Managing Lead Times in the COVID Era
I’m at the point where I’m genuinely tired of dealing with the impact of COVID-19 on business, and I’m definitely tired of talking about it. But, as they say, we play the hand of cards we have dealt.
There are a lot of complications that we have to face today as a result of COVID. Some complications were easy to foresee, and some took us by surprise. Either way, we’ve all had to adapt and find solutions.
One huge complication is that lead times for products and their delivery have been greatly extended. It’s a domino effect. Production times in factories are longer. Transit times in and out of sorting depots are longer. Getting picked and shipped from the vendor or distributor warehouses takes longer to get to the dealer’s locations.
And if your container of products has to cross an international border, they can take extra weeks to reach you. And with all those interdependent links in the supply chain, all it takes is a single monkey wrench thrown into the gears to back things up even worse.
For the foreseeable short-term future, at least, the old, formerly reliable model of “just-in-time” delivery doesn’t work anymore. Not long ago, there was a two-week span where two major courier depots in Calgary were shut down due to COVID outbreaks on-site. That meant I had dozens of deliveries to my dealers in Calgary and southern Alberta stuck on trailers in those depots’ yards and no way to move them.
For the most urgent and mission-critical ones, our warehouse had to resend the deliveries by a third courier, crossing our fingers and hoping that they wouldn’t have to lock down their depot too — and instruct our dealers to refuse the original, delayed deliveries when they finally arrived. It was time-consuming and aggravating for all concerned parties, and I can assure you that it is expensive for us.
So, faced with logistical challenges, what do you do about them? The short answer is, you do what you can. Control what’s within your control.
If you’re the buyer or inventory manager, whether it’s for retail or AV install, you need to plan further ahead than you’re used to. Whether it’s ordering one extra week out or two, factoring in a buffer helps ensure that you don’t have empty pegs in your stores or techs standing around because the product for the install didn’t show up yet.
By the same token, distributors need to do similar. To avoid running out of core, high-velocity SKUs that your dealers need, ordering from vendors needs to look ahead too.
So long as it’s affordable to do so, these days, it’s better to sit on inventory than it is to wait for it. If that means ordering four months’ worth instead of two, that reduces the risk that you’re going to be out of stock. I feel a little odd counseling on going long on inventory since during normal times, I advise the opposite: that inventory is a necessary evil. You should keep on hand just what you need, and reorder often as it turns over.
I’ve repeated that mantra endlessly during normal times. But, as I’m sure you’ve noticed, things aren’t normal right now. So, do what you can. Indeed, what you must.