Why should on-time performance be considered in supplier selection decisions?

On-time performance affects the variability of the lead time.A reliable supplier has low variability of lead time,whereas an unreliable supplier has high variability.As the variability of lead time grows,the required safety inventory at the firm grows very rapidly.On-time performance can be translated into lead time variability,which is converted to required safety inventory.A firm can evaluate the impact of poor on-time performance by a supplier on the cost of holding safety inventory.