It’s a common tale of woe in the retail industry. Your hottest product is flying off the shelves, and you’re racing against the clock to restock before the dreaded ‘out of stock’ tag flashes. The question is: when should you reorder? The classic response usually goes along the lines of, “Let’s see, what’s my lead time? I’ll just add a week to be safe.” But, what if I told you there’s a more analytical and entertaining way to tackle lead time? Buckle up!
You might see lead time as a single, menacing monolith of time, looming over your inventory. However, I’m here to convince you otherwise. Lead time is a mosaic, each tile representing different components, some more volatile than others, and all subject to change. Let’s deconstruct this beast:
- Ordering and Confirmation: A quick tango, usually lasting 1-2 days. The dance begins with you creating and sending the order to your supplier and ends with them confirming it. The supplier might even grace you with an estimate – typically around 10-25 days.
- Production Time: The real mystery. Just how long does it take to forge these magical goods? Your supplier’s estimate likely bundles this with packaging, yet rarely breaks it down for you.
- Packing Time: The duration here depends on the size of the order – anywhere from 2-5 days. This could be included in the initial estimate or could be a sneaky add-on.
- Shipping Time: The time it takes for your products to globe-trot their way to you varies greatly and depends on your location and chosen method of transport. The ever-mercurial customs might also extend this timeframe. COVID, we’re looking at you!
- Warehouse Receiving Time: The often overlooked time for your box of goods to graduate from the receiving dock, get counted, and find a home on the shelves.
And for our Amazon FBA sellers, don’t forget these two crucial components:
- Stock Transfer Time: The journey from your local warehouse or 3PL to an Amazon FBA Warehouse.
- Amazon FBA Warehouse Receiving Time: The wait for your product to be counted and placed on Amazon’s shelves for sale. This duration can fluctuate wildly, especially during Q4 and holiday seasons.
Now that we have the components of lead time laid out, let’s illustrate this with a couple of scenarios:
Scenario 1: A Small Amazon Seller working from home:
Congratulations! Your home-based store is flourishing. You need to reorder your popular product line. You’re a small seller, so you’re likely shipping directly to an Amazon Warehouse. Yet, to meet the supplier’s MOQ (Minimum Order Quantity), you also use your garage or spare bedroom as a local warehouse. This local inventory is crucial during Q4 when Amazon imposes restock limits.
Let’s break down your lead time:
- Ordering and Confirmation: 1-2 Days
- Production Time: 10-20 Days
- Packing Time: 2-3 Days
- Shipping Time: 8 Days (Assuming non-express air transport, a boat would add an extra 20-30 days)
- Warehouse Receiving Time: 1 Day (Welcome home!)
- Optional:
- Stock Transfer Time: 3-5 Days
- Amazon FBA Receiving Time: 4-9 Days
Your lead time ranges from 29 to 48 days. That’s a vast difference! You would need an extra three weeks of inventory to prevent stockouts.
Scenario 2: A Seller working with a 3PL:
You’ve leveled up! Now you’re working with a 3PL because your product size or volume no longer fits your home. You’ve got two options here: Seller fulfilled Prime and shipping or shipping to an Amazon warehouse. Amazon buyers, like kids on Christmas morning, prefer to receive their packages sooner rather than later.
Here’s what your lead time could look like:
- Ordering and Confirmation: 1-2 Days
- Production Time: 15-30 Days
- Packing Time: 3-6 Days
- Shipping Time: 24 – 35 Days
- 3PL Warehouse Receiving Time: 2-3 Days
- Optional:
- Stock Transfer Time: 3-5 Days
- Amazon FBA Receiving Time: 4-9 Days
This gives us a range of:
45-76 days for 3PL Fulfilled
52 – 90 days for Amazon FBA
The above scenarios demonstrate that lead time is far from static. You might need a substantial buffer stock to cover all possibilities. However, there are a few other variables to factor into your decision-making process.
With a new supplier, always review the product and packaging before shipping directly to an FBA warehouse. Remember, a good sample doesn’t guarantee the quality of the entire batch. Early negative reviews can be as fatal as a vampire seeing sunlight! And if you’re considering fulfilling orders yourself, beware of the pitfalls. Amazon’s pressure for speedy logistics and the accountability for any late deliveries (which could lead to negative reviews) might just steer you away from this path.
Still with me? Then perhaps we can help you out with Stockt’s features these can be a game-changer for small e-commerce sellers.
Supplier Metrics: As a small e-commerce seller, managing relationships with suppliers can often feel like juggling flaming torches while riding a unicycle. But, fret not! Stockt offers Supplier Metrics that track two critical components – average production time and On-Time Accuracy. This means you can understand precisely how long your supplier takes to produce and ship orders. Furthermore, the On-Time Accuracy measure helps gauge the reliability of their estimates. Rather than using these metrics as a weapon, think of them as a lens to better understand your suppliers, and adapt your ordering habits accordingly.
Shipping Metrics: Say adios to shipping uncertainties. Stockt’s Shipping Metrics include average delivery time and receiving time, from a supplier to your warehouse or between warehouses. By nailing down these metrics, you can plan better and reduce any unforeseen delays. This feature is like having a crystal ball that predicts your supply chain future. Who needs astrology when you’ve got Stockt?
Lost Sales Analysis: Ever wondered how much potential revenue slips through the cracks when your stock runs out? With Stockt’s Lost Sales Analysis, you’ll have the numbers at your fingertips. This feature exposes the hidden costs of stockouts over time, potentially a more significant issue than you’d expect. It’s like shining a flashlight into the dark corners of your business operations, revealing the cobwebs of missed opportunities.
Realistic Lead Time Calculation: With Stockt, your lead time calculation isn’t just guesswork; it’s a science. By analyzing the Supplier and Shipping Metrics, Stockt gives you a more accurate estimate of your lead times. No more crossing fingers and hoping for the best. With Stockt, you’ll be making informed decisions based on data, not hunches.
Free 30-Day Trial: Not sure if Stockt is the right fit for you? Try it free for 30 days! That’s 30 days of hassle-free number crunching, 30 days of clear visibility into your supply chain, and 30 days to experience the joy of well-managed inventory. It’s like a 30-day vacation from stress.
So, lead time isn’t as simple as you first imagined, right? It’s crucial to scrutinize each component for your specific business situation. And if you’d like to make life easy, try Stockt free for 30 days – we’ll crunch all those pesky numbers for you!