Logistics
What is Lead time?
The time between placing an order with a supplier and having that stock available to sell. It covers production, freight, customs and receiving, so it is nearly always longer than the manufacturing time a supplier quotes.
Why it matters in practice
Lead time is the number that decides when you reorder, so getting it wrong shows up as a stockout months later rather than as an obvious mistake today. The useful version is measured end to end, from purchase order to sellable, and includes production, waiting for a sailing or a flight, transit, customs clearance, the truck from the port, and the time it takes to receive and check goods in. It also has variance, not just an average. If a shipment usually takes ten weeks but sometimes takes fourteen, planning on ten guarantees you run out roughly whenever the long case happens, and the long case tends to arrive in your busiest month. Absorbing that variance is the whole reason buffer stock exists.
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