1/7
LONGER LEAD TIMES
= BETTER PLANNING
THE MATH BEHIND WHY SLOW (BUT STEADY) CAN BE
SMARTER.
2/7
Common Belief
The myth:
SHORTER LEAD TIMES = BETTER SUPPLY
CHAINS.
BUT IS SPEED
ALWAYS THE MOST
EFFICIENT?
LET’S TEST IT WITH NUMBERS.
3/7
Case Setup:
2 Suppliers
Supplier A Supplier B
Lead Time 3 days 12 days
Order
52/year 12/year
Frequency
Order
460 units 2,000 units
Quantity
Ordering
Cost per ₹1,000 ₹1,000
Order
4/7
Ordering Cost Math
ORDERING COST = ORDERS/YEAR ×
COST/ORDER
A B
52 × ₹1,000 = 12 × ₹1,000 =
₹52,000 ₹12,000
SUPPLIER B SAVES ₹40,000/YEAR
— JUST BY CONSOLIDATING ORDERS!
5/7
Holding Cost Math
HOLDING COST = ₹10/UNIT/YEAR
AVG INVENTORY = ORDER QTY ÷ 2
A B
460 ÷ 2 × ₹10 × 52 2,000 ÷ 2 × ₹10 ×
= ₹1,19,600 12 = ₹1,20,000
HOLDING COSTS ARE NEARLY EQUAL
— BUT B GAINS ON ORDERING COST.
6/7
Real-World Strategy
COMPANIES THAT PLAN > PANIC
ZARA: LONG LEAD UPSTREAM, FAST
LOCAL FINISHING
IKEA: PREDICTABLE LONG LEAD,
BUFFER AT DCS
TOYOTA: SELECTS SUPPLIERS BASED
ON RELIABLE LEAD TIME, NOT SPEED
PREDICTABILITY PLANNING SAVINGS
7/7
Key Insight
SPEED ISN’T ALWAYS EFFICIENCY.
LONGER LEAD TIMES (WHEN PREDICTABLE)
GIVE US:
SMARTER PLANNING
LOWER ADMIN LOAD
FEWER LAST-MINUTE FIRES
CONSISTENT COST CONTROL
SOMETIMES, SLOWER = SMOOTHER.
Let’s Connect
