Have you ever heard about lead time? The waiting time used to calculate process times was the theme chosen by Alexandre Moreno, Director of Services at Mercadoe, in an article that impacted the CIO and InforChannel portals.
Measuring conversion time from request to order and calculating the overall time between product ordering and delivery can bring several benefits to the operations of any company, as it can also reflect in a number of departments, such as customer service.
That’s why Mr. Moreno recommends a good strategic planning of procurement to reduce impacts caused by delays. Mentioning a usual example in industries, he stresses that knowing process times, planning needs properly and having an active procurement area, with duly signed SLAs (Service Level Agreements), is vital to reduce supply and operation risks in the company.
The negotiation of quotations, prices, delivery times & modes, and order approval, among other items – such as inspection, billing and transport, which are time consuming processes, must be also considered. Not to mention that, in some cases, a product or part must still be manufactured, which will increase waiting time even more.
However, to calculate lead time correctly, you must create a list of the company’s consumption needs, along with a document containing all the items (raw materials and products). Mr. Moreno mentions also other factors that can affect lead time – such as supplier management, a crucial point in the supply chain, considering that a supplier who is troublesome or lacks the required expertise can have a negative impact on lead time.
Read also how to calculate lead time in procurement, in an article by Marcos Roig, Commercial Manager at Mercadoe.