1. Managing Strategic Lead Times
Compiled by Rulzion Rattray

2. Time Based Competition
Price and quality important, but increasingly cost of time is crucial element in choice:
Shortening life cycles
Customers drive for reduced inventory
Volatile markets making reliance on forecasts dangerous

3. Life Cycle and Lead Time
Market
Sales
Obsolescent
Stock
Late Entrant
Time

4. Drive to Reduced Inventories
The drive towards Just in time delivery has had a major impact .
Responsiveness can only be achieved through time compression in supply chain.
Volatile Markets & Forecasts:
History tell; us that no matter how sophisticated the forecasting technique it will be wrong

5. The Concept of Lead Time
The time it takes for customers to receive their purchases.
The order to delivery cycle
Customers are increasingly sensitive to time.
Shortening delivery time a major potential source of competitive advantage

6. The order to delivery cycle
Order Cycle Time:
Time taken from order to delivery Short lead time major source of competitive advantage.
Customer
places
order
Order entry
Order
processing
Order
Assembly
Transport
Order
received
Each step consumes time
If order not met from stock but manufactured lead times will be extended.

7. Cash to Cash Cycle Time taken to convert order in to cash.
The longer the pipeline form the source of materials to the final user the less responsive to changes in demand the system will be.
Ensuring timely response to volatile demand will require a fundamentally new approach.

8. Logistics Pipeline Management
The process whereby manufacturing and procurement lead time are linked to the market.
Key managing the supply Chain as a single entity.
Common fallacy long lead times give security. The opposite is true!

9. Lead Time Gap
Problem of most organisations is time taken to procure, make and deliver is longer than the customer will wait.
Procurement
Manufacturing
Delivery
Logistics lead time
Customer order cycle
Order fulfilment
Lead Time
Gap
If logistics lead time = customers required order cycle. Forecast & inventory not required!

10. Reducing Logistics Lead Time
The visibility of the logistics process must be increased.
Fundamental questioning of why we do things the way we do.
Optimising Production Technology (OPT1):
All activities can be categorised as bottleneck (slowest activity in the chain)or non bottle necks.
Throughput of whole system is determined by bottlenecks.
Bottlenecks often associated with information flow

11. Improving Visibility of Demand
Key requirement of getting earlier warning about customer’s requirements.
Real demand may happen a lot earlier than demand penetrating the system.
How:
Improving information flow so manufacturing gets to hear about changes in the market earlier.
Postponement of commitment of product to its final form
Earlier notification of customer intentions get customers to order more frequently

12. References
1Goldratt, E.M., (1990), “Theory of Constraints”, North River Press.
Christopher, M. & Braithwaite, A., (1989), “Managing Strategic Lead Times”, Logistics Information Management, December.
T V Ramaswamy, “Lead time-centred materials management” accessed