The Manufacturer's Incentive to Reduce Lead Times (original) (raw)

The prevailing wisdom in supply chain management suggests reducing lead times to enhance supply chain responsiveness and sales. However, this paper argues that shorter lead times may inadvertently lower sales due to two interacting effects: a safety stock effect, where retailers maintain higher inventories in response to longer lead times, and an effort effect, where retailer sales efforts are influenced by inventory levels. The implications of these effects introduce complexities in decision-making regarding lead time management, challenging the assumption that decreased lead times are always advantageous.