TLMT611 Week 5 Discussion
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School
American Public University *
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Course
611
Subject
Industrial Engineering
Date
Jan 9, 2024
Type
docx
Pages
3
Uploaded by BarristerTapirPerson186
Good afternoon fellow classmates and professor,
Lead time refers to the amount of time it takes for a product to made and delivered from the supplier to the customer. It is calculated by applying numerous factors that include days to procure materials, manufacture goods, and ship finished products (Kenton, 2022). Reducing lead time can help a supply chain reduce its inventory buffer, which relates to the amount of inventory a company holds as a buffer against demand fluctuations, without hurting customer service.
One way that reducing lead time can help a supply chain reduce its inventory buffer is by enabling the company to respond more quickly to changes in demand. This can be done by reducing production time by minimizing unnecessary processing steps, defects in production, and through changing current decisions
(Wilson, 2010).
If a company can reduce the lead time for its products, it can also reduce the safety stock amount it needs to hold to meet customer demand. This can translate to cost savings by reducing the amount of money tied up in inventory and freeing up storage space.
Reducing lead time can also improve customer service by enabling companies to deliver products to customers quicker. This can be significant for industries where customers expect fast delivery, such as the way Amazon Prime works on delivery products within two days or same day shipping that is faster than other competitors in the market (Amazon, 2011). By reducing lead time, a company can meet customer expectations and improve customer satisfaction through
reliable delivery services.
Additionally, the use of a lean supply chain management system is another way to reduce
inventory buffers by reducing lead times from streamlining processes and eliminating waste in
the supply chain. In a case study conducted by the Massachusetts Institute of Technology (MIT) Center for Transportation and Logistics, a company in the FMCG sector was able to reduce its inventory buffer by 20% through the implementation of a lean supply chain management system that focused on reducing lead times (Roos & Kekäle, 2018). This concluded in cost savings and improved customer service, as the company was able to deliver products more quickly and reliably to customers. Therefore, reducing the lead time can help a supply chain reduce its inventory buffer without hurting customer service by enabling the company to respond more quickly to changes in demand and improve delivery times.
My question for the class is a reversed version of the one for this week’s discussion topic. Thus, can inventory buffers still be reduced without hurting customer service if lead times increase?
References
Amazon. (2011). Customer Service
. Amazon Support. Retrieved January 3, 2023, from https://www.amazon.com/gp/help/customer/display.html?
nodeId=GRPQFCNVUDYCBG24 Kenton, W. (2022, September 26). Lead time: Definition, how it works, and example
. Investopedia. Retrieved January 3, 2023, from https://www.investopedia.com/terms/l/leadtime.asp Roos, G., & Kekäle, M. (2018). Lean supply chain management in fast-moving consumer goods industry. International Journal of Logistics Systems and Management, 29(3), 303-320.
Wilson, L. (2010). How to Implement Lean Manufacturing. McGraw-Hill Professional. Retrieved January 3, 2023, from https://web-s-ebscohost-com.ezproxy1.apus.edu/ehost/ebookviewer/ebook?sid=5b58bdac-
ad13-463c-b523-1cf7943d93c9%40redis&vid=0&format=EB
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