Lead-time gap

Global material flow and transport planning is also an integral part of global models not on a tactical level but addressing requirements of lead time gaps... 

This is the basis of the lead-time gap. Figure 4.2 highlights the problem. 

This twin-pronged approach of simultaneously seeking to reduce the logistics lead time whilst extending the customer s order cycle may never completely close the lead-time gap. However, the experience of a growing number of companies is that substantial improvements can be made both in responsiveness and in the early capture of information on demand - the end result of which is better customer service at lower cost. 

The accuracy of short term statistical forecasts can be easily measured but since the goal of the S OP system is to reduce the dependency on the forecast we should also measure the lead-time gap at the individual item level. The aim should be to progressively reduce this gap by a concerted focus on time compression and improved visibility. 

Differences between P-times and D-times are referred to as the lead-time gap. The gap has strategic implications for marketing, product development and process development. P-time can be reduced by a six-stage process control, simplify, compress, integrate, coordinate, automate. 

The only way to avoid this is by strict analysis of the supply chain from the customer order to final product delivery. Definition of the optimized (theoretical) process and sequential work towards a high service level approach allow the identification of gaps, and of opportunities which might not always be the cheapest (ship versus train versus plane) but could be the most effective way to reduce capital costs and shorten planning scope - an important aspect, especially in volatile customer markets with long production processes on the (chemical) supplier side. As in the case of CIP, this needs clear parameters, KPIs, commitment from all players, and regular tracking. The most important parameters are the lead time for all products, optimal lot sizes, replenishment points, and safety inventories. 

At present, the sector is lacking the infrastructure for the manufacture of antibodies to come. Despite major investments however, the high demands and long lead times prohibit a short-term solution other than a significant increase in overall productivity to close the current gaps in bio-pharmaceutical supply chains. 

The gap between need time and lead time is what creates the need for inventory. If you turn on the switch, the electricity gets made, transmitted, and powers your bulb—all in an instant. There is no gap between need time and lead time. There is therefore no need for inventory. 

The gap between need time and lead time determines the amount of inventory needed. 

The challenge for logisfics managemenf is to search for the means whereby the gap between the two lead times can be reduced if not closed (see Figure 4.3). 

Reducing the gap can be achieved by shortening the logistics lead time (end-to-end pipeline time) whilst simultaneously trying to move the customer s order cycle closer by gaining earlier warning of requirements through improved visibility of... 

Lead time is the gap between the time an order is placed and when it is received. In our discussion, we denote the lead time by L. In the B M example, L is the time between when B M orders phones and when they are delivered. In this case, B M is exposed to the uncertainty of demand during the lead time. Whether B M is able to satisfy all demand from inventory depends... 

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