Lead Time is increasingly ignored as the culprit responsible for out-of-stock. Today, logistics costs have plummeted while logistics capability has skyrocketed. RFID tags, consolidation of logistic companies, and instant internet information have all contributed to lower costs and better operating efficiencies. This has helped instill a belief that Out-of-Stocks associated with lead time are generally blamed on the supplier, not on logistics or process.
The supplier issues that create out-of-stocks may include:
- Late Delivery: not meeting a PO landing date request
- Inconsistency in supplier lead time across purchase orders (PO)
- Lead time doesn’t match what was initially agreed by supplier and buyer