Glossary

Lead time

The total time between triggering an order or task and having it completed and available for use.

Lead time is the total time between triggering an order or task and having it completed and available for use. It is broader than cycle time, which typically starts only when active work begins; lead time usually starts when a customer places an order or a purchase order is issued, and includes any wait time before processing starts, not just the processing itself.

It's often broken into components — order processing time, manufacturing or picking time, and transit time — and tracked separately for supplier-to-warehouse lead time versus customer-facing order-to-delivery lead time, since each drives different planning decisions.

Lead time directly determines how much safety stock is needed to cover demand during that window: longer or more variable lead times require a larger buffer for the same service level. Shortening and stabilizing lead time is often more valuable than simply holding more inventory, since it also improves on-time in full performance. A common pitfall is quoting a single average lead time, which hides the variability that actually causes stockouts — the spread around that average usually matters as much as the average itself.

Last reviewed September 22, 2026

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Related terms

Cycle time The total elapsed time to complete one unit of work, from when active processing starts to when it finishes. Safety stock Extra inventory held beyond expected demand to absorb variability in demand or supply lead time without running out. Inventory turnover How many times a company sells and replaces its inventory over a given period, usually a year. Days of supply How many days current inventory would last at the recent or expected rate of usage before running out. On-time in full (OTIF) The share of customer orders delivered both on the promised date and complete, with nothing missing or short.

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