Lead Time Calculator

What is lead time?

Lead time is the total time between deciding to order and having the goods ready to sell or use. It includes the time to raise and approve the order, the time the supplier needs to make or pick it, transit, and your own time to receive and put it away.

Formulas

• Lead time = order processing + production + shipping and receiving
• Lead time demand = lead time × average daily usage

Worked example

Processing takes 2 days, the supplier needs 10 and shipping and receiving take 5, so the lead time is 17 days (2.4 weeks). At 30 units a day you will use 510 units in that time.

How to use the lead time calculator

1. Enter your figures: order processing, production or supplier time and shipping and receiving. Average daily usage is optional and counts as zero when left empty.
2. Read the result. It updates as you type, so there is no button to press.
3. Try other numbers to compare scenarios. Reset brings back the example values.

Getting it right

• Use days your supplier actually achieves, not the days they promise. Check the dates on past orders.
• Lead time demand is the minimum stock you need on hand when you place an order; add safety stock to get your reorder point.
• Shorter lead times mean less stock held. Local suppliers and standing orders are the usual ways to cut them.

Frequently asked questions

How do you calculate lead time?

Add the days taken by each stage between placing an order and the stock being available: order processing, supplier production, transit and receiving.

What is the difference between lead time and cycle time?

Lead time is measured from the customer’s or buyer’s side, from order to delivery. Cycle time is measured inside production, from starting work on a unit to finishing it.

Why does lead time matter for inventory?

It sets how early you must reorder. Double the lead time and you need twice the stock on hand at the moment you place the order.