Frequently asked questions
What is lead time?
Lead time is the total time from placing an order until the goods are received and ready to sell or deliver.
How is lead time calculated?
Add order processing, production or supplier preparation, and shipping time. For example, 2 + 10 + 5 days gives a lead time of 17 days.
Which stages should I include?
Order approval and processing, production or picking, quality checks, transport, customs clearance and receiving into stock.
What is the difference between lead time and cycle time?
Lead time covers the whole wait from order to delivery. Cycle time measures only the active working time spent on one step or process.
What is the difference between supplier lead time and customer lead time?
Supplier lead time is the wait for your own stock to arrive. Customer lead time is how long a customer waits from ordering to receiving. Consider both when you make delivery promises.
Should I count business days or calendar days?
Use one consistently and say which you mean. Calendar days include weekends, so use them for shipping unless the supplier quotes working days.
How do I allow for delays?
Add buffer days, track actual against promised lead times, and use the longest realistic lead time for critical items.
How does lead time affect my reorder point?
Reorder point = daily demand × lead time + safety stock, so a longer lead time means you must reorder earlier and hold more stock.
Can lead time differ by product?
Yes. Stocked items, made-to-order items and imported items can all have different lead times, so calculate it per product or supplier.
How can I reduce lead time?
Stock fast sellers, use closer suppliers, approve orders faster, choose quicker shipping, reduce production batch sizes and keep clear communication with suppliers.
What about customs and international orders?
Add customs clearance, port delays and public holidays. Peak seasons and holidays in the supplier country can also slow production and shipping.
What is a good lead time?
It depends on your industry and customer expectations. Compare with competitors, and remember that reliable lead times often matter as much as short ones.
Should I track actual lead times?
Yes. Record the order date and the receipt date for each order, then average the recent results. This shows which suppliers are unreliable.
How is lead time different from delivery time?
Delivery or transit time is only the shipping part. Lead time includes everything before and after it, from order to receipt.
How often should I update my lead time?
Update it whenever supplier terms, shipping methods or seasonal conditions change, and review it at least once a quarter.