What Is Lead Time?

In this series of blog posts, I’m defining key inventory management terms so that they’ll be more familiar when I mention them in the future. Last time I went through the various Costing Methods, and now I’ll define Lead Time. Lead time is an important component of order management, Fishbowl Inventory BlogLead Time – The length of time between when an item is ordered and when it is added to a company’s inventory. Lead time includes not just transit time, but also how long it takes to issue a purchase order, as well as for a vendor to process it and get the requested parts, products or other materials out the door. You should calculate lead times for all of your products and all of the other parts and materials you work with on a daily basis because you don’t want to run out of them. It helps to use warehouse management software. Instead of having to remember the lead times for everything in your warehouse, you can have it all recorded in your software database. And that’s just the start of what it can do for a business or other organization. Be sure to come back next week when I’ll start a new chapter in this series.