Reducing Order Lead Times and Supply Chain Variability Executive Seminar September, 2005

Order and Shipment Variability Foundation questions for the order and shipment variability discussion … Do you measure order lead time variability? Have you assessed the cost of lead time variability in terms of larger inventories, expedited freight costs and lost sales? Have you set goals to reduce order lead time duration and variability? What strategies do you have in place to improve lead times?

Domestic Lead Times Components of Domestic Lead Times Vendor produce time is the single most important factor in order lead time duration and variability.

International Lead Times Components of International Lead Times Vendor produce time is also the single most important factor in international order lead times.

Measuring Key Order Milestones Are the correct milestones being measured?

Transit Time Duration Transit times vary significantly between modes and lanes, particularly for International shipments.

Transit Time Variability Transit time experiences within mode can also vary significantly.

Product “Touches” Costs, transit times and damage increase the more times a product is handled in moving from vendors to stores or customers.

Distribution Center Gate-to-Gate Transit Times The mix of crossdocked, flow-through and stored product can significantly impact average gate-to-gate times through distribution centers.

Service and Variability – Learnings The ability of vendors to provide short, consistent produce times (order acknowledgement to ready-to-ship) is the single most important factor in order lead times. Accurate demand planning and forecasting can remove uncertainty for vendors, carriers, and logistics service providers. Accurate measurement of lead time components can point to recurring, systemic problems that are the most deserving of attention. Real time shipment visibility and individual shipment recovery is a difficult capability to implement and sustain. An emphasis on crossdock and flow-through operations can significantly reduce gate-to-gate times at distribution centers. Shippers experience wide variations in transit times using the same transportation mode. However, transit times can be managed and improved.

Questions?