How Can Implementing Manufacturing ERP Software Reduce Lead Times?

Posted in Cloud ERP on August 7, 2013

lead-time-creep

Lead-time creep is a major concern to manufacturers. Unnecessary delays in the supply chain cause manufacturers to be paid late, increases the amount of inventory that needs to be carried and forces a dependence on forecasts, says an article on the EBN website. EBN provides a simple look at what causes long lead time as well as ways to analyze lead time.

The key to deal with systemic lead time is to make use of technology where real-time information can be provided to the business. With the right technology tools implemented and used — such as cloud computing — significant cost savings can be gained in the area of inventory management. Technology can be the key tool in reducing lead times, reducing the cost of inventory and improving the number of turns of costly inventory. Today’s manufacturing ERP software, specifically cloud ERP technologies, are a major enabler to supply chain innovation and can tremendously accelerate any business.

Implementing technology like manufacturing ERP software gives visibility into how products are selling.

Doug Kane of cloud software provider One Network divides total lead time into two parts: physical and systematic. Physical lead time relates to how long it takes for products to move, while systematic lead time involves the stops products make along the cycle. In most cases, systematic lead time accounts for half of those supply chain stops — most of them unnecessary.

Before implementing manufacturing ERP software, leaders can begin cutting lead time by taking an assessment of their current level of supply chain velocity. How much time does it take to move product through the supply chain? What can be done to reduce it?

Next, adding manufacturing ERP software allows manufacturers to build demand and reduce faulty forecasts.

The article shares the example of Pulse Electronics, a worldwide electronic manufacturer that was able to reduce its product lead time by 50 percent to four to five weeks. Cutting lead time in half gives manufacturers on average a 27 percent reduction in their inventories and a 50 percent reduction in retailers’ inventories — all while maintaining a 99 percent fill rate.

Source: EBN Online, July 2013

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