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Old 03-10-2010, 03:26 PM
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Default Lead time Management

I am looking for insights on best practices for maintaining lead times. We experience very dramatic changes in business level that affects the lead time for many of our parts (primarily build-to-print items) as supplier capacity and utilization change. We are currently using a look back at actual deliveries and calculating the lead time at which 90% of orders were delivered. This works for parts with frequent deliveries, but may not be the best choice for items with few deliveries. Many of the suppliers do not have a good handle on their lead time, and are impacted by high order change rates, so asking them does not yield accurate data.
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Old 05-25-2010, 02:36 PM
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Default ghaddix

I work with a similar "build to print" operation. Unfortunately using fabrication and painting from outside sources means difficult lead time determinations. Unless you are a large percentage of their business, they will fit you next in line. This is where the little recognized art of supplier relationship is most effective. Poor relationships mean you get it as soon as they can fit it in at best.
You must look at your historical data and extrapolate your educated estimates from that, meaning you will be able to shorten them or extend them depending on the current business situation at the source. You must set your leadtimes to the best available data and review on a periodic basis accounting for fluctuations. For the past year lead times have been reduced because everyone was hungry for work. Now lead times are starting to expand as the sources get busy.
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Old 12-18-2012, 07:42 AM
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Hi ljperuffo,

If your Customer Service levels are very high or the product delivery is critical to customer, you could consider higher safety stocks as buffer for high lead time fluctuations. A solution might involve reassigning new suppliers to account for the fluctuating lead times. If the product is highly profitable, developing reserve capacity at the supplier may be advantageous.However, if the product is not profitable for the supplier, you could engage with the supplier and identify cost reduction opportunities for improving overall supply chain profitability.

Another option is to look at a pull based predictive system that evens out the highs and lows of your demand especially for non runner items. Have a “dynamic buffer system”. It works on a traffic light mechanism of red, yellow and green wherein you do not have to over stock at the central distribution point. Your “top of green” is the maximum time it takes for you to replenish. So, for example, if your average consumption of this slow moving item is say 6 a month and it takes 2 weeks for it to be manufactured and shipped then your top of green is 4. As soon as 1 or 2 move, the dynamic buffer triggers you to start the replenishment cycle. This reduces your forecast to consumption mismatch risk and also ensures a better customer experience.

-Sam, CGN & Associates
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