You live in an era of online shopping and e-tailoring. You just scroll, choose, and click to get the desired product. After placing the order, you wait for that item to be delivered to your doorstep. This whole time from placing an order to getting the delivery is lead time in shipping.
Lead time in shipping refers to the time taken by the e-tailer/retailer to process, pack and deliver a product after the customer places an order. Once you confirm the order, the workers of the company act upon the set of instructions given to them by the employer. The companies try to shorten the lead time as much as possible, but it varies depending upon various factors.
Factors affecting the lead time
You will find several factors affecting the lead time. Here I have discussed some of them. Have a look!
- Raw material suppliers
- Manufacturing process
- Stock management
- Transportation company
- Weather conditions
Factor no:1 Raw material suppliers
Keeping up with the chain suppliers of raw materials can effectively reduce the shortage of products. If the raw material supplies are scheduled properly, then your retailers can commit a delivery date to you.
Lead time in shipping varies depending on the complexity of manufacturing processes. It is directly related to the time required to produce a product. If your product involves more complex production, its lead time increases. For the simpler manufacturing process, you will experience a decrease in the lead time.
If the retailer keeps an updated record of the stock in the warehouse, it enables him to commit to the delivery date. The availability of stock in the warehouse allows the retailer to estimate the lead time required. It will be the time for processing, packaging, and delivery of your order.
After the manufacturer hands over the product to the transportation agency, the remaining lead time will now depend on the transportation. An efficient and reliable transportation company will deliver your order as fast as possible. Another factor that affects the delivery date or lead time is the location of the shopper. If you are the buyer and you are located out of the country, then the lead time of your order will increase.
Apart from human errors, natural causes may also cause a delay in the delivery date. The heavy rain, heavy snow, or extreme windstorms become a barrier to the delivery of your order. It stops the transportation agencies to proceed with the delivery. Consequently, you will observe an increase in the lead time by an unmanageable factor.
How can you calculate Lead-time?
Thinking of calculating the exact lead time of your order? Here you go with a simple formula.
Lead time= delivery date- order date
You can either use this formula to calculate your lead time in shipping or simply mark a calendar from the date of confirmation of your order to the delivery date.
How shipping lead time affects the retailers?
Imagine if you will have to wait more than the committed lead time of the company. What will be your reaction? You will be frustrated saying “I shall never order from this retailer again.”
Therefore, the retailers try their best to shorten the delivery time of the products. The unnecessary delay in lead time in shipping puts a negative impact on the customers. Once an order is cancelled, several online shoppers refrain ordering from that site again. Thus, it effectively reduces the customers of that retailer. To maintain the customer care, the retailers must put their best foot forward to shorten the shipping lead time.
Advantages of shorter lead time in shipping
Getting the product early satisfies you but how does it benefit the retailer? Why would the retailer go across the board to deliver you faster?
Well, let’s look at the advantages below.
- Customer care
Who doesn’t want to get their orders as soon as possible? All of you want them to be at your doorstep in the shortest lead time. You get the order in less lead time and the retailer gets a five star in return. By decreasing the lead time, retailers achieve better customer care.
- Lesser stock management
If the lead time is managed to be shortened, the supplies in the warehouse will be utilised early. Thus, reducing the complexity in managing larger stocks at warehouses.
Hope you understood what the shipping lead time is. It is simply the time from placing an order to getting it delivered. Proper management of supplies, manufacturing and packaging helps the retailer to meet the deadline. The shorter the lead time, the happier the customer and vice versa.
Frequently asked questions
What are the factors affecting the lead time in shipping?
Timely supply of raw materials, complexity of manufacturing processes, availability of the stock and efficiency of the transportation agency are a few factors affecting the lead time shipping.
How is the lead time in shipping calculated?
You can simply calculate the lead time in shipping by using the following formula.
Lead time= delivery date- order date