What is lead time?
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Days from placing a purchase order to the stock being ready to sell.
Lead time is the number of days between placing a purchase order and the stock being on your shelf, ready to sell. Work yours out with the lead time calculator.
What does lead time mean?
Lead time is the time from asking for something to receiving it. Every step that needs a wait has one: a supplier making goods, a carrier delivering a parcel, a warehouse receiving a pallet. For a seller, the figure that matters is the total lead time, from the day you place the order to the day you can sell the stock.
What lead time includes
| Stage | Typical range for imported goods |
|---|---|
| Supplier production | 15–45 days |
| Ocean freight, port to port | 20–40 days |
| Customs and delivery to the warehouse | 3–10 days |
| Receiving and putaway | 1–5 days |
These ranges are illustrative and vary widely by supplier, route and season. Measure your own from past orders.
Lead time in supply chain
In supply chain, lead time is named for the step it measures:
- Supplier lead time: from your order to the supplier shipping it or delivering it.
- Manufacturing (production) lead time: how long the goods take to make.
- Order lead time or delivery lead time: from placing the order to receiving it.
- Total lead time: every step added up. This is the one to plan reorders with.
Lead time in shipping
In shipping, lead time is usually the time from an order being placed to the parcel arriving. It includes picking and packing, and the carrier’s transit time. For example, a retailer that packs in 1 day and ships with a 3-day carrier has a shipping lead time of 4 days, while the carrier’s transit time is 3.
Does lead time include shipping?
For inventory planning, yes. You can’t sell the stock until it has arrived, so freight, customs, delivery and receiving all count. The trap is a supplier who quotes “30 days” and means production only. Ask whether the number includes shipping, or add the other stages yourself. The lead time calculator explains “ARO” quotes too.
Lead time vs cycle time
The two are often confused:
- Cycle time is the time spent actively working. Making one batch takes 5 days.
- Lead time is the whole wait, including the time before work starts. If the order queues for 10 days and then takes 5 to make, the production lead time is 15 days and the cycle time is 5.
Definitions vary by industry, so check how a supplier or system uses each term. For reordering, you need lead time, because the wait is what your stock has to cover.
Why lead time matters
Lead time decides how far ahead you must order. The longer it is, the more stock you need to cover the wait (lead time × daily sales) and the more safety stock you need, because more can go wrong in a longer window. See the reorder point calculator. Planning with too short a lead time is a common cause of a stockout.
Seasonal lead-time shifts
Lead times are not constant. Factories in China close for one to three weeks around Chinese New Year, and freight capacity tightens before Q4. Plan for the lead time of the order window you are actually in, not the yearly average.
Frequently asked questions
What does lead time mean?
Lead time is the time between starting something and having it finished. In inventory, it is the number of days from placing a purchase order with a supplier to having the stock on your shelf, ready to sell.
What is lead time in supply chain?
In a supply chain, lead time is the time a step takes from request to delivery. Supplier lead time is how long a supplier takes to deliver after your order. Manufacturing lead time is how long it takes to make the goods. Total lead time is all of it, from order to sellable stock.
What is lead time in shipping?
In shipping, lead time is the time from an order being placed to its delivery, which includes preparing the goods before the carrier collects them. Transit time is only the carrier's journey, so lead time is longer.
Does lead time include shipping?
For inventory planning, yes. Total lead time includes production, freight, customs, delivery and receiving. A supplier's quoted lead time often covers only production, so ask what the number includes.
What is the difference between lead time and cycle time?
Cycle time is the time spent actively working on something, such as making one batch. Lead time is the whole elapsed time from the request to delivery, including waiting. Lead time equals cycle time plus the time spent waiting.
What is the difference between production lead time and total lead time?
Production lead time is how long the supplier takes to make the goods. Total lead time adds freight, customs, delivery and receiving. Reorder timing must use total lead time.
How do I measure lead time?
For each of your recent purchase orders, count the days from the order date to the date the stock was received and sellable. Use the average, and note the slowest, which tells you how much safety stock you need.