These days companies need to respond rapidly to any changes occurring in the supply-demand chain and reduce the lead time to adjust to new circumstances. Due to the growing competition and product variety on the markets, the producers are pressured to speed up. Therefore, managers are searching the ways to reduce inventory time without damaging the quality of services provided. Reduction in lead time ensures lower supply chain costs (Vipin et al., 2021). For instance, when a manufacturer is in touch with a supplier, they can agree on the physical movement of the products. Since this process is expensive and time-consuming, it is better to attract a supplier who would minimize the wait time, thereby making it cheaper to deliver.
Additionally, diminishing the lead time enables time management because one can identify the time limits through this. For example, when ordering goods and services from a manufacturer, one is able to trace the delivery dates; meanwhile, ordering directly from a supplier reduces the waiting period. What is more, the decrease in lead time results in better communication between the supplier and the other party, both domestically and internationally (Vipin et al., 2021). It contributes to better goal establishment and decision-making. Ultimately, the fastened process allows for sharing forecast reports without diminution of customer service. It presupposes that reporting updates to a supplier can significantly improve their planning process and order fulfillment procedures (Vipin et al., 2021). In general, reducing the lead time is a beneficial strategy since it boosts the overall performance without causing any harm to service provision.
Reference
Vipin, B., Rajendran, C., Philip, D., & Janakiraman, G. (Eds.). (2021). Emerging frontiers in operations and supply chain management: Theory and applications. Springer Singapore.