Calculating Lead Times | Power Supply

The process of managing lead times in order fulfillment involves several key steps to ensure accuracy and efficiency. Here's a comprehensive overview of how we handle this crucial aspect:

Order Time and Distribution

The bulk of what we order comes from a distributor, encompassing the good, the bad, and everything in between. Lead time is defined as the period from when a Purchase Order (PO) is cut to when it is physically received. Once a buyer cuts the PO, it is sent out the same day. Upon receipt, we take immediate action to put everything away on the same day.

Lead Time Calculation and Updates

Lead time is a dynamic measure, meaning it changes over time. You don't set a lead time based on a single point in history. Instead, this is an ongoing process that requires regular updates.

On a monthly basis, we run a new lead report. This is crucial because what may have taken three days as a typical lead time can extend due to various issues like shortages. In recent months, we've seen many instances where lead times have stretched to two weeks. Hence, our lead time calculations must be updated regularly; it's not a static number.

Ensuring Efficiency

The procedure ensures that once the PO is cut, it is sent out immediately. Upon receipt, we handle inventory promptly, thereby maintaining an efficient workflow. This consistent updating of lead times allows us to adapt to changes swiftly and maintain accuracy in our operations.

Keywords

Lead time
Purchase Order (PO)
Distributor
Inventory
Efficiency
Lead report
Monthly updates
Dynamic measure
Order fulfillment

FAQ

Q: What is lead time?
A: Lead time is the period from when a Purchase Order (PO) is cut to when it is physically received.

Q: How often do you update lead time calculations?
A: Lead time calculations are updated on a monthly basis.

Q: What happens if there are shortages affecting lead times?
A: If there are shortages, the lead time calculation is adjusted accordingly, which can extend from a few days to up to two weeks.

Q: How quickly do you process Purchase Orders?
A: Once a buyer cuts the PO, it is sent out the same day. Upon receipt, inventory is managed immediately on the same day.

Q: Why is lead time not a static number?
A: Lead time is influenced by various factors like shipment delays and shortages, making it a dynamic measure that needs regular updates.