Lead Time: The time it takes for a supplier to deliver goods after an order is placed.
Lead time is the time it takes for a supplier to deliver goods after an order is placed. It is an important factor in inventory management, as it affects the amount of inventory a business needs to keep on hand to meet customer demand.
Lead time can be influenced by several factors, such as production time, shipping time, customs clearance, and transportation delays. Businesses must carefully consider lead time when managing inventory to ensure that they have adequate stock on hand to meet customer demand while avoiding overstocking and associated costs.
The primary factors that affect lead time include:
Effective inventory management strategies can help businesses manage lead time effectively and minimize associated costs. This may involve implementing inventory management tools such as safety stock, reorder points, and just-in-time (JIT) inventory management.
By carefully managing lead time and maintaining appropriate inventory levels, businesses can optimize their operations, improve customer satisfaction, and achieve long-term success in a competitive marketplace.