The supply chain has countless complex, interconnected moving parts and stakeholders with distinct responsibilities. It is in the best interest of everyone involved in the freight broker industry to keep the supply chain moving smoothly, and one facet worth highlighting is shipping lead time. If you are wondering, “what is lead time in shipping?” you are not alone. In this guide, we define lead time, explain why it matters, and provide tips for building in more lead time.
What is lead time in shipping?
Lead time is the total time between the origination of a purchase order and order fulfillment. In shipping, lead time is highly relevant to shippers. For the best logistics outcome, shippers must promptly arrange transportation after completing a purchase order. Arranging transportation as soon as possible gives logistics providers more lead time. With more lead time, shippers access more favorable freight rates, more efficient transportation, higher quality carrier arrangements, and preferable delivery times.
Why does shipping lead time matter?
Let’s be realistic. It may not always be possible to have enough lead time. Sometimes there are rush orders or other types of delays that limit your control over your lead times. However, as much as possible, it is absolutely in the best interest of shippers to maximize the lead times for their loads. Here are some reasons why:
Better Rates
The closer you wait until the drop-off deadline to let a logistics company know you have a load to ship, the more you will have to pay to meet the deadline. When it comes to favorable rates, the early bird gets the worm. This is because freight brokers will have to jump through hoops to stick to your timeline, and a shorter lead time gives them fewer options when negotiating rates.
More Availability
The longer you wait to let a logistics provider know you have a load to ship, the fewer options you will have to ship your goods. Logistics providers need time to find the most suitable and cost-effective carrier. Plus, carrier availability rapidly shrinks over time because the most desirable providers book up first.
Higher Quality Service
When a quick turnaround time becomes the priority, sacrifices are usually required. With a short lead time, logistics providers will have fewer options, less time, and less negotiating power on your behalf. Meeting a quick deadline may require you to compromise on quality or other aspects of the logistics arrangements, which is a risky choice to make.
Better Organizational Efficiency
Shipping lead time is a major part of supply chain management because it impacts the flow of goods. Organizational efficiency largely hinges on effective supply chain management, and it is a leading way that companies can differentiate themselves from their competitors.
Increase in On-Time Performance – Logistics providers and shippers always want to increase on-time performance. However, it can be challenging to meet delivery deadlines even in the best of scenarios. Issues can arise by surprise and be difficult to resolve. Increasing shipping lead time gives shippers and logistics providers more room to adjust to issues and significantly raises the likelihood that a shipment will arrive on time.
How To Build in More Lead Time
If you are always scrambling to arrange the transportation of your goods, it may be difficult to maximize lead time. To build in additional lead time, partner with a logistics company that can collaborate with you to forecast orders, anticipate shipments and streamline your transportation operations. A quality logistics company will have extensive industry knowledge and experience, highly skilled professionals, and the right technology to optimize lead time and deliver the results your business needs. They can help you uncover and resolve supply chain inefficiencies and increase the visibility into processes crucial to your success.
Here at First Star Logistics, we provide our shippers with comprehensive freight transportation solutions to ensure the job is done right, at the best possible rates. We are a unique asset-based global logistics provider with more than 60 years of experience. Our core business is arranging and securing space for your freight’s transport between states and countries using common carriers such as trucks, railroads, and ocean liners. Our clients benefit from a comprehensive North American network and global reach, along with time and cost-saving technology that delivers results.
To learn more about the freight broker industry and logistics solutions, visit First Star Logistics today.
