Driving Backwards in the Dark Without Lead Time Forecasting

Is Lead Time Forecasting Your Missing Link?

Lead Time is a critical link in your supply chain. For a service based inventory replenishment system, lead time is the indispensable piece to knowing when it is time to place the order. This week, we review why you should tighten this link in your supply chain.

Lead Time impacts when you place an order to avoid lost sales, it helps you avoid goods arriving early that create overstock, it helps you plan better, and drive better results…If you know the real lead time – you don’t, lead time forecasting solves the problem.

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Trying to predict the future is like trying to drive down a country road at night with no lights while looking out the back window.


The Future must include Lead Time Forecasting

Nobody can see into the future, but that’s exactly what you need to do to get ahead in your market. With a few years of experience behind you, and The Essential Drucker” on your bookshelf (available on Amazon.com), you have carefully mapped out your inventory, your ordering, and projected sales for the next quarter. And yet, you always seem to be in the wrong place at the wrong time. When the demand is high, you don’t have enough. When inventory turnover is slow, you somehow manage to order too much. At the end of the season, you’re taking the biggest loss by selling at 50% or more off the retail price – completely eliminating your potential profit. Sounds familiar to many of you, doesn’t it…

Demand Forecasting and Lead Time Forecasting are Essential

Effectively predicting your market is essential to the bottom line of any business, and is more complicated than tracing over last seasons’ profit margin. Inventory tracking and management doesn’t always go by the calendar. Trying to get ahead, however, shouldn’t feel like driving down a dirt road with no headlights. What you need is lead time forecasting to make certain the goods are on hand at the right location on the right receipt date.

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Time is money – making poor Lead Time Forecasting a potential money pit for your business. Learn how you can improve your gross margin and increase your profits.


Lead Time Forecasting is an Art and a Science

Lead time forecasting is the art and science of minimizing inventory, maximizing product relevance and being one step ahead of the competition. How? By adjusting your item order point based in the lead time forecasted. Many companies (yours?) will use the lead time quoted by the vendor or a vendor lead time based on the last receipt from the vendor. Some companies put an expected receipt date on the purchase order, often based on an open to buy/ plan without considering their days supply; that doesn’t work. Many supply chains don’t use lead time effectively. Most use lead time as a method to punish the vendor with a ‘late fee’; how effective has that turned out for you?

The science of lead time forecasting is geared toward reducing overhead and inventory, and increasing sales and profit. We look at your business’ history, whether you’ve been going for three years or thirty. We take a careful inventory of the profit leaks in your system – excess inventory, wasted time and energy on promotions that are out of season, or for products or services that the market isn’t ready for. Usually your business planning is just a couple months, or even weeks, off from maximizing the profit potential. A lead time forecasting model takes the guesswork out of purchasing, and pinpoints the right amount at the right moment for the most strategic investment.

Lead Time Can be Your Million Dollar Mistake!

The art of lead time forecasting considers the ever-shifting variables of the worldwide marketplace and your business’ unique place in it. Data Profit watches seasonal trends in your niche, and has an instinct based on experience and mathematics for what the market is going to do next. We want you to be ahead of the curve on global and regional trends; we want you to be the trendsetter. At Data Profits one customer improved gross profit dollars by over 1 million dollars when they implemented lead time forecasting – they were losing that much money (lost sales) due to poor lead times.

Ready to Move Ahead of Your Competition? – Tighten Your Links!

Is it any wonder that Data Profits is ahead of the curve in lead time forecasting? Contact Us to see how our lead time forecasting services will put your business on the paved road to success.

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