What is procurement lead time?
The time from placing an order to receiving the goods.
In detail
Lead time covers the whole period of the supplier processing the order, producing or preparing the goods, shipping, and receiving and inspection. Only by knowing the lead time can you work out “the latest date an order must be placed”; otherwise you either run out of stock or overstock.
For example
A raw material takes 15 days on average from order to receipt, and the factory uses 50 units a day. So when stock falls to about 750 units, plus safety stock, it is time to place a replenishment order.
How companies use it
Record actual lead times by supplier and material, rather than relying only on the time written in the contract. Materials with long and unstable lead times deserve special attention.
Common misconceptions
Calculating only with the time the supplier promises. Actual arrivals are often later than promised, and lead times calculated from historical delivery data are more reliable.
Get started
Every change begins with a conversation
Whether you are still looking for direction or already have clear business needs, we would be glad to explore them with you.
Not sure where to start?
Start with a conversation.
A free 30-minute consultation with our team to explore what digital transformation could mean for your company.
Book a free consultationAlready have clear business needs?
We start by understanding your business.
Tell us about your company's current situation, management challenges and goals, and we will explore the right digital approach for you.
Explore servicesWe will reply within 48 hours