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Supply chain management

A conventional definition of lead time in a supply chain management context is the time from the moment the customer places an order (the moment the supplier learns of the requirement) to the moment it is ready for delivery. In the absence of finished goods or intermediate (work-in-progress) inventory, it is the time it takes to actually manufacture the order without any inventory other than raw materials. The Chartered Institute of Procurement & Supply identifies “total lead time” as a combination of “internal lead time” (the time required for the buying organization’s internal processes to progress from identification of a need to the issue of a purchase order) and “external lead time” (the time required for the supplying organization’s processes, including any development required, manufacture, dispatch and delivery).

Manufacturing

In the manufacturing environment, lead time has the same definition as that of Supply Chain Management, but it includes the time required to ship the parts from the supplier. Shipping time is included because the manufacturing company needs to know when the parts will be available for material requirements planning purposes. It is also possible to include within lead time the time it takes for a company to process and have the part ready for manufacturing once it has been received. The time it takes a company to unload a product from a truck, inspect it, and move it into storage (“put-away time”) is not trivial. With tight manufacturing constraints or when a company is using Just In Time manufacturing, it is important for supply chain to know how long their own internal processes take.

In manufacturing, “lead time” usually means the total time needed to make a product. This can include preparing the order, waiting in queues, setting up machines, actual production time, moving items around, inspecting them, and putting them into storage.

·         For products made only after an order is placed (“make‑to‑order”), lead time is the time from releasing the order to producing and shipping the item.

·         For products kept in stock (“make‑to‑stock”), lead time is the time from releasing the order to finishing production and adding the item to inventory.

Supply Chain Management

In supply chain terms, lead time is the time from when a customer places an order to when the product is ready to be delivered. If there are no finished goods or work‑in‑progress items available, this lead time is simply the time it takes to manufacture the product using only raw materials.

The Chartered Institute of Procurement & Supply breaks “total lead time” into two parts:

·         Internal lead time: how long it takes the buying company to go from identifying a need to issuing a purchase order.

·         External lead time: how long the supplier takes to develop, make, ship, and deliver the product.

Manufacturing

In manufacturing, lead time is defined the same way as in supply chain management, but it also includes the time needed to ship parts from suppliers. This matters because manufacturers need to know exactly when parts will arrive so they can plan production.

Lead time can also include the time it takes a company to unload incoming materials, inspect them, and store them properly. These steps—often called “put‑away time”—can be significant. When a company has tight production schedules or uses Just‑In‑Time manufacturing, knowing the length of these internal processes is especially important.

In manufacturing, “lead time” usually means the total time needed to make a product. This can include preparing the order, waiting in queues, setting up machines, actual production time, moving items around, inspecting them, and putting them into storage.

·         For products made only after an order is placed (“make‑to‑order”), lead time is the time from releasing the order to producing and shipping the item.

·         For products kept in stock (“make‑to‑stock”), lead time is the time from releasing the order to finishing production and adding the item to inventory.

Supply Chain Management

In supply chain terms, lead time is the time from when a customer places an order to when the product is ready to be delivered. If there are no finished goods or work‑in‑progress items available, this lead time is simply the time it takes to manufacture the product using only raw materials.

The Chartered Institute of Procurement & Supply breaks “total lead time” into two parts:

·         Internal lead time: how long it takes the buying company to go from identifying a need to issuing a purchase order.

·         External lead time: how long the supplier takes to develop, make, ship, and deliver the product.

Manufacturing

In manufacturing, lead time is defined the same way as in supply chain management, but it also includes the time needed to ship parts from suppliers. This matters because manufacturers need to know exactly when parts will arrive so they can plan production.

Lead time can also include the time it takes a company to unload incoming materials, inspect them, and store them properly. These steps—often called “put‑away time”—can be significant. When a company has tight production schedules or uses Just‑In‑Time manufacturing, knowing the length of these internal processes is especially important.

Lead time is the time between starting a task and finishing it. For example, if you order a new car, the lead time is the time from placing the order to delivery. Depending on the manufacturer and the circumstances, this time may vary from two weeks to six months.

In manufacturing, “lead time” usually means the total time needed to make a product. This can include preparing orders, waiting in queues, setting up machines, assembly time, moving items, inspecting them, and storing them.

·         For products made after the customer places an order (“make‑to‑order”), lead time is the time from taking the order to producing and shipping the item.

·         For products kept in stock (“make‑to‑stock”), lead time is the time from releasing the order to finishing production and adding the item to inventory.

Supply Chain Management

In supply chain terms, lead time is the time from when a customer places an order to when the product is ready for delivery. If no finished goods or work-in-progress items are available, this lead time is the time taken to make the product using only raw materials.

The Chartered Institute of Procurement & Supply breaks “total lead time” into two parts:

·         Internal lead time: how long it takes the buying company to go from identifying a need to issuing a purchase order.

·         External lead time: how long the supplier takes to develop, make, ship, and deliver the product.

Manufacturing

In manufacturing, lead time is the same as in supply chain management, but it also includes the time needed to ship parts from suppliers. This matters because manufacturers need to know exactly when parts will arrive so they can plan production.

Lead time can also include the time it takes a company to unload incoming materials, inspect them, and store them properly. These steps – often called “put‑away time” – can be significant. When a company has tight production schedules or uses Just‑In‑Time manufacturing, knowing these internal times is essential.