EV’s Impact on Lead Time

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Lead Time

The movement towards electric vehicles has been in the works for years; has projected that by 2030, approximately 35% of US vehicles will be powered by electricity. If this stands true, then many aspects of the supply chain will undergo change as well, especially in terms of decreasing lead time.

Near the end of 2017, Tesla received orders from FedEx and for a total of 30 Tesla Semis, the company’s first battery-powered semi-truck. Signifying major disruption to come, and now with more than 200 orders placed by various companies, it is obvious that the benefits of using electric vehicles are more prevalent than its flaws.

One of the greatest benefits of adopting electric vehicles would be the increased efficiency. With the new Tesla Semi going into production by 2019, Tesla claims that it will be more efficient than traditional trucks, with up to a 5500-mile range and speeds of 60 MPH; 3 times faster than regularly packed trucks. These benefits will not come without setbacks, however, with the greatest obstacle being the amount of infrastructure available for trips further than the single-charge range. Having enough charging ports for long-distance drivers must be addressed and solved before Tesla’s true potential can shine.

With increased efficiency and fewer car accidents, more companies can shave in-transit time from their supply plan. Lead time might seem small because we are expected to have to wait for things we want. In actuality, lead time is one of the things that trickle down to every part of your supply chain. So by improving even fractions of a percent, benefits are felt extensively through the process.

Long lead time items have a significant impact on an organization’s financial performance, customer service, and overall sales. A company has a decision to make. Keep extremely high levels of inventory, which has an enormous negative impact on the bottom line; or run the risk that you will miss out on potential sales if you stock out.

Electric vehicles can help companies improve their lead times.  By decreasing the lead times, companies can improve their overall supply chain efficiencies thus improving their cash flow, customer service, and sales.  By decreasing lead time, the results could also include the benefit of increased flexibility during rapid shifts in the market, outpace competitors with more efficient output, quicker replenishment, and increased cash flow because of an increase in order fulfillment. These improvements will be reflected in the company’s forecasting software with modified forecasts that have put the changes into consideration. With the value of being able to decrease lead time, it is vital to have software that can accommodate with updated, accurate forecasts.

To learn more about Vanguard IBP and how it intelligently adapts to any changes your company throws at it, contact us for a .