Back in October 2021, Bloomberg reported the latest findings from the Institute for Supply Chain Management on equipment manufacturing lead times, and it wasn’t pretty. In fact, it was the highest it’s been since 1989, at 154 days. With the ongoing supply chain challenges of container vessels waiting for weeks to be unloaded at their destination port, truck driver shortages, and workforce woes, lead times are likely to get worse long before they get better.
Organizations looking to build and equip a new facility or update an existing operation – including parcel sortation, fulfillment, or distribution centers (DCs) – with automated systems, conveyors, sortation, and other material handling technologies need to be aware that system suppliers and original equipment manufacturers (OEMs) are likewise experiencing these issues. Plus, their technologies and systems are in high demand. Whereas a company used to cut a purchase order (PO) at the end of the first quarter for a project slated to go live by the fourth quarter, in today’s environment that timeframe can be as long as 18 months.
There are, however, a few strategies that can reduce current lead time challenges.
Leverage integrator/OEM partnerships. While not the case with every integrator or consultant and every OEM, chances are that some have worked together so frequently that they’ve built a strong partnership built on trust and collaboration. Very rarely will an OEM allow their usual contract process to be circumvented; there typically must be an exceedingly strong relationship with an integrator to make such arrangements. In these instances, however, there is a lead time savings advantage in that an integrator can proactively share the details of an upcoming project with the OEM long before the project PO is even cut.
For example, if an integrator is confident that it will be awarded a project, it can advise the OEM of the systems and equipment that are forecasted to be incorporated into the solution’s design. That allows the OEM to order a certain number of required parts and components – such as motors, pulleys, bearings, tube steel, electrical panels, and more – even before they receive the completed engineering drawings, sometimes as far as a year ahead of the anticipated go-live.
This proactive approach enables the OEM to plan their own production schedule more accurately and effectively, essentially holding a space in their manufacturing timeline for the integrator’s project. This means production can start immediately upon receipt of the approved project design, if not sooner. It also allows an OEM to better anticipate their book of business 12 to 18 months ahead of time, which can help them address their own needs (staffing, facility availability, production equipment) with more confidence, as they know what projects are likely to come through.
Be a repeat customer. When a customer returns again and again to the same integrator, chances are much higher that the integrator will be willing to go the extra mile to cut lead times. Not only does this include working with OEMs months ahead of time to enable the acquisition of necessary components, but it also often includes pre-engineering on spec.
Based on historic data about previous projects for a specific customer, an integrator likely has a good idea of the types of equipment, systems, and solutions that will best meet their unique handling needs for the next project. With that knowledge and understanding, the integrator can begin engineering the design before the project is officially awarded. This too saves time in the overall design, review, and approval process, cutting lead time.
Work with an independent integrator. It’s important to work with a consultant or system integrator who is brand agnostic. That is, an integration partner who does not have an exclusive relationship with a material handling OEM to single source only that brand of equipment in every project. A single supplier may not offer the optimal solution for a given facility’s unique needs, or their equipment for one area may not be as robust or flexible as their technologies for a different process. They also may have longer lead times than other OEMs who make and sell similar solutions, which could cause a project to fall behind the desired schedule.
Consider solutions that combine multiple brands. Often, it’s a mix of equipment and technologies from multiple brands, integrated into a streamlined system, that provides the optimal solution for an operation. By engaging an integrator who maintains relationships with a broad range of OEMs, an operation can not only get the greatest flexibility in system design and control, but also can factor current OEM lead times for the delivery and installation of those systems into the selection process.
Looking to cut your project lead times? Consider working with DCS. Connect with us to learn more about how our supplier relationships can help keep your next material handling implementation on schedule.
Nathan Swift, Supplier Development Specialist, firstname.lastname@example.org
Nathan has skillfully combined a relational and analytical approach to his varied roles in Supply Chain, whether creating performance evaluations or resolving conflicts with tier I partners. Most recently, Nathan has led our Supply Chain’s response to the ever-changing environment COVID-19 has created. Outside of work, Nathan loves anything that gets him moving and outdoors, like hiking, tennis, or golf.