What is lead time?
Lead time is how long something takes from trigger to result. In inventory planning it usually means the time from placing an order with a supplier until the goods are received, counted and available to sell. In eCommerce it can also mean the time from a customer’s order to delivery.
Lead time is one of the two inputs, together with demand, that decide how much stock you need. Longer and less predictable lead times mean more safety stock and more cash tied up in inventory.
Core principle: Plan with the full lead time, from order to sellable stock, not just the supplier’s production time.
Types of lead time
Supplier or production lead time
From purchase order to goods ready at the factory.
Transit time
From the factory to your warehouse, including customs clearance. Sea transport from Asia to Northern Europe often takes five to seven weeks door to door, air a few days.
Receiving time
From arrival at the warehouse until the stock is counted, put away and live in your shop.
Watch out for: Peak season and unlabelled cartons can add days here.
Customer lead time
From order to delivery, the sum of processing time and delivery time.
Why it matters: Shorter delivery times raise conversion, which is why brands store stock in the countries they sell to.
How to calculate it
Total replenishment lead time = production time + transit time + customs and port time + receiving time.
Example: A pet accessories brand orders from Vietnam: 30 days production, 38 days sea transport to Rotterdam, 3 days port and customs, 2 days receiving. Total lead time is 73 days. With 50 units sold a day, the brand needs 3,650 units to cover demand while it waits, plus safety stock. That sum is its reorder point.
How to shorten lead time
- Share forecasts with suppliers so materials are ready before the order arrives.
- Split shipments: a small air shipment for bestsellers, the rest by sea.
- Prepare customs data, EORI and HS codes before the goods leave origin.
- Send the warehouse the purchase order and carton details before arrival to speed up receiving.
- Store stock closer to customers to cut delivery lead time, see distributed inventory.
Frequently asked questions
What is the difference between lead time and transit time?
Transit time is only the transport part. Lead time covers the whole process, from placing the order to having stock ready to sell.
How does lead time affect stock levels?
The longer the lead time, the more stock you need to cover sales while you wait, and the bigger the buffer for delays.
What is a good lead time for eCommerce delivery?
In most EU markets customers expect delivery within one to three working days for domestic orders.
How do I reduce supplier lead time?
Share forecasts, agree fixed production slots, keep packaging and materials in stock at the supplier, and prepare documents early.
