Investigation about the Lead Time Variability at Warehouse A Case Study of the Central Warehouse of Company Y

Abstract

The lack of previous studies regarding the understanding of distinction and relationship between effective and efficient measurements of supply chain performance led this report to create a framework based on various literatures of the two concepts, including Potočan (2006)’s claim on the sources of conflict in content understanding, implementation of methodologies and management of organizations’ operations. By initiating the analyses on the lead time deviation in the Company Y, a major manufacturing company for commercial vehicles, and its influence on various performance measurements at different levels, the connection is endeavored as the lead time being an effective measurement and other time dependent measurements being efficient ones. With the complex nature of aftermarket service and its significant market share in automotive industry, the lead time is crucial to maintain the availability of spare parts and keep the stock at a desired level. Deviations of the lead time occurring at various links and nodes of the supply chain can have a significant impact on the service level and overall customer satisfaction. This report attempts to find out the existence of lead time deviation within the fragment of the supply chain followed by its successive impacts on safety stock and service level by quantitative analyses. Subsequently, the study tries to connect the reasons of such phenomena, explored by conducting qualitative analyses through interviews and field observations, to the framework developed. Finally, the constructive conclusions and suggestions made for further research analyses regarding how to stabilize the lead time deviation in the receiving process and how to connect performance indicators in different functions, processes and sub-processes vertically in the organization and horizontally in the supply chain. Additionally, the importance of increased transparency, traceability and reliability of supply chain in the focal company to compete in today’s aggressive business environment is emphasized by applying a combination of technologies such as GPS devices, RFID technology and extended information system integrations.