How long does it take for your products to go through the supply chain from start to finish? How can you plan an operational timeline that will ensure your business is always stocked with the appropriate amount of inventory?

For Amazon sellers, estimating order lead times can be frustrating, overwhelming, and unpredictable.

In this article, we’ll go through the formulaic pieces that make up the traditional supply chain lead time—and what you can do to stabilize, streamline, and minimize these lead times.

How To Reduce Your Product Lead Times delivery truck with shipping time clock

What Is A Lead Time?

Lead time is defined as the amount of time between the start and end of a process. In manufacturing, this simply means the time it takes from ordering the goods to delivering the products to market.

For example, you’ve just decided to add a new product to your lineup. The lead time is how long it will take for you to get that product to your inventory and available to customers. This includes all processes in the supply chain, from ordering to production and shipping to fulfillment. The lead time includes every operation that prepares your goods to be sold.

Your lead time will determine how fast you are able to deliver to your customer. If you pride yourself on offering the hottest and trendiest items, a short lead time is crucial to ensuring you have products on hand when your customers want them. If you pride yourself on providing quality customer service, you need a reduced lead time to be able to provide products when and how your consumers demand.

Understanding your lead time helps you understand how to manage your inventory and roll out products to your customers. When do you need to start the process in order to have the product available to customers? How often do you need to reorder in order to maintain a steady inventory?

Moreover, reducing your lead time streamlines operations, improves productivity, increases your output, enhances customer service, and ensures that each part of the logistics and sales process is efficient and effective.

So how do can you minimize your lead time to provide the best solutions to your customers?

Minimizing your lead time starts with understanding the different players that makeup the overall lifespan of your supply chain.

The Lead Time Formula

Lead time is highly variable. Often, it is dependent upon where and how you source. Each part of the supply chain has its own decisions and delays that will affect your overall lead time.

There are three major components to lead time: pre-processing lead time, processing lead time, and post-processing lead time.

Pre-Processing Lead Time

  • Sourcing (choosing a product and supplier)
  • Product sampling
  • Negotiation and contracts
  • Ordering
  • Purchasing

You can automate these pre-processing activities with Ask Idea Sourcing. This can instantly reduce your lead time by outsourcing the pre-processing operations to an experienced professional service.

Processing Lead Time

  • Material acquisition (factory getting raw materials for production)
  • Manufacturing and production time
  • Shipment prep
  • Loading

Post-Processing Lead Time

  • Shipping
  • Unloading and clearance
  • Customs
  • Quality inspection
  • Fulfillment (prepping, packaging, and labeling inventory for warehousing)

Delays

Even if all three aspects above were completely streamlined, there are a number of delays that can occur along the process that will change the lead time as well. Possible delays include:

  • Lost or damaged shipments
  • Customs holds
  • Order processing delays
  • Material acquisition delay
  • Late or delayed shipment
  • Weather patterns affecting shipment scheduling
  • Loading and unloading delays (waiting for clearance)
  • Lack of manufacturer capacity management

Despite delays and potential concerns, it is possible to reduce your lead time and deliver products to market faster.

How To Reduce Your Product Lead Times boxes on shipping conveyor belt

How To Lower Lead Times

1. Create a supply chain value stream map.

Go through each part of your specific supply chain formula. Start by looking at your past purchases average. What were the approximate lead times for your most recent purchase? That can give you a starting point to understanding how you want to adjust your lead time moving forward.

What does it look like from start to finish to get a new product to market? List each step and the timeline for process. This can help you see what areas of your supply process are the most extensive and can be shortened. It will also keep you organized as you start to expand your business and need to keep up with an increased flow of product orders.

Work with your supplier or a partner like Ask Idea Sourcing to build this value stream map. We will help you build a formula for your specific lead time to pinpoint areas for time and cost reduction.

 

2. Streamline pre-processing.

Don’t waste time and energy trying to find the perfect supplier with the perfect product at the perfect price. Pre-processing lead time is one of the easiest areas to outsource and reduce your lead time. If you work with a partner like Ask Idea Sourcing, you can draw on their expertise and connections to build a strong portfolio in days—not months. Your partner can also help you negotiate price and reorder effectively, so you always have a steady stream of high-margin inventory.

 

3. Get it in writing.

Part of the pre-processing lead time is drawing up a contract. Formalizing the timeline for production in a contract can help ensure your manufacturer prioritizes your goods. Work with your supplier to build an approximate timeline range that can be put in writing. You can include penalty clauses for lead time as well.

However, it’s also important to note that sometimes things happen. If your manufacturer has a delayed shipment once in awhile, you shouldn’t be quick to penalize them as this could hurt your relationship. Rather, the contract should be there to provide consequences in the case of a consistent and debilitating lead time concern. Learn more about building an appropriate sourcing contract here.

How To Reduce Your Product Lead Times businessmen signing contract

4. Have a relationship with your supplier.

Having a strong relationship with your manufacturer is one of the best ways to reduce your overall production time. If you have a good relationship, they will prioritize your products over a number of their other clients’. This can reduce the time waiting for materials and factory space, ultimately reducing your processing lead time by a significant amount.

Make yourself a high priority client not by demanding priority but by providing value in your manufacturer-seller relationship. Ask Idea Sourcing has a team on the ground in China to build face-to-face relationships that can help minimize your lead time and turn you into that high priority client.

 

5. Order in smaller volumes.

This is contrary to what we usually advise to our clients, which is to order in greater volumes in order to save money. Nevertheless, the smaller the order, the faster your factory will be able to accomplish the quantity. It’s a lot faster to produce, pack, and ship 1,000 units than 5,000. If you need 5,000 units, you can create a layered ordering process where you order 1,000 units five separate times so you get five shipments of goods—each with a faster lead time.

However, in order to achieve this faster lead time, you often have to pay a premium. The lower the quantity you order, the higher the price usually is. Talk to your supplier or sourcing partner to negotiate the price per unit if you were to order in smaller batches with a greater number of “rounds.”

 

6. Change your shipping process.

Different shipping methods have different lead times. For example, shipping via ocean currently has a longer timeline than shipping via air (though ocean freight is becoming faster). Find out the difference between shipping air and ocean freight here. Talk to your supplier about their transport carrier partnerships to find the best balance of cost and lead time for your business.

 

7. Reduce customs delays.

Customs is one of the most cumbersome delays that can severely elongate your lead time. You want to try to improve the reliability of your supply chain as much as possible, which includes reducing external delays like customs holds and damages. Find out here how to ensure your imports don’t get stuck in customs, which could cost your business significant time and money.

 

8. Ship direct.

If you want to save time in the post-processing phase, you should reduce the number of hands on the products once they’re in the U.S. You can send your products directly to Amazon’s FBA, where you can then pay a small fee to have Amazon package and prep the goods for you. This will reduce the time you have to put into packaging, while also minimizing the time spent in transport rather than in inventory. Learn more about sending shipments direct from China to Amazon FBA here.

 

The Bottom Line

Lead time can vary drastically, but there are steps you can take to make it more stable. Remove the unexpected variations by preparing your supply chain ahead of time.

If you want to reduce your lead time and cut your costs, it’s time to talk to a sourcing partner.

Contact Ask Idea Sourcing now to find out how to outsource your sourcing processes to deliver products faster, more efficiently, and more cost-effectively.