Lead time is the total time from when a customer places an order to when the product ships. It includes procurement, production, quality checks, packing, and shipping.
How can you reduce lead times?
Ways to reduce lead times include eliminating unreliable vendors, selecting closer suppliers, forecasting demand with partners, adapting external processes internally, automating order workflows, completing tasks simultaneously, and improving communications.
Why are short lead times important?
Short lead times allow businesses to be more competitive, increase output, reduce costs, and improve customer satisfaction through faster order fulfillment.
How is lead time calculated?
Lead time is calculated by adding up the administrative processing time, production time, and transportation time required to fulfill an order.
What lead times are considered long?
Lead times longer than a company's average or industry standards are considered long lead times. What qualifies depends on the business, industry, processes, and locations.
How much lead time should be allowed?
Businesses should allow enough lead time to account for production and shipping time so customers receive orders on time based on commitments made.
How can lead times be communicated to customers?
Lead times and shipping estimates should be clearly communicated on websites, product pages, checkout flows, order confirmations, and shipping notifications to set accurate delivery expectations.
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