CHAPTER 6

STRATEGIC LEAD TIME MANAGEMENT

• LEARNING OUTCOMES

AT THE END OF THE SESSION

STUDENT SHOULD BE ABLE TO:
- Describe time based
competition
- Discuss lead time concepts
- Explain logistics pipeline
management
TIME BASED COMPETITION

EXAMPLE:
TIME SENSITIVE buyers - suppliers - lead
times- meet specification
FACTORS THAT INCREASE THE
GROWTH IN TIME SENSITVE MARKET
Shortening life cycles

Customers’ drive for reduced inventories

Volatile markets making reliance on forecasts is dangerous

Shortening life cycle
Example: Typewriter

Mechanical typewriter Electro-mechanical Computers

typewriter
 Figure 6.1: The product life cycle

Source: Christopher, M. (2010), Logistics and Supply Chain Management, 4th Edition, Prentice Hall.
Customers’ drive for reduced inventories

pressure?
- capital stock up Suppliers can provide JIT Timeliness of
- holding cost delivery service delivery:
Volatile markets make reliance on forecasts
dangerous
Why?

Forecast is
wrong!!! Results of
? intermediaries
market is policies
volatile
 Lead-time concept
VIEWPOINT CYCLE DESCRIPTION

• It is a critical competitive variable

The elapsed time as more and more markets
become increasingly time
Customers from order to competitive.
delivery
• It represents only a partial view of
lead time.

• The total time that working capital

The time it takes is committed from when materials
Suppliers to convert an are first procured through to when
order into cash the customer’s payment is
received.

Source: Christopher, M. (2010), Logistics and Supply Chain Management, 4th Edition, Prentice Hall.
 Figure 6.2: The order cycle

Source: Christopher, M. (2010), Logistics and Supply Chain Management, 4th Edition, Prentice Hall.
Lead-time concept (cont.)
The cash-to-cash cycle

“How long does it take to convert

an order into cash?”
 Figure 6.3: Lead-time components

Source: Christopher, M. (2010), Logistics and Supply Chain Management, 4th Edition, Prentice Hall.
Logistics pipeline management
 The goals are:

 Lower costs

 Higher quality

 More flexibility

 Faster response times

Figure 6.4: Which activities add cost and which add value?

Finished Regional Customer

Stock Order
Product
In- Cycle
Production Transit

VALUE-
ADDED Raw Material
Time, Stock
Place &
Form
Utility

COST-ADDED
Production, Storage & Transport costs & the Time Cost of Money

Source: Christopher, M. (2010), Logistics and Supply Chain Management, 4th Edition, Prentice Hall.
 Figure 6.5: Value added through time

Source: Christopher, M. (2010), Logistics and Supply Chain Management, 4th Edition, Prentice Hall.
Figure 6.6: Reducing non-value-adding time improves service and
reduces cost

Source: Christopher, M. (2010), Logistics and Supply Chain Management, 4th Edition, Prentice Hall.
 Logistics pipeline …
Reducing logistics lead time

Supply
Chain Map Explanation Example
Time
• time spent in process.
• It could be in-transit time,
Horizontal • may not necessarily be time manufacturing or assembly time,
(when customer value is being
time time spent in production planning
created but at least something or processing, and so on.
is going on).

• when nothing is happening. the material or product is

Vertical time • No value is being added during • standing still as inventory.
vertical time, only cost.
 Figure 6.7: Supply chain mapping – an example

Source: Scott, C. and Westbrook, R., ‘New strategic tools for supply chain management’, International Journal of Physical Distribution and Logistics Management, Vol. 21,
No. 1, 1991.
Conclusion

THANK YOU
References
Christopher, M. (2010), Logistics and Supply Chain Management, 4th Edition, Prentice
Hall.
Lambert, D.M. and Stock, J.R. (2001) Strategic Logistics Management., 4th Edition,
New York: McGraw-Hill.
Scott, C. and Westbrook, R., ‘New strategic tools for supply chain management’,
International Journal of Physical Distribution and Logistics Management, Vol. 21, No.
1, 1991

OPM560 SUPPLY CHAIN LOGISTICS

MANAGEMENT
Prepared by:
Dr. Veera Pandiyan Kaliani Sundram
Faculty of Business and Management, Puncak Alam, UiTM, Malaysia
Email: veera692@puncakalam.uitm.edu.my