What is Lead time?
Lead time is the time between placing an order and the inventory becoming available for sale. Longer or variable lead times increase the required planning horizon and often safety stock. The full time includes production, transport, and receiving.
Practical example
Six weeks of production, three weeks of ocean freight, and one week of receiving create a ten-week effective lead time.
What teams should remember
- Lead time is the time between placing an order and the inventory becoming available for sale.
- Longer or variable lead times increase the required planning horizon and often safety stock. The full time includes production, transport, and receiving.