The Best Lead Time Reduction Methods in Procurement
Originally published on January 21, 2021
Lead time reduction is vital for every procurement department to ensure their business is cost and time-effective; contributing to fleet efficiency. Here, we explore what lead time is, lead time reduction benefits and five lead time reduction methods for a smoother supply chain.
What is Lead Time?
Lead time refers to the time taken between when an order is placed and when the product is received by the customer. For any procurement department, paying attention to lead time reduction methods is significant for reduced costs, time-efficiency, increased communication and productivity.
Lead Time Reduction Benefits
One of the key benefits of reduced lead times is increased customer satisfaction and reliability of suppliers. As a buyer of goods and services, levels of customer satisfaction are influenced by how reliable the supplier is to deliver goods in an efficient and timely manner. An effective and smooth supply chain is dependent on your products being delivered to you on time, ensuring you don’t leave your customers waiting in return. Hence, reduced lead time from your supplier can result in better rapport and a healthier and long term working relationship.
5 Lead Time Reduction Methods
1. Analyse your suppliers
For an efficient and reduced lead time, your business needs sufficient stock levels to respond and ship out orders in a timely fashion. This means analysing your current suppliers against the potential supplier market and selecting a reliable domestic supplier. You can also put in place a lead time contract with your supplier to guarantee you receive the goods on time.
2. Positive internal working relationships
To reduce lead time, different departments in your business need to communicate openly and comfortably with one another. For instance, if you have a large order being delivered today that’s ahead of schedule, emailing or picking up the phone and discussing this delivery with the relevant internal department is essential, so the supply chain isn’t disrupted. This can only be achieved by building relationships with your colleagues.
3. Investing in fuel cards
Analysing each element of the supply chain will help to improve lead time. For example, the delivery of goods can be delayed depending on the size of the suppliers fleet and how often drivers have to fill up with fuel. To overcome these factors that can slow the supply chain, look for a supplier who utilises fuel cards to speed up transportation and administration time.
Fuel cards are a cost-effective solution as they are pre-paid cards that drivers can use at specific stations depending on their companies operational requirements. There is a range of fuel cards available to meet the needs of your fleet, whether you operate locally, regionally, nationally or across Europe. Fuelmate offers a variety of fleet management fuel cards with connections to major fuel brands such as BP, ESSO, Keyfuels, Shell, Texaco, UK Fuels and supermarkets. Fuel cards offer management features which contribute to the smooth running of a fleet, whether large or small. Fleet fuel card activity can be measured to ensure a time-efficient delivery and a procurement department can oversee how their fleet is working towards their budget.
4. Automated stock management
Automated stock management allows for an order to be placed when your businesses current stock levels are low, calculating the correct quantity of goods to have at one time; this reduces the chance of human error such as an over-order of goods. Orders of smaller but more frequent quantities can mean a quicker delivery time and often helps you save money too.
5. Open communication with suppliers
Building relationships is a key factor for successful fleet procurement. As a buyer, you should communicate with suppliers regarding any stock issues or increased stock needs. Once you’ve built a strong relationship with suppliers, an effective way to reduce lead time is to communicate openly about any predicted seasons of high demand to receive your orders in time. Effective communication can not only benefit your business when it needs a quicker lead time, but it helps to develop the relationship between you and the supplier.
We hope that you now understand these five ways to reduce lead time and how a reduced lead time can improve department efficiency for successful fleet procurement. For further procurement and fleet management advice, please explore our blog.