Timing is everything. If you don’t make it on time, you miss an appointment, or lose the chance at a job. If you don’t time it right, you might miss a connecting flight, or get burned going for a steal on the basketball court.
In business, timing can be the difference between expansion and stagnation, or even bankruptcy. Did you get your resupply in time? Did you properly account for any delays or runs on your product with enough safety stock?
When it comes to the supply chain, lead time is a big part of any successful enterprise.
Your manufacturer obviously matters when you’re figuring out that lead time, but like a bad movie, or a bland best man’s speech, shorter is always better. Production lead time can be the the crucial component in the success of the business.
Here are six ways to manage, or cut the manufacturing lead time, so you’re no longer scrambling to set in motion a resupply while forcing customers to wait until new shipments arrive:
1) Consolidate Your Suppliers
This requires business owners go back in time to when they were selecting manufacturers, something they should be doing anyway. Did any of them also make parts you ended up ordering from a different supplier?
Refining the supply chain you cut down on the number of suppliers, you won’t get stuck waiting on materials with differing lead times. It’ll likely cut lead times, too. Fewer suppliers means fewer headaches.
One way to do this is with vendor managed inventory. Oftentimes it’s the distributor that decides when to place an order with a manufacturer, but with vendor managed inventory, the manufacturer has access to the inventory data of the distributor. This allows them to manage purchase order creation and it eliminates redundancies in the supply chain.
The onus for a new order transfers to the manufacturer, so you can spend time on other parts of the business. As we’ll see later in this list, there has to be some trust involved to make vendor managed inventory work, but when you no longer have to place an order, and it’s done automatically, cut lead times are the result.
2) Outsource Subassembly and Use Kitting Services
Kitting involves packaging, grouping and sending individual — but related — components together as one unit. Similar to using fewer suppliers, this trims the messiness of multiple shipments and a complicated assembly. Production lead time shortens, too.
On top of that, you can outsource the assembly. This removes multiple steps: You’ve got one less build you have to do, and remove redundancies in packaging and shipping of more parts. This leads to fewer stock-keeping units (SKUs), which helps the business run more smoothly and efficiently.
However, in order to spot kitting opportunities, you have to be quite familiar with the intricacies of your product. You have to find a good supplier, but when you do, the manufacturer likely knows the material better than you do (they made it!), so they can then inspect to make sure their package of parts is in working order before they’re shipped out.
It’s less of a risk, while eliminating the often annoying tautologies that make a product’s build less efficient.
3) Standard Over Speciality
There’s nothing special about speciality parts, especially when generic is so much cheaper.
For most speciality orders, there’s a minimum run time. Manufacturers often need to order specialized tools and machines to make them. The only way a manufacturer can make up that added cost is to lock in a distributor to a longer minimum run time.
Not only that, but the manufacturing lead time is longer with speciality parts. This can be a costly investment, one you can’t get out of if sales aren’t staying consistent.
The only downside is partially mitigated, too.
The convenience of standard parts, where applicable, might mean the quality suffers. But if it requires you order more as replacements, they’re a lot easier to find, and arrive a lot faster, if they’re not customized.
4) Communicate and Develop a Direct Relationship With Suppliers
If you’re planning on long-term production, your contract manufacturer (CM) matters a lot. They’re dealing directly with the suppliers and relationships matter in business.
If your CM has an easy rapport and develops friendships with suppliers, especially large-scale ones, your CM’s sales engineer friend might move you up the queue. A cut lead time is the result. This goes double if it’s a huger supplier, and you’re a small volume, boutique outfit the supplier can afford to ignore or delay.
Communication is also good way to cut lead times. If you’re consistently staying in touch with your manufacturers and distributors, problems get identified and solved a lot faster.
You might even incentivize a faster delivery, with tiered increases rewarding efficiency and speed. You’d be surprised how many manufacturers expect to be delayed by a business owner or contract manufacturer who is loathe to hop on the phone.
5) Increase Order Frequency
The popular consensus is that you save money when you put in larger, bulk orders. But if that means longer lead times, you might end up losing money in the long run.
Delayed lead times can mean lost sales because you’re out of stock. It might also mean increased labor costs to manage the inventory. A total cost analysis might reveal that it’ll actually help do do more, smaller orders to cut lead times and reduce the need for extended inventory management.
6) Share Sales Forecasts
This is contingent on a trusting your supplier, which is why Sourcify is a great tool to find the right manufacturer for your business, particularly if you’re international. By sharing sales forecasts, suppliers will have a head start.
They’ll be able to anticipate and plan your next order rather than being in the dark (this is another reason to communicate with them as much as possible).
In turn, production lead time will drop, and fulfillment requests will almost seem like a formality. It’s the next best thing to vendor managed inventory.
All businesses need to shrink the time between initiation and delivery. These techniques cut lead times, so businesses can focus on other matters.
