Managing Lead Time is Critical to Achieving Your Service Goals
What steps are you taking to effectively manage your vendor’s performance?
- Lead time quoted vs On-Time performance
- Service Goals vs Vendor Fill Rates
Most companies don’t manage lead times effectively or at all. Lead Times are reviewed quarterly or annually as part of a vendor performance review. Lead time quoted by the vendor is only the starting point for understanding vendor performance. High variability in performance affects bottom line results. Early vendor deliveries cause overstocks, late deliveries can trigger out-of-stock service issues.
HIMPACT reviews lead-time performance daily as each purchase order is received. Lead Time and Lead Time variability are tracked by vendor and SKU, and automatically incorporated into the Safety Stock calculations. In other words, if your vendor is providing service levels at 92%, HIMPACT knows how much additional inventory is needed for you to make your 95% service goal for your customers.