Why Lead Times Matter – A View From the Edge
Place an order for a custom built industrial PC (IPC) from OnLogic, and you can frequently expect to receive the system within five business days. It seems simple enough, but in fact a great deal of planning, investment and effort goes into making it happen–from initial system design to managing the supply chain to the stocking of parts and final assembly.
So what does it take to ensure short lead times at OnLogic?
At the highest level, lead times are a balancing act. The IPC sector is sharply competitive, and served by everything from niche assemblers to massive, general-purpose PC makers like Dell and IBM. At the same time, IPC purchasers work with tight deadlines and even tighter budgets. They can’t afford to wait two or three weeks to replace a system that’s gone down, yet they require highly customized configurations at viable price points. You can see the challenge.
To an extent, managing lead times is about doing the math. You look at what you want to do as a business–in our case, deliver cost-effective, custom-built IPCs in less than a week–then figure out how to manage inventory, assembly and delivery around that. Like any organization we look at our average stock level, which shows the historical consumption of components and parts in our inventory, and use it as a measuring stick to prepare for future demand.
Then we drill down on the frequency, distribution and variability of that consumption to understand what demand on our inventory might look like going forward. That helps us determine our safety stock, which is the incremental inventory above our average stock that we keep to respond to changes in demand. This margin also defends against supply-side variability, whether a supplier’s factory loses power or a volcano in Iceland erupts and delays air shipments from Europe. Backstopping that work is a lot of detailed forecasting, bolstered by close collaboration with our sales and marketing teams, to ensure inventories are aligned and prepared to meet demand.
Executing on short lead times involves a lot of moving parts
Once we know what we need, we work with our suppliers to make sure we get it. That means being timely with inventory re-orders, and accounting for things like our suppliers’ own lead times on parts and products when we move to refill inventory. There’s a lot of orchestration involved–a bit like being an air traffic controller at a busy airport. But if you get it right, you end up with a responsive, efficient, and cost-effective operation that can deliver custom IPCs within five working days, and do it at prices that are very affordable.
OnLogic is in the unique position of being able to provide customers with localized service and support from our offices in both the US and the Netherlands as well as the supply chain access afforded by our sourcing and engineering office in Taiwan. The combination of local manufacturing and global logistics orchestration means that we’re able to pass on the benefits of our experience, and the time saving business practices that we’re constantly striving to optimize, to our customers, resulting in lead times measured in days rather than months.
A View from the Edge is a series that explores the IPC industry as told by the people who live it every day. Our experts take you inside the industry to explore the ins and outs of the industrial hardware landscape. Interested in a particular aspect of IPC? Tell us about it in the comments and we’ll look into it.
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