Every reorder decision assumes some idea of how long new stock will take to arrive. That's lead time. Getting it right, or wrong, has a real effect. A business might run out of stock, order too early, or hold more safety buffer than it needs.

Types of Lead Time

Supplier lead time is the time from placing a purchase order to the supplier shipping it, plus transit time to arrival.

Manufacturing lead time is the time it takes to make an item in-house — from starting production to having a finished item ready.

Customer lead time is the time between a customer placing an order and receiving it. It combines internal work with getting the order ready and shipped.

How Lead Time Is Measured

Lead time is best measured from real past data — how long orders have actually taken to arrive. That's better than a supplier's quoted guess, which doesn't always match real-world delays. Tracking lead time across several orders also shows how much it varies. That matters just as much as the average.

Why Lead Time Matters

Lead time feeds directly into how reorder points are set. The longer the lead time, the earlier an order needs to go out to avoid a stockout. It also affects how much safety stock is needed — longer or less steady lead times need a bigger buffer to cover the wait.

Reducing Lead Time Risk

Businesses manage lead time risk a few ways. They work with multiple suppliers so they don't rely on just one source. They build relationships that reveal delays early. And they hold the right amount of safety stock for items with longer or less steady lead times. For a closer look at working with suppliers, see our supplier lead time management guide.

Key Takeaways

Lead time is the gap between ordering and receiving stock. It directly shapes reorder points and safety stock levels. Measuring it from real order history — instead of assuming a supplier's quoted time — gives a much more reliable basis for planning.

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