Lead time is probably the most important variable you'll use in inventory planning.
In a world that demands instant gratification, customers are loathe to wait - pandemic or no pandemic.
In the midst of COVID-19, businesses are looking outside the box to slash lead times and improve reliability during uncertain times.
Peanut potential in NZ
Until recently, the New Zealand-based company Pics imported all its peanuts from Australia.
They hauled 2,500 tonnes of peanuts across the Tasman Sea each year. However all that changed when drought wreaked havoc with Australia's peanut industry.
In 2020, Queensland's peanut yield dropped to about 10% of its normal numbers.
To address this shortfall, Pics moved to source half its peanuts from Zambia, Brazil, and briefly from Argentina.
But as Pics addressed the drought problem, COVID-19 introduced further disruptions to its peanut supply.
They turned their attention to a market where peanuts have never been grown commercially - New Zealand.
The move is an experiment with as yet unknown results. But if it's successful, the risk of further interruptions to their peanut supply by delay, drought or disease will be greatly diminished.
COVID-19 has put the microscope on long supply chains - those which span countries and continents.
Initiatives like 'Buy NZ Made' and 'Buy American' have undergone a resurgence during lockdown.
In Japan, the government pledged US$2.2 billion to encourage Japanese manufacturers to wrestle production back from China.
Until now, many businesses have resisted the temptation to source from their domestic market, because it is expensive and inefficient.
However, 2020 had such a turbulent effect on supply chains that executives are beginning to shift their mindset.
Like Pics, Australian-based Amaero International is looking closer to home, according to an interview with Executive Director Stuart Douglas in the Wall Street Journal.
When their lead time doubled due to COVID-19, the 3D printing business accelerated plans to build a factory and manufacture its own powdered metal in Australia.
Clearly, most companies don't have the resources to build their own factory.
But one thing is for certain: lead times are dynamic.
StockTrim makes it really easy to keep your lead time up to date.
In the app, you can reduce the the impact of fluctuations in supply and be proactive about delays so your customers are less likely to be left waiting.
Tips for using lead times in StockTrim
- If you want an extra month worth of stock, set the lead time to your supplier’s lead time plus an extra 30 days.
- If you have an internal process that needs to be followed after orders arrive, but before they are ready to be sold to your customers, you should account for this in the lead time.
- You can select a lead time manually for an individual item or use the supplier default.
- Alternatively, StockTrim will adjust your lead time based on purchase order history or your default lead time.