8 Ways to Reduce Supply Chain Lead Times

If you’re looking for ways to reduce lead times, you’re in the right place.

Because in this post, you’ll find 11 effective strategies for doing just that.

Plus, we’ll go through some common lead time questions.

Let’s dive in!

Find Diversified Suppliers

Working a variety of suppliers has a few benefits, including:

1. Fewer late shipments
2. Fewer product quality issues
3. Better communicated lead times

And each of these benefits helps endear your brand to your customers. Plus, they can help shorten your lead times.

Diversified suppliers with quality supply practices achieve better performance in quality, flexibility, reliability, cost, and design.

But just a word of warning…

If you decide to make changes, ensure you’re stocked with enough inventory to get through the changeover period. This will help avoid inventory deficits and help you get up and running with a new supplier more quickly.

Tip: Many industries have been hit hard by the pandemic and believe it or not some still have not caught up yet today. If you’ve been working with a supplier for many years, it may be more beneficial to stick with that supplier if the sole reason for wanting to change is because of lead times. Eventually the supply chain will normalize and your trustworthy supplier you’ve been working will be there in the end.

Choose Domestic Suppliers

The closer the supplier is to your warehouse or manufacturing plant or location, the easier it is to reduce lead times.

Although there can be a temptation to “chase” the best prices to far-flung places, a local/domestic supplier is a great choice to reduce lead times.

The common problems with outsourcing overseas include:

• Increased wait times to receive shipments – in some cases 30 to 40 days
• Language barrier
• Complicated return process

Closer suppliers can benefit you in many ways, including:

• Reduce lead times, which is equal to reduced shipping times
• Better ROI from faster order fulfillment
• Easier returns
• Avoid expensive international tariffs
• Avoid delays associated with customs holdups

Note: If you can’t find a local supplier, use the large ordering strategy: Placing larger orders but less frequently to keep more inventory on hand.

Consolidate Suppliers

Managing lead times demands more than just managing your suppliers.

The problems associated with handling multiple suppliers include:

• Spending more time coordinating and handling multiple vendor accounts
• Taking time to implement setup and vendor management software
• Handling multiple purchase orders
• Managing multiple supplier relationships

These activities almost always cause strain on your lead time.

Although it’s common to have at least one backup supplier to avoid complete dependence on one source, it’s unlikely you’d need multiple backup suppliers.

So, consider condensing your suppliers and eliminating redundant suppliers. Have one backup supplier and not more than two to reduce the time spent handling multiple accounts.

Improve Internal Communication

A supply chain process in any operation involves multiple steps and many people. And if it’s a paper-based system, it’s prone to errors. These are avenues of communication problems that can precipitate lead time issues and delays in supply.

If your supply chain process demonstrates numerous communication problems, they’re symptoms of deeper issues that need to be resolved.

To solve the communication issues, implement an automated workflow system. This will route order documents from department to department and immediately notify key users when action is required.

Improve External Communication

Effective communication comes with opportunities, but poor communication comes with challenges.

The problem(s) associated with lack of or inadequate communication with suppliers include:

• More time spent communicating with and reacting to unfavorable situations
• More stress due to unmet expectations
• Difficult and long process to build confidence in suppliers. It’s also easy to lose confidence instantly

You can overcome problems like miscommunication and miscoordination through a proper communication flow.

When miscommunication with suppliers occurs frequently, it can slow down your production schedules.

Constant communication with suppliers helps ensure smooth process flow and keeps expectations met. This also helps address any issues along the way promptly.

When communicating with suppliers:

• Share your demand/sales forecasts with them to let them know when to expect reorders. This is important in industries that naturally fluctuate. Suppliers will know when to expect an increase in demand.
• Provide key performance indicators to motivate the supplier to achieve your expected service levels.

Communicating with customers may not directly help reduce lead time but can help set expectations and increase satisfaction.

You can also use a shared automated workflow system with the supplier to send order update notifications via email or text or to notify the supplier through the system.

Motivate Employees

If you trace bottlenecks to your production or team, consider your employees’ level of motivation.

Demotivated employees can sometimes cause lead time delays directly or indirectly. Ask questions like:

• Do employees have a clear direction?
• Do employees understand the metrics behind the success of their department?
• Do they get enough rest time or off-work schedules?

Motivating your employees with cash bonuses, gift cards, lunches, and time off from work can improve their job satisfaction. This will result in improved performance and reduced lead times.

Bring External Processes In-House

Should you outsource or bring it in-house?

Outsourcing certain aspects of production sometimes can leave you at the mercy of your partners. Thus this lack of control can increase lead times and leave you without many solutions.

Solution: Bring all production tasks in-house to avoid any unexpected delays.

In-house management and delivery operations give you:

• Reduced expenses on third parties and production lead time reductions.
• Full control over your customer service and lead time management.
• Access to all your data about customer deliveries with granular detail to make informed decisions fast about your logistics management.
• More flexibility in decision-making and quickly acting on them. With data and full control, you can change, adjust, and pivot as need be.

The result: You’ll have long-term savings and scale with growth more easily since you already have the infrastructure.

However, bringing external processes in-house requires significant investment. You’ll need to have your own warehouses, a fleet of delivery vehicles with drivers, and proper management and planning, including staff.

Increase Capacity

One of the reasons you’re having an increased lead time could be your production capacity.

Can your infrastructure, production lines, machinery, equipment, material handling vehicles, and software systems (e.g., WMS) keep up? If they’re inadequate, you may have increased lead times.

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Solution: Increase your capacity

Update your production tools, resources, and technology, and use automation equipment such as conveyors and AGVs, to improve your capacity.

Use Standard Components

You can choose to customize your production/delivery or use standard processes: Custom vs. standard manufacturing.

If you must use a customized solution, rely on a specialized supplier who won’t be learning on the go.

Lead times tend to be longer for custom manufacturing because of the increased processes and resource demands. Unless specified by the customer, use standard manufacturing.

But don’t compromise the production performance or quality of finished products because you may risk poor quality and customer dissatisfaction.

You can collaborate with designers to tweak designs to allow for standard components when possible.

The advantages of using standard components are:

• Save time in engineering and production
• Reduce costs
• Outsource cumbersome processes

While bringing processes in-house gives you control of your lead time, you may not own all the processes.

Just as outsourcing can slow you down, producing items outside your expertise or unlimited resources can slow you down. If you don’t specialize, reconsider whether doing it yourself is beneficial.