What is Lead time?

Lead time is how long it takes from placing a purchase order until the stock is available to sell — production, freight, customs and warehouse receiving.

Example

20 days production + 25 days sea freight + 7 days customs and check-in = 52-day lead time.

Why it matters

Underestimating lead time is the most common cause of stockouts.

Calculate it: Reorder Point Calculator

Safety stock and when to reorder

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Question

What is lead time?

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Answer

Lead time is how long it takes from placing a purchase order until the stock is available to sell — production, freight, customs and warehouse receiving.

Related terms

Reorder point

The reorder point is the stock level at which you should place a new purchase order: average daily sales × lead time + safety stock.

Safety stock

Safety stock is extra inventory kept to cover demand spikes and supplier delays: Z × daily sales variation × √lead time.

Read more in our guide: Safety Stock and Reorder Point: When to Reorder Inventory