Lead times are often assumed to be fixed but during the life cycle of a product lead times can vary significantly.
Lead times are often set in computer systems based on the first time the item was bought or made and this could be longer than in a routine supply situation.
When products near the end of their life their lead times often extend again.
Lead times need to be actively maintained, because lead time variability is often the cause of holding too much inventory or running out of inventory.
Fixed, known and reliable lead times are often more beneficial than variable shorter lead times because of the ‘Bullwhip effect’ – this is where small changes in one part of the supply chain cause wild fluctuations elsewhere.
Having higher lead times from suppliers will mean that there is a need for a greater level of safety stock to ensure that orders can be fulfilled. This will increase the carrying costs to hold higher levels of inventory.
Faster lead-times will give planners more flexibility when reordering inventory and allows for less inventory to be carried, thereby reducing the short term carrying costs and the long term risk of holding items that become excess or obsolete.