Table of Contents
As people become more familiar with fast one to two-day shipping, customers are showing impatience with longer waiting periods to receive their products. This is the prime reason why e-commerce businesses strive for short lead times throughout their processes; enabling customer orders to be shipped out and delivered as quickly as possible.
On the flip side, many businesses still struggle with managing long lead times which ultimately impacts the customer experience in a negative way.
Defining Lead Time
Lead times refer to the amount of time it takes to complete a process of production, from beginning to end. In logistics language, ‘lead times’ refer to the amount of time it takes to get inventory to your warehouse from the manufacturer, and to when it goes into the fulfillment process upon customer orders. This also includes the time of delivery: from the time of customer purchase to when the item shows up on their doorstep.
The Importance of Avoiding Long Lead Times
When businesses have longer lead times, it often results in higher costs and lower profits. Shorter lead times ensure that your resources are well utilized and you won’t be wasting additional costs on raw materials. Shorter lead times can also encourage repeat purchasers due to customer satisfaction.
The main reason for lengthy lead times is due to supplier disruptions. An example of this is the COVID-19 pandemic, as it caused suppliers around the world to be delayed in their manufacturing processes. The pandemic caused inefficiencies in supply chain processes and halted the delivery of supplies. This means that it could prove to be beneficial to have more than one supplier as a backup if an unexpected supply chain disruption occurs.
2 Simple Strategies to Prevent Long Lead Times
- Early Material Planning: An inventory management tool will keep you notified when the stock dips below a certain level. This means you can accurately plan for inventory replenishment. This is possible with a warehouse management system (or WMS)
- Freight Methods: Air freight is very expensive compared to other transportation methods such as ocean freight. However, this option is always a silver lining as it allows products and raw materials to be delivered in the fastest possible time frame (if you’re preparing for peak season sales such as the Holiday Season or Cyber Monday). With air freight, your potential profits need to be substantially higher than air freight cost.
Reduce Inventory Management Stress
Reducing lead times is a complex and tedious task, which makes it a challenge for many businesses to maintain and manage. To help you focus on front-end operations and customer retention, Simple Global provides you with access to a global fulfillment network and with full transparency via our WMS. When you partner with us, you can easily reduce lead times by allowing our team of experienced professionals to take care of everything from inventory management, and order fulfillment, to the entire shipping process.
What is Direct Fulfillment? Meaning, Process, and Benefits Home > Blog > What is direct fulfillment? Meaning, process, and benefits Order delivery and fulfillment costs
What is Fill Rate in Logistics? Definition, Types, and Importance Home > Blog > What is fill rate in logistics? Definition, types, and importance Fill