Last week we talked about how complicated it actually is to have your supplier management under control. We mentioned some potential dangers of failing at it, and finished off by explaining how what we call “delivery time” is actually just a step of something called “the replenishment lead time” (RLT).
If you have not read that one go and check it out here. If you did... let’s dive right in!
So what exactly is the replenishment lead time? SAP´s definition says: “ is the duration in working days sufficient to procure or produce any (reasonable) quantity of a material. ... For materials procured externally, the replenishment lead time equals the processing time required by the purchasing department plus the planned delivery time and goods receipt processing time.
Generally speaking, you could think of it as the time that passes from the time you place an order (order intake) until the material is actually available to you. Not until the supplier arrives at your premises, not until the materials are standing IN your warehouse waiting to be inspected or organized, and not until they are not already visible in your system.
Alright, now that that’s out of the way, how can you calculate the RLT if it entails so many little steps?
A couple of important things that you have to bear in mind are:
Do not panic! We did not forget to explain the last two factors that influence your RTL.
But, since we do not want to overwhelm or bore anyone with what is a crucial topic in the road of optimization, we will leave you with this information as the food for thought for this week.
Make sure to come back next week for more details on the Transportation time and Goods receipt processing. But of course, that is not all, we will be talking about some benefits your company will enjoy once you begin to implement this new knowledge and what is very exciting is that we will be giving you *bonus tips*.
You are not going to want to miss those! These tips will allow you to go even further with the RLT and to have your procurement running like butter.
your Statistance team.