The moment that I entered the logistics industry, I noticed one thing; The lead times of shipping are far from accurate. The lead time of a product is the period covering from the manufacturing to the distribution of the products to the customers and this process can take from 2 weeks to up to 6 months.
Every freight forwarder, before the beginning of the shipping process, should make an estimation of how long it will take for the products to arrive at your destination. However, issues may rise and port congestion may cause unexpected delays to your shipments. Hence, the first thing that you need to do is to collaborate with a trustworthy freight forwarder, that will provide you with transparency and full visibility of your products.
But, even if you do this, you, still, cannot be sure that your products will arrive within the arranged timeframe. I know the feeling, believe me! This is why I started searching for ways to shorten the lead time of the shipments. In the next paragraphs, I will present all these ideas, hoping that they will put to good use, to increase the efficiency of your business.
- Choice of the supplier: I know that you may want a supplier from the other side of the world due to reduced production costs, but consider, just for a moment, to choose a supplier based stateside. It can help you reduce the lead time by two weeks or more. It takes more to send the parts from multiple countries than to send them from just one country. On top of that, the language barrier may cause delays and problems that will increase your lead time.
- The number of suppliers: Apart from collaborating with local suppliers, you have to think carefully on how you will manage all the different orders with different suppliers. One approach of doing that is to leverage on management software that will help you simplify your processes and achieve greater efficiency. Another way of managing many suppliers is to concentrate your orders to one or two suppliers. Consolidating suppliers, will enable you to reduce time from coordinating all the vendors, while managing multiple purchase orders in one sitting.
- How to approach suppliers: Have you ever wanted a lead time of 12 weeks, but your supplier could only offer a lead time of 14 weeks? Have you considered to offer him a bonus if he agrees to deliver at your preferred lead time? If not, then please think about this. Everyone like rewards, so I am sure that your supplier will try his best to meet the deadline.
- Frequency of orders: Are you used to placing large bulk orders, considering that, in this way, you will save time and money? Placing large orders increases the likelihood of longer lead times. Additionally, buying stock that you may not need, leads to lost sales and increased workforce for the inventory management. There is a high chance of losing valuable resources, so you have to be sure about this. One way to determine any losses or savings, is to conduct a total cost analysis. If you identify possible losses, then consider placing small orders more frequently to reduce lead times and to better control the demand of certain products.
- Sales Forecasts: Keeping track of your orders, can help you manage your current and future inventory. Being able to monitor past orders, will give you the benefit of controlling the demand. You can see the period of the year that requires a large inventory, so you can schedule your orders accordingly. In general, suppliers do not order raw materials until they receive your orders, meaning that their lead time is added to your lead time. Thus, another important thing that can help you with the warehouse storage management is to provide the sales forecasts to your supplier. In this case, the supplier will know when to expect orders from you enabling him to arrange and speed up the fulfilment process. The lead time can be reduced, if your supplier can set your usual orders aside and have them ready until you request for them.
- Standard components: Keep in mind that you can use standard components for your products reducing the costs, while saving time from engineering and production. And this is why you should collaborate with a supplier that understands the market trends. An experienced supplier can assess every situation differently and advise you whether using standard components is a wise choice that will not affect the quality or performance of your finished goods.
- Communicate constantly: Constant communication can be very important in the relationship with your supplier. Ensure that you communicate your goals and expectations to your supplier, so you can create a relationship based on trust and mutual understanding. Make sure to provide him with key performance indicators, that will motivate him to achieve the level of performance you expect. In addition, suppliers are batching different orders to deliver them altogether in one large run. Working with a trustworthy supplier, means that he can understand your need for efficiency and speed and he may schedule the deliveries according to your deadlines.
- Control for Delays: Many delays can occur due to many different factors, such as congestion at ports and consolidation delays where different orders wait to be consolidated into a single shipment. Sea freight services run according to published schedules, like the air freight services. Therefore, if you lock in on a specific shipping schedule, you can eliminate delays waiting for the ship and you can even negotiate better rates and ensure availability of space for your products.
As you can see, there are many ways that can help you shorten the lead time of your products. My recommendation is to start small and see which of these practises fits your business best. You don’t have to do everything, but you can start changing your processes step by step!
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