Why Do Production Lead Times Change?

Quick Question Monday : Why Do Production Lead Times Change?

Why Do Production Lead Times Change?

When you are ordering production stock or special order packaging components, we always state the “manufacturer’s suggested lead time”. While it may seem straightforward on the surface, it is actually a very tricky topic since there isn’t a single, stable time period to estimate when you are purchasing special order bottles, closures, or a deco application..

Lead-time is a fairly dynamic estimation. It is quoted based on the time period we anticipate will transpire from when we receive your purchase order until when we have the components available to ship from our facility (of course, this means you also have to build in the freight, or transit time, to your warehouse or filler). The dynamic nature of lead time can lead to some confusion, and even a bit of frustration if you’re caught short on supply – so we thought it might be a good idea to help provide some background to incorporate into your planning..

Why do Lead Times Change?

The reason that lead times lengthen or shorten is entirely dependent upon production orders received at our production facilities. While we wish we could predict the future (we’d have bought Apple stock at $15 if we could), we just don’t always have perfect information about incoming customer orders. We can be humming along perfectly at 6 week lead times, but throw in 6-7 unexpected orders, and our backlog grows quickly to 8 weeks. By the way, don’t get us wrong – we love your unexpected orders..

Often, we try to smooth these peaks by transitioning production to other platforms, adding additional shifts, and trying to gang like orders to reduce changeovers – but that’s not always possible. Just a few years ago, when everyone in the States wanted a bottle of Antibacterial Soap in their bathroom – we saw Lotion Pump lead times grown as high as 24 weeks on some components. Of course, that kind of demand leads to opportunities to grow capacity by adding new tools and new machines, but that often runs into to another lead time challenge – the lead time to build a new tool can be 16-24 weeks (this lead time discussion can be crazy)..

And, when you’re shipping as many different components as we are - lead times vary greatly. They can be as short as 1 week or as long as twenty-four weeks depending on the component and the demand on the machine platform..

Why did the lead time you quoted last week change?

Good question – remember, we estimate production lead times as of the day we quote. If the demand for the component grows – say 4 customers place orders the day after we provide your quote, the time it takes to manufacture components for orders in the queue lengthen, and your lead-time will increase – even just 24 hours after we quoted.

How many lead times do I need to worry about?

In actuality, there could be three or more lead times on most complete package orders, 1) Containers, 2) Closures, and 3) Deco application. This means that there are multiple processes and components of fulfillment that can affect your lead-time. While container and closure lead-times may not be additive (if the components are being manufactured concurrently), deco application is, since no decorating process can begin without receiving the manufactured container or closure..

What can I do to minimize impact from Lead Times Change?

As a customer, having accurate usage forecast of all your packaging components will help minimize impacts in your supply chain due to unforeseen lead time changes. And, we’ve got an excellent logistics and inventory programs available to help alleviate component shortages due to extended lead times – ask your sales rep about InStock and InStock+, or click here to visit our very cool logistics InfoGraphic.

Posted by Sam
on 05/11/2015
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