How to decrease stock levels by automatically updating supply lead-times

You’ll sleep better with supply lead-times updated every week.

When I ask supply-chain executives about their action plans to keep stock low or decrease their stock levels, they usually suggest:

  • improve the S&OP process (the #1 action in efficiency);
  • increase VMI or CMI coverage*;
  • negotiate short lead-time programs against weekly forecasts;
  • watch orders which need to be rescheduled or cancelled more closely.

One action is often missing from their suggestions: a better process for updating the most critical supply-chain data… the supply lead-times.

How to update collapsing lead-times

Current processes for updating lead-times

Think about it. I’ve never seen a process that differed from the following.

You receive lead-time updates on a monthly basis (or longer) from manufacturers and distributors. They’re in Excel spreadsheets. Your teams need to compile them into a single sheet, then adapt the format so that it can be automatically imported into your ERP(s).

But there is often a major issue.

You never receive the files from all your suppliers at the same time. So usually you decide to wait another week to do the job. And then another week. All that being dependent on how much time you have in any case, with many other urgent tasks to complete. The result? You barely update your lead-times more than once every quarter!

If we automatically check Precogs’ customer ERP’s lead-times against refreshed manufacturer lead-times, here are the results: 22% of the ERP lead-times are 30 days or more under market lead-times. 27% of the ERP lead-times are 30 days or more than market lead-times. And it is common to see huge gaps in lead-times of 30 weeks and more.

lead-time analysis

How to leverage distributor lead-times thanks to their APIs

But things have changed! You now have access to distributor APIs and receive real-time updates on their offers. For example, you can leverage Digi-Keyand/or Mouser API’s and request a weekly update of your lead-times on all your parts. In this way you can automatically build a weekly file to update lead-times for 90% of your inventory needs (some parts are not available at Digi-Key and Mouser).

I won’t bore you with the step-by-step process here. Of course, you can contact us at Precogs and we can help you, plus here is the API documentation for you to convince your IT to take action (Digi-Key and Mouser). Either way, believe you me, you will sleep much better with lead-times automatically updated every week!

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*VMI-CMI: if your plants are in Western Europe or North America, chances are you don’t have enough volume for a VMI or CMI to be worth the hidden cost which distributors will charge you.

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