Lead time is an essential metric across many industries. Lead time in this context could refer to the completion of a single task or an expansive team project. In project management, lead time mostly refers to the time it takes - or time that is allowed - to finish something. Order lead time applies to traditional B2C (business-to-consumer) contexts, and it refers to the time it takes for a good to be received by a customer starting from the receipt of the customer’s order. This is because manufacturers need to know exactly when parts requested are ready to be constructed with other parts, using the most efficient manufacturing practices. Manufacturingįor a manufacturing company, the definition accounts for shipping as well as manufacturing time in turning around goods for a client. Typically, this measurement does not include shipping time. In supply chain management, lead time exclusively refers to the time it takes for a supplier company to have goods ready for delivery.įor example, an apparel company may have a 7-day lead time for custom t-shirts. In order to account for lead times accurately, you should become familiar with the different definitions depending on what field of work the term is used in.Ĭheck out the below list of lead time definitions for different business operations: Supply chain management The period between a manager delegating a task to their employee completing the task is a lead time, as is the amount of time it takes for a contractor to fulfill their obligations to their clients. Lead times must be carefully calculated and accounted for to avoid periods where orders cannot be fulfilled due to lack of stock.īut the term is not exclusive to inventory management.Īs the definition indicates, any task, project, or assignment has a lead time. It is most often used in supply chain circles and is an important measure for all product-based businesses. Simply put, lead time refers to the ‘latency’ (time interval) between the start and completion of a certain task.
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