What is lead time and how the inventory management is maintained?

What is lead time and how the inventory management is maintained?

Lead time is the time that elapses between the placing of an order (either a purchase order or a production order issued to the shop or the factory floor) and actually receiving the goods ordered.
If a supplier (an external firm or an internal department or plant) cannot supply the required goods on demand, then the client firm must keep an inventory of the needed goods. The longer the lead time, the larger the quantity of goods the firm must carry in inventory.
A just-in-time (JIT) manufacturing firm, such as some automobile manufacturing fims, can maintain extremely low levels of inventory. Some of these companies take delivery of some goods as many as 18 times per day. However, steel mills may have a lead time of up to three months. That means that a firm that uses steel produced at the mill must place orders at least three months in advance of their need. In order to keep their operations running in the meantime an on-hand inventory of three months' steel requirements would be necessary.

http://www.eresourceerp.com 

Contact Us

REGISTERED OFFICE

TMA House, 1st Floor,
Road No 16, Plot No. 6,
Wagle Industrial Estate,
Thane (West) 400 604, Maharashtra
Tel: +91 22 41118000 / 8049 (50 lines)
+91 22 25828775
e-mail (Sales): sales@eresourceerp.com

Middle East UAE
eresource Middle East FZE
P.O Box: 513071, Sharjah,
United Arab Emirates
Contact Person: Sudheer Soman Nair, CEO
Mob: 00 97155 9018499

email: sudheer.nair@eresourceinfotech.com