Manufacturing lead time is a critical factor in offshoring. On Time, In Full (OTIF) deliveries help you optimize cost & reduce your time to market. From using kitting services to using generic components, sharing sales projections & automating inventory management, read more about how you can achieve this KPI.

The recent coronavirus outbreak originating in Wuhan, China has caught the notice of the world. Among them is the concern for the manufacturing industry in the region, and for those reliant on them.

What is manufacturing lead time and why is it important?

Manufacturing lead time (MLT) is the time period between placing your order and shipment of the completed order to you. It has a direct relationship with the amount of inventory that exists at different points in the overall supply chain.

If the MLT is too long, you might have to stock up excess inventory which - as lean theory tells us - is a ‘waste’. It reduces your operational flexibility as well as product market flexibility, which is the ability to adjust product prices corresponding to demand.

Naturally, the shorter your manufacturing lead time the better. However, as seen earlier, there are several factors that influence this: complexity of the product, its demand, supply time for raw materials, etc. Thus lead times have the potential to vary wildly.. if you don’t have an experienced partner to help.

That’s where Zetwerk comes in.

Advantages of outsourcing manufacturing (to Zetwerk)
  • Multiple vendors to choose from/be matched to
  • On-demand - with flexibility to support increased demand
  • Logistics - delivered to you 99% OTIF (On Time, In Full)

What can you do to reduce manufacturing lead time?

  1. Streamline your supply chain
    A supply chain is only as strong as its weakest link. When you outsource manufacturing, it is advisable to have an eye on long term requirements. Picking a partner based on immediate requirements is certainly okay, but having to transition later can upset your business.

    Having one consolidated supplier reduces your exposure to risk. As you will see below, outsourcing partners today have a much bigger role to play. They actively participate in inventory management, stocking, and more.

    With Zetwerk’s global network of vendors, we deliver 99% OTIF (On Time, In Full) keeping your supply chain smooth.

  2. Use kitting services
    Unless you’re an OEM, assembling components is probably not one of your core specialties. Neither is it the manufacturer’s.

    It’s wise to plan for specialised assembly units that are required to keep cycle times in control. In steps a kitting service which can handle that subassembly for you, reducing headache and manufacturing lead time.

    Many kitting services also offer storage as well as order fulfilment as part of the deal. This can help you reach markets that would otherwise be outside your reach.

  3. Steer clear of customised components where generic ones will do
    We know, customisation is the rage everywhere. But unless it’s the USP of your product, the longer manufacturing lead times make it less attractive.

    Generic/standard components are cheaper, readily available, do not require special tools or longer run times, and can be easily replaced. Hence most after-market parts are produced to generic standards.

    That doesn’t mean innovation should take a back step. But do remember to account for longer lead times while making the choice.

  4. Analyse your inventory management costs
    Yes, manufacturing items in bulk reduces their unit price. But it comes with longer lead times, and higher storage and labour costs for inventory management.

    The human factor of inventory management is sometimes under-accounted for. The costs of maintaining a warehouse full of stock can pile up quickly.

    Maintaining a large inventory reduces your (market) flexibility in offering varying prices. So you maybe better off with smaller but more frequent orders.

  5. Automate your inventory management
    Use inventory management software to stay ahead of the curve. Being able to accurately forecast growth or fall in demand for each of your products is half the job done.

    Building a reliable forecasting method can do wonders for your manufacturing lead time. It helps you anticipate demand and acts as an input to your partners as well.

    Using vendor managed inventory (VMI) is a great way to keep your supply chain healthy. The responsibility of tracking inventory and making proposals shifts to the manufacturer, reducing order lead time and manufacturing lead time.

  6. Share Sales projections
    The key to a well oiled supply chain is communication, communication, communication. Sharing insights based on industry knowledge helps your suppliers anticipate your requirements and reduce manufacturing lead time.

    Very few people understand your business like you do. Your requirements are influenced by the specific clients you have, in addition to industry specific trends. Therefore sharing input with your partners can make a big impact.

  7. Try the carrot and stick method
    A time tested approach to keep manufacturing lead time in control is including incentives or penalties in the service-level agreement.

    These are typically used with outsourcing partners to incentivise reduction in manufacturing lead times. Incentives keep your partners invested in your product while insuring you against losses from delays.

We hope this helps you plan your business better.

At Zetwerk, we realise the value of timely and reliable delivery partners. With a capacity of 15,000+ MT per month and 1000+ network facilities, we offer delivery in as early as 7 days.

If you would like to understand how we can help you with outsourced manufacturing, get in touch with us here.

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