Lead Times at Record Highs
You may have noticed that it has been hard for companies and people to get stuff lately. Well there is currently problem in lead times in the supply chain industry.
Lead time refers to the difference between the delivery date and the order date measured in calendar days. Delivery estimates are bases on the company's order history and deliveries. So, that explains the difference between how things were prior to COVID and how they are today.
The logistics goal is to deliver the right products to the right place, at the right time, in the right quantities and under the right conditions.
So the specific issues we are encountering in the supply chain and logistic industry is a shift in labor trends leading to more frequent changes in planning, changes in operations that look for higher efficiencies such that stock is stored more optimally, and looking for alignment between suppliers and distributers while all of this is happening.
The companies that we collaborate are also dealing with their own problems. Suppliers are experiencing material shortages and labor constraints.
All of this is leading to an increase in backlog across the board. This situation will put a heavy emphasis on businesses that are able to act and be able to implement the following in their business:
1. Eliminate Unnecessary Processes.
2. Optimize Transportation Methods
3. Incentives For Better Service
4. Procure Optimally
5. Carry Higher Inventory
6. Reorder More Frequently
7. Promote Internal Learning
I'll admit that these tasks do not seem new but implemented and incentivized together will lead to the innovations necessary for success during these times. After all, lead time is a technical process that won't always look the same and we don' want it to.