Lead Time: Meaning, Types & Formula
Definition
Lead time is the time from starting a process to finishing it — for purchase, from placing an order to receiving the goods; for a customer, from their order to delivery.
| Term | Lead time |
|---|---|
| In Hindi | लीड टाइम (अग्रता समय) |
| Area | Purchase & stores |
| Search phrase | lead time meaning |
| Try it | Reorder level calculator |
लीड टाइम (अग्रता समय) — हिंदी में अर्थ
लीड टाइम किसी प्रक्रिया को शुरू करने से पूरा होने तक का समय है — खरीद में ऑर्डर देने से माल मिलने तक, ग्राहक के लिए ऑर्डर से डिलीवरी तक।
Types of lead time
Purchase (supplier) lead time: PO to GRN. Production lead time: work order release to finished goods. Customer lead time: sales order to delivery — the sum of the others plus any waiting. Lead time = End date − Start date, measured on actual records, not promises.
Lead time vs cycle time
Cycle time is the time to actually work on one unit. Lead time includes everything else — queues, waiting for material, transport. In most factories lead time is many times the cycle time, and the waiting is where it can be cut.
Example
PO on 1 March, material received 9 March: purchase lead time 8 days. Reorder level = daily usage × 8 days + safety stock.
Related tools and guides
Frequently asked questions
What is lead time?
The total time from the start of a process to its end — e.g. from placing a purchase order to receiving the goods.
How is lead time calculated?
End date minus start date, averaged over recent orders; also track the maximum for safety stock.
What is the difference between lead time and cycle time?
Cycle time is working time on one unit; lead time is the full elapsed time including waiting.
How does lead time affect stock?
Longer and more variable lead times need a higher reorder level and more safety stock.
Related terms
- Bin cardA bin card is a record kept at each storage bin or rack by the storekeeper, showing the quantity of an item received, issued and in balance after every transaction. It records quantities only, not values.
- FSN analysisFSN analysis classifies inventory items as Fast-moving, Slow-moving or Non-moving according to how often and how much they are issued over a period, so that stores can focus replenishment on fast items and clear the rest.
- InventoryInventory is the stock of goods a business holds to make or sell — raw material, work in progress, finished goods and consumables. In Hindi it is माल सूची or भंडार.
- MOQ (Minimum Order Quantity)MOQ stands for Minimum Order Quantity — the smallest quantity a supplier will accept in one order for an item, set so that its own setup, packing and freight costs are covered.
- ProcurementProcurement means obtaining the goods and services a business needs — from identifying the need and choosing a supplier to ordering, receiving and paying. In Hindi, procurement means खरीद or प्रापण.
- RFQ (Request for Quotation)RFQ stands for Request for Quotation — a document a buyer sends to several suppliers asking for their price and terms for specified items and quantities.