As we discussed in part one of our Lead Time Forecasting series, time is money and an accurate lead time forecast is critical for your business. Lead Time forecasting is considered the time from when a Purchase Order is placed until the goods are ready and available to sell or ship off the shelf. This week we take a look at how a lead time forecasting impacts your customers
Does Lead Time ruin your Customer-Centric Sales Environment?
Are you like the many retailers focused on delivering a customer-centric experience? Amazon.com leads the industry in providing a true customer-centric experience that is focused on delivering the best possible customer experience and believe that by delivering this experience its business will continue to grow. Based on the customer-centric model, let’s take look at how an inaccurate lead time forecast can have a real impact on your customers’ experience.
Lead Time Forecast in Customer-Centric Retail
In a traditional retail culture, if you sell 1000 units a day of item X and plan on the lead time taking 10 days but the goods are not available for 12 days, then you just generated 2000 lost sales units. Now let’s look at this from a customer-centric perspective. Customer A relies on your store to stock item X. On day 10 Customer A arrives to find your shelves out-of-stock. He is disappointed in not finding the needed item and pulls out his smartphone to find the closest retailer with item x in stock. Customer A leaves your store with a bad experience. Due to an inaccurate lead time forecast, you have a dissatisfied customer and potentially a lost customer. Now multiply this by the 1000 units over the 2 days and you have 2000 unhappy customers.
Now more than ever technology puts the power in the hands of the customer. Knowing the correct lead time and the ability to correct for changes in lead time is important to you, your vendor/supplier and ultimately your customer. Your ability to deliver a customer-centric solution relies on a complete picture of your forecast including lead time.
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