Best Practices Consortium Supply Chain Best Practices Consortium Order Lead Times and Variability Executive Seminar Track 1, Session C September, 2006

Scope This session covers order lead times and strategies for minimizing variability. Key Lead Time Components: Vendor related, in-transit, delivery. Key Order Milestones: What milestones are being measured? Are we measuring the right ones? Variability Reduction: What strategies are being used to minimize order lead time variability?

What is Driving Your Order Lead Times? Vendor produce time is the single most important factor in order lead times. Components of Domestic Lead Times Components of International Lead Times Transit time is the second most important factor in order lead times, especially for international orders.

What is Driving Your Order Lead Times? Lead Times - Domestic

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

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 (DCs).

Measuring Key Order Milestones Are the correct milestones being measured?

Your Expectations What would you like to learn from this session? Important issues? What’s working? What’s not working? What’s changing? Shared good and bad experiences? Reasonable performance expectations?

Potential Discussion Points What are the top two or three factors in reducing order lead times and their variability? Do you measure lead times and their variability? If so, what metrics do you use? How much technology support is required to effectively manage order lead times? How do you get your vendors involved in reducing lead times and variability? Have you assessed the costs of lead time variability in terms of larger inventories, expedited freight costs and lost sales? What strategies do you have in place to improve lead times?

Important Takeaways Short, consistent produce times – 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. Remove uncertainty – Accurate demand planning and forecasting can remove uncertainty for vendors, carriers, and logistics service providers. Accurate measurement – Accurate measurement of lead time components can point to recurring, systemic problems that are the most deserving of attention. Real-time visibility – Real-time shipment visibility and individual shipment recovery is a difficult capability to implement and sustain. Reduce gate-to-gate times – An emphasis on crossdock and flow- through operations can significantly reduce gate-to-gate times at DCs. Improve transit times – Shippers experience wide variations in transit times using the same transportation mode. However, transit times can be managed and improved.

Questions?

Benchmarking & Best Practices References Information on order lead times can be found in the following references: Note: Available for downloading at www.supplychainconsortium.com