Catalog & Customer Lead Time

1. Objective and Focus

The objective of this content is to define and enforce a leadtime policy between our customers and our operations that satisfies:

• Product Managers & Commercial as part of their “going-to-market” strategy
• Supply Chain as main input for the Stockholding strategy

The proper management of customer related leadtimes is an enabler for the Stock-Holding Strategy definition

The proper management of customer related leadtimes is a pre-requisite for increasing the customer requested OTIF. It ensures that:

• All stakeholders are aligned on the same and coherent definition of the leadtimes (manufacturing, planning, logistics, transportation, customer service, commercial)
• Leadtimes take into account buffers, making the requested leadtime “feasible” in many circumstances and are properly communicated to customers

The main focus of this document is given to:

• The End-to-End management of customer related leadtimes
• An initial definition and ongoing management of the customer leadtimes
• The communication of the customer leadtimes to the various stakeholders
• The monitoring and enforcing customer leadtime adherence

2. Definitions

Main definitions (sequential order):

Catalog Leadtime:

• Starts from “Order Entry Date” (=date of creation of Sales Order in SAP, does not take the date PO date of the customer) and runs until the goods are available in the warehouse and ready to be picked
• The catalog Lead time Covers the time for manufacturing the goods or not (MTO vs MTS) and plays a major role in setting SHS/Stock-Holding-Strategy

Pick-Pack Leadtime:

• Starts from the date the goods are available in the warehouse and ready to be picked and runs until the goods are available in the shipping area of the warehouse and ready to be loaded for transportation (zero for bulk storage)

Transport Planning Leadtime (catalog + Pick-Pack):

• Includes booking the transportation and Preparing transportation as well as export checks and paperwork (Road (Local): typically from 2 to 4 days; Maritime/Air (Export): typically from 10 to 20 days)

Loading Leadtime:

• Starts from the date the goods are available in the shipping area of the warehouse and ready to be loaded on a Truck/Train and runs until the goods-issue has been posted in SAP, (i.e., transportation running and goods are in transit to customer)
• Includes the 1st road leg from the DC/plant to the harbor or airport, the time to load the ship or plane and the time waiting for the departure of the ship or plane (Goods-Issue is only posted when Plane/Ship have departed)

Transit Leadtime:

• Starts from actual Goods-Issue and runs until the actual receipt of goods at the customer premises
• Beyond transportation, must take into account “Customs Clearance” time where applicable

Customer Leadtime (CULT):

• Customer lead time is calculated as follows (CULT = Max (Transport planning lead time OR (Catalog + Pick-Pack)) + Loading leadtime + Transit leadtime
• The CULT is the leadtime to be communicated & enforced towards the customer

→ Click here to find an illustration of the total lead time

Lead Time Management Process:

3. Determination of Catalog Leadtime

Catalog Leadtimes result out of multi-disciplinary 4steps phased approach:

1. Setting the Market CULT Expectations & CALT Requirements
2. Understanding SPEED Importance
3. Setting the SHS optimizing inventory & SPEED
4. Adjusting CALT to operations

→ More details on the approach here