The lead time may be defined as the time delay between the initiation of any process and completion of the same process. In a supply chain management process, lead time can be defined as the time from the moment the customer places an order to the moment it is received by the customer. In a supply chain management there are two types of lead times one is material lead time and the other is information lead time.
Material lead time:
Lead time is the time taken by the goods to get produced. Lead time of the transportation often depends on the mode of transportation. Faster transportation modes like airways, pipe, electronic transfer are used to reduce the material lead time in a supply chain.
Information lead time:
Information in the supply chain is used for planning, forecasting and also used to co ordinate daily activities. The information lead time can be reduced by employing electronic data interchange (EDI) because EDI does not employ human interpretation of data which reduces the information lead time.
Lead time can be separated into three components, the components are review time, manufacture time, transit time. Review time is the time taken for company to generate an order and review time can be reduced by placing the orders daily or weekly instead of placing the orders monthly and this has the direct effect on the reduction of the lead time.
Short lead times, have high degree of uncertainty and can force necessary inventories upward.
Material lead time:
Lead time is the time taken by the goods to get produced. Lead time of the transportation often depends on the mode of transportation. Faster transportation modes like airways, pipe, electronic transfer are used to reduce the material lead time in a supply chain.
Information lead time:
Information in the supply chain is used for planning, forecasting and also used to co ordinate daily activities. The information lead time can be reduced by employing electronic data interchange (EDI) because EDI does not employ human interpretation of data which reduces the information lead time.
Lead time can be separated into three components, the components are review time, manufacture time, transit time. Review time is the time taken for company to generate an order and review time can be reduced by placing the orders daily or weekly instead of placing the orders monthly and this has the direct effect on the reduction of the lead time.
Short lead times, have high degree of uncertainty and can force necessary inventories upward.
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