Lead Time Reduction: Planning and Scheduling.

When an order is entered into your system, the right product or products should be delivered in the right quantiy at the right time to all of your customers. That's where the planning function comes in place.

The planning function has several components:

demand planning

supply planning

production planning

distribution planning

Before we explore these components with regard to "Lead Time Reduction", I would like to emphasize the importance of "knowing your products".

You need the following data about your products:

sales amount

sold quantity

contribution margin

inventory

inventory turns

When you know these data, you can do an ABC - analysis on all of these data.

You will see that approximately

20 % of your products account for 80 % of the sales or margin or inventory (A-products)

30 % of your products account for 15 % of the sales or margin or inventory (B-products)

50 % of your products account for 5 % of the sales or margin or inventory (C-products).

Now you can focus your efforts in relation to the importance of your products, and apply different planning strategies for A, B and C products or product groups.