Lead time refers to the amount of time required to complete a process or deliver a product or service from the initiation or placement of an order to its final fulfillment or delivery. It represents the time interval between the customer’s request or order and the actual provision or delivery of the requested item or service.

Significance and Usage Lead Time

Lead time is an important metric in various industries and business operations as it helps in planning, scheduling, and managing customer expectations. It allows businesses to estimate and allocate resources, determine production or service capacities, and ensure timely delivery or fulfillment of customer orders. Lead time can vary depending on factors such as product complexity, production or service capacity, supply chain efficiency, and customer demand.

Example of Lead Time

An example of lead time is the duration it takes for an online retailer to process and deliver a customer’s order. If the lead time for a specific product is three business days, it means that from the moment the customer places the order, it will take approximately three business days for the product to be prepared for shipment and delivered to the customer’s designated address.