Lead time is the time between placing an order and having the goods on the shelf, ready to sell. If you order from a supplier on the 1st and can pick the stock on the 22nd, the lead time is 21 days. It is the single biggest driver of how much stock you have to hold.
Lead time, in plain English
Every day between "we need more" and "it's on the shelf" is a day you're selling from the stock you already hold. That's the whole reason buffer stock exists — lead time is the exposure window it has to cover.
The kinds of lead time that matter
- Supplier (purchasing) lead time — order placed → goods received. For imported stock this includes production, shipping, customs and goods-in checks: 60–120 days is normal for Far East supply.
- Customer lead time — customer order → delivery. The gap between this and your supplier lead time is what your stock has to bridge.
- Internal lead time — the quiet killer: days lost between the system flagging a need and the purchase order actually going out.
Why lead time sets your stock levels
- Longer lead time = more stock. You must cover expected demand for the whole window, plus a buffer for demand swings during it. Buffer needs grow with the square root of lead time — going from 7 to 28 days of lead time roughly doubles the buffer, all else equal.
- Variable lead time is worse than long lead time. A supplier who reliably takes 30 days is easier to plan around than one who takes "somewhere between 14 and 45". Unreliability has to be bought off with extra stock.
- Lead time drift goes unnoticed. Suppliers quietly slip from 21 to 35 days over a year; reorder points set against the old number produce stockouts that look like "bad luck".
Practical hygiene
- Measure real lead times from your goods-in dates, not the supplier's quoted figure — the two diverge more than most buyers expect.
- Track variability, not just the average: the standard deviation of lead time belongs in your safety stock maths.
- Review per supplier quarterly. A two-week slip on your biggest supplier changes every reorder point downstream.
Optimal Chain treats lead time as a per-supplier, per-product input — not one global setting. Reorder recommendations account for demand over each product's real lead time, and the Disruption Planner lets you stress-test the question every importer worries about: "what does +10 days on all Far East suppliers actually cost me?" — answered in pounds, in about a minute, with the adjusted purchase orders to cover it.