Lead Time Is a Balance-Sheet Number
A 45-day supply chain and a 10-day supply chain do not require the same amount of inventory.
That sounds obvious. Its financial consequence is often underestimated.
Long lead times force a company to commit to demand earlier. More inventory sits in production, in transit, and in safety stock. Forecast errors are discovered later. Replenishment decisions have longer consequences.
Shorter lead times do the opposite. They allow smaller commitments, faster learning, and more frequent corrections.
This means lead time should be modeled as working capital, not just calendar days.
Calculate inventory in production, inventory in transit, cycle stock, and safety stock under each sourcing scenario. Then ask how much capital must be committed to maintain the target in-stock rate.
A nearshore supplier does not need to beat Asia on every line of COGS to create value.
It may only need to free enough cash and reduce enough forecast risk to make the total system better.
Pressure-test it before the buyer does. A Channel Checkride Retail Readiness Review looks at your economics, assortment, and launch plan through the buyer's chair and the operator's chair. Request a Retail Readiness Review.
Related: China vs. Mexico: The Cheapest Factory May Not Produce the Cheapest Product