Glossary
Order Fulfillment Lead Times
Tags: Glossary
Average, consistently achieved lead time from customer order origination to customer order receipt for a particular manufacturing process strategy (Make-to-Stock, Make-to-Order, Configure/Package-to-Order, Engineer-to-Order) is calculated. Excess lead time created by orders placed in advance of typical lead times (Blanket Orders, Annual Contracts, Volume Purchase Agreements, etc.) is excluded. This calculation is an element of Total Supply Chain Response Time. The calculation includes the total average lead time from customer signature/authorization to order receipt, order receipt to completion of order entry, completion of order entry to start manufacture, start manufacture to complete manufacture, complete manufacture to customer receipt of order, and customer receipt of order to installation complete. Note that the elements of order fulfillment lead time are additive, and not all elements apply to all manufacturing process strategies. For example, for Make-to-Stock products, the lead time from start manufacture to complete manufacture equals 0.
What is Order Fulfillment Lead Times?
Order Fulfillment Lead Times
Order fulfillment lead times refer to the average amount of time it takes for a customer's order to be fulfilled, from the moment the order is placed to the moment the customer receives the order. This is an important concept in logistics as it helps businesses understand and manage the time it takes to deliver products to their customers.
The lead time calculation takes into account various factors, such as the manufacturing process strategy employed by the business. There are different manufacturing process strategies, including Make-to-Stock, Make-to-Order, Configure/Package-to-Order, and Engineer-to-Order. Each strategy has its own lead time calculation.
To calculate the order fulfillment lead time, excess lead time created by orders placed in advance of typical lead times, such as Blanket Orders, Annual Contracts, and Volume Purchase Agreements, is excluded. This ensures that the calculation reflects the average lead time for regular customer orders.
The calculation of order fulfillment lead time is an element of Total Supply Chain Response Time. It includes several stages, such as customer signature/authorization to order receipt, order receipt to completion of order entry, completion of order entry to start manufacture, start manufacture to complete manufacture, complete manufacture to customer receipt of order, and customer receipt of order to installation complete.
It is important to note that not all elements of the order fulfillment lead time apply to all manufacturing process strategies. For example, for Make-to-Stock products, the lead time from start manufacture to complete manufacture is zero, as these products are already manufactured and ready for immediate delivery.
Understanding and managing order fulfillment lead times is crucial for businesses to meet customer expectations and optimize their supply chain operations. By analyzing and improving lead times, businesses can enhance customer satisfaction, reduce costs, and increase overall efficiency.
In conclusion, order fulfillment lead times are the average time it takes for a customer's order to be fulfilled. It is calculated based on the manufacturing process strategy and excludes excess lead time from advance orders. The calculation includes various stages of the order fulfillment process and is an important element of Total Supply Chain Response Time. By effectively managing lead times, businesses can improve customer satisfaction and optimize their supply chain operations.