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 address those issues better. 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 interests 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 practical 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 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.
Importance of supply chain visibility
Forecasting and Planning
With real-time data on inventory levels, production status, and demand fluctuations, businesses can make informed decisions when it comes to inventory replenishment, production schedules, and distribution. This accuracy in forecasting and planning leads to optimized lead times and minimizes stockouts or excess inventory.
Communication and Collaboration
By providing real-time visibility into inventory levels, order status, and delivery schedules, businesses can foster better coordination among stakeholders. Seamless communication among suppliers, manufacturers, distributors, and customers allows for proactive decision-making, responsiveness to changing demands, and ultimately, optimized lead times throughout the supply chain.
Efficient inventory management is a significant benefit of supply chain visibility. With real-time visibility, businesses can manage their inventory more effectively. They can optimize inventory levels, reduce carrying costs, and prevent stockouts or overstock situations. By ensuring the timely availability of products, businesses can minimize lead times and improve overall order fulfillment efficiency.
Benefits of supply chain visibility
Supply chain visibility offers several key benefits that directly contribute to optimized lead times.
Real-time visibility into the status of each order allows businesses to proactively monitor and manage the order fulfillment process. By identifying potential bottlenecks or delays early on, businesses can take corrective actions, allocate resources efficiently, and ultimately optimize lead times for order delivery.
By providing accurate and reliable information to customers regarding order status, shipment tracking, and estimated delivery times, businesses can meet or exceed customer expectations in terms of lead times. This, in turn, enhances customer satisfaction, loyalty, and positive brand perception.
Cost Savings and Efficiency
By identifying inefficiencies such as delays, bottlenecks, or excess inventory, businesses can take corrective actions to streamline operations. This leads to reduced carrying costs, improved resource allocation, and enhance overall operational efficiency, resulting in cost savings and optimized lead times.
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 the 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.
Short 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 pay to produce them and the moment you get paid for delivering them. Extended lead times usually result 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 large 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 and 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. 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.
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 synchronize operations. Different solutions help to process the reengineering of your transport plan to reduce, in the end, your lead times.
Sinay developed the Container Tracking API to help track and trace containers in real time. By using the container number, booking number, or Bill of Lading, it allow the users to get complete visibility on location, status, and ETA to the next trans-shipment port, and destination.
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 for lead time reduction. Once the best option is chosen, it is essential to assess the outcomes, that is to say, make sure that the expected lead time reduction has been achieved.
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.
Frequently Asked Questions About Supply Chain Visibility and Lead Times
Lead time refers to the total amount of time it takes for an order or a product to move through the entire supply chain, from the moment it is placed or initiated until it is delivered to the customer.
It includes all the processing, manufacturing, transportation, and delivery activities involved in fulfilling the order.
It involves capturing and sharing data related to inventory levels, production status, transportation, and other relevant information to enable stakeholders to have a clear and comprehensive view of the supply chain activities.
Good supply chain visibility offers several benefits:
- Improved Forecasting and Planning
- Enhanced Communication and Collaboration
- Efficient Inventory Management
Reliable lead times are important for several reasons:
Planning and Decision-making
There are several strategies to reduce supply chain lead times:
Collaborate with Suppliers
By implementing these strategies, businesses can effectively reduce supply chain lead times, enhance customer service, improve operational efficiency, and gain a competitive advantage in the market.