CEPM 3: lead time reduction via pre-positioning of inventory in an industrial construction supply chain

Lead time reduction is a key concern of many industrial buyers of capital facilities given current economic conditions. Supply chain initiatives in manufacturing settings have led owners to expect that dramatic reductions in lead time are possible in all phases of their business, including the delivery of capital materials. Further, narrowing product delivery windows and increasing pressure to be first-to-market create significant external pressure to reduce lead time. In this paper, a case study is presented in which an owner entered the construction supply chain to procure and position key long-lead materials. The materials were held at a position in the supply chain selected to allow some flexibility for continued customization, but dramatic reduction in the time-to-site. Simulation was used as a tool to consider time-to-site tradeoffs for multiple inventory locations so as to better match the needs of the construction effort.