Use Lead Time Review to modify to Lead Time for a receipt.
it is critical that the average lead time (LT) be an accurate representation of the vendor or distribution center’s actual performance. The average lead time is calculated by looking at actual receipts, based on the settings in Replenishment Parameter F/M, Receipts Used to Calculate Lead Time, and subject to the minimum and maximums for vendor or transfer ARPs.
Lead Time Review provides access to the receipts for a warehouse/item and allows you to directly impact them in several ways.
“Abnormal” refers to a lead time that was outside established parameters – i.e. it was unusually long or short. FACTS automatically sets the abnormal flag as receipts are processed, and this flag is useful during lead time review to quickly see questionable receipts.
A receipt may be abnormal and also correct. The fact that it’s flagged as abnormal is not an automatic indication that it should be changed.
“Ignore” refers to a lead time that is excluded from the average lead time calculation. This flag is never automatically set by FACTS. It can be set by the user when entering or receiving the PO, and it can be set from within lead time review.
When a receipt was intentionally shipped differently than normal (e.g. it was expedited or requested to be delayed), setting it to Ignore is one option to ensure that it doesn’t adversely impact the average lead time calculation.
Another option for handling lead times that are not wanted in the LT calculation is to qualify the lead time. When you enter a qualified lead time, you are indicating that FACTS should use the receipt in the LT calculation, but it should use the number of days you specify as qualified. This can be useful when you have relatively few receipts for this ARP.
Based on the settings in Replenishment Parameter F/M, the average lead time will not use receipts older than a specified number of months, so entering a qualified lead time instead of ignoring it, can help ensure the average LT is being updated.
There are many reasons why actual lead times may be inaccurate, including:
• When a product was shipped using a faster shipping method to expedite delivery on a specific order
• When stock is purchased as a “pre-buy” to take advantage of early purchase discounts, but shipment is delayed
• When stock is received in the system long after it actually showed up in the warehouse (delay in data entry)
In the upper portion of the screen, you can specify the warehouse, item and indicate the type of documents you want to view—transfers, purchase orders or both. You can also specify the PO number and receipt or Transfer number and shipment line. The transfers shipment lines and purchase order receipt lines are displayed in the browser so you can modify the lead time information as needed. The “Show Lead Time” drop box on the right limits which receipts are displayed. The default is to show only receipts with abnormal lead times, but you can also select “Ignore” or “All”.
Editing a line allows you to change the abnormal, ignore and qualified fields.
This modified lead time called “Qualified Lead Time” is used in calculations concerning lead time. Any changes to the Lead Times will be reflected by recalculating the replenishment Order Point and Line Point for the item. If there is no qualified lead time then the actual lead time is what is used in calculations.
The program lists abnormal, ignored or all Lead Times for items and allow for Lead Time correction.
For Example: Since actual lead time is the difference between the order date and the receive date. A line in Lead Time Review might show an actual lead time of 7 days. In some cases you may need to “qualify” that lead time, because something caused that line arrive later or sooner than indicated. In such a case actual lead time would stay 7 but you would enter the qualified lead time that represents the correct lead time value that is to be used in calculations in the system. You can select the Abnormal check box to flag a Lead Time as abnormal if it is more than 50% different from the average or if the ARP Lead Time minimum or maximum threshold has been reached. The ARP minimum and maximum thresholds are established in the Inventory Control Replenishment Parameters and can be in effect for various product scopes.
You can select the Ignore check box to prevent this lead time from be included in average lead time calculations.
There are times when lead time on a particular receipt should be ignored and not factored into the average lead time. Generally, this occurs when a product’s lead time varies significantly from the average, and, if factored into the average, could result in an order point that is too high or too low.
Other examples of receipts where you might ignore the lead time include:
The Lead Time options provide parameters that can be set to monitor exceptional lead times and automatically override lead time. You can set to ignore the lead time on product replenishment transactions in several FACTS functions.
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