Lead time
From the moment you place an order with a supplier to the moment the goods are on your shelf and ready to sell, time passes: the supplier prepares the order, a carrier moves it, and you receive and put it away. That stretch, in days, is what you have to plan around, because stock must last through it. It is called the lead time.
Use the real figure, from order to sellable, not the supplier's promise. Look at your last ten orders: the average is your normal lead time, and the longest is the one to protect against with safety stock. Include your own handling: a delivery that arrives on Friday but is checked in on Tuesday has the longer figure as its lead time.
Lead time can also mean the time from a customer's order to delivery. This entry is about the supplier side, which is the one that sets how early you must reorder. A shorter or more reliable lead time lets you hold less stock for the same service.
In practice
A supplier says 'delivery in 7 days'. Looking back, the last ten orders took between 8 and 15 days from order to shelf, 10 on average. The shop plans its reorder point on 10 days and builds safety stock for the 15-day worst case.
Further reading
Related terms
Ready to see BizBloqs on your own process?
Book a demo and we will walk your warehouse and order flow end to end — inbound, storage, picking, shipping, returns — and tell you honestly what BizBloqs would change.
Two questions about your own operation
How many of your articles sit in a pick location they empty less than once a month?
Part one: Laying out a warehouse does not start with the racking
After your last integration, how many systems hold a stock quantity for the same item? Name them.