is to say, making sure that the expected lead time reduction has been achieved.
In the case of Michelin, one of the features of the IoTrack solution is to be able to analyze terminal trains’ efficiency and to identify the fastest ones. The detailed analysis of the delays between the different arrival points and the performance of each rail terminal in Chicago has resulted in 1 day lead time reduction.
Managing to obtain reliable and shortened lead times tends to be easier said than done, considering supply chain uncertainty and disruptions. But lead times are playing a prominent role in the organization of your supply chain, giving you the opportunity to realize costs and stock gains. With the right strategy adjustments necessary for effective management of your operations, you’ll be able to reduce your lead times and optimize your global supply chain, resulting in more satisfied customers and better productivity.
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