What is lead time?
Lead time is the time between placing an order with a supplier and having the goods in hand. It includes the supplier's processing, production, shipping and receiving, and it sets how early you need to reorder.
Example
A bakery orders flour from a mill. Order confirmed on Monday. The mill packs it Tuesday, the carrier collects Wednesday and delivers Friday, and the bakery counts it in Friday afternoon. Lead time is 4 days.
The bakery uses 25 kg a day. Over the 4 days it uses 100 kg, so it must reorder while at least 100 kg remain, plus any buffer.
Quoted lead time and actual lead time differ. Keep both.
In Atta
A supplier's catalog entry stores price, minimum order and a quoted lead time per item, along with what the vendor says it has. The stock outlook and runway use those quoted lead times; they don't predict a drive time or a carrier delay.
Supplier scores summarise delivery performance and change nothing. Ordering a purchase opens its shipment, and an inbound with an expected date is late once that date passes, so the gap between quoted and actual is visible. A promise date on an outbound does the same for what you ship.
Where it hides
Lead time has parts: order processing, production or picking, transit and receiving. Suppliers quote the first three. If your dock takes two days to book in a delivery, that belongs in your number as well.
Questions
Should I plan with quoted or actual lead time?
Actual, when you have it. A quoted figure is the supplier's best case.
Related
- What is a reorder point?A reorder point is the stock level that triggers a new order. The formula is daily demand times lead time, plus safety stock. With a worked example.
- What is safety stock?Safety stock is the extra inventory held to cover demand spikes or late deliveries. Definition, a simple formula and a worked example.
- AI inventory management that ends in a purchase requestAtta keeps stock as a ledger, forecasts when each item runs out from measured usage and quoted lead times, and opens a restock request instead of ordering.