DELIVERY LEAD TIME COMPRESSION: AN INTEGRAL PART OF A TIME BASED STRATEGY.

Corporate success in today's global environment has become increasingly dependent on a firm's ability to streamline processes and thereby decrease customer response time. The new and emerging customer-satisfaction mind set demands higher quality product, greater flexibility (in variety and volume), and better service at a competitive price within a shorter and shorter time interval. In this fast-paced global environment, more and more customers are willing to pay premium prices for faster responses to their needs. Even though quality, flexibility, service, and cost are very important factors, they are evolving into given competitive priorities that customers are not willing to compromise. The ever increasing challenge is speed and on-time delivery of customer orders--Time Based Competition (TBC). Time Based Competition is a strategic approach of achieving competitive advantage through: (1) fast introduction of new technology and development of new products and (2) fast response to customer demands for existing products through the compression of purchasing, manufacturing and delivery lead times. (1) This study emphasizes the second portion of TBC by scrutinizing various aspects of delivery lead time reduction. DELIVERY LEAD TIME From a manufacturer's point of view, delivery lead time (delivery cycle) is the elapsed time between when an item is completed and available to be shipped until that item is received by the customer. (2) This time interval typically encompasses order receipt and entry, order processing, order preparation (picking and packing), and order shipment (transit time). (3) The lead time quoted to a customer (customer lead time) is often different (greater) than the delivery lead time. Customer lead time can be as short as the delivery lead time (make-to-stock environments) and as long as the total of product development, purchasing, manufacturing, and delivery lead times (engineer-to-order environments). Initially, fueled by the application of just-in-time techniques, manufacturers strived to reduce purchasing and manufacturing lead times. Unfortunately, improvement in speed in one area can be offset by poor performance in another area. For example, in 1982, Toyota discovered that while it was able to produce a car in two days, it took from fifteen to twenty-six days to process the order, get it scheduled, and deliver the car to the customer. (4) Thus, delivery time began receiving an increasing amount of attention as a means of reducing overall response time. A study in the late 1980's indicated a shift in JIT programs focus from manufacturing to delivery lead time. This study indicated that the application of JIT has led to changes in the modes of carriage used for both inbound and outbound movements. (5) Further evidence of the growing importance of time compression has been the development of Quick Response (QR) systems in the retailing and apparel industries. Finally, more recent time based competition strategy (philosophy) is aimed at achieving supply chain integration by eliminating all "non-value-added" activities in business processes. (6) In the area of logistics, the past two decades brought an increased recognition for an integrated business discipline which resulted in both reduced costs and increased customer service. Forward thinking firms were able to capture and retain market share through better coordination of logistics activities. This was followed by an emphasis on logistics quality aimed at increasing customer satisfaction by adding value to the firm's product via on-time, accurate, undamaged delivery. As part of this process, partnerships developed which provide additional opportunities to improve logistics quality. (7) Currently, manufacturers are striving to become more competitive through a simultaneous improvement of quality of delivery process and compression of delivery cycle. FACTORS INFLUENCING DELIVERY LEAD TIME From a logistics perspective, delivery lead time reduction can be achieved through both accelerating its value-added components (e. …