Lead time is the elapsed time between placing an order and the stock being sellable. Suppliers usually quote only the production segment, which is why the figure they give is reliably shorter than the one you experience. Planning against the quoted number rather than your own measured one is a common cause of stockouts that feel like bad luck.
In more detail
Lead time is really four numbers stacked together, and the quoted figure covers one of them. Order to acknowledgement, which is often days and almost never counted. Acknowledgement to ready, which is what they quoted. Ready to shipped, which waits on containers and consolidations. And shipped to sellable, which includes transit, customs and your own receiving.
Because the quoted figure is a best case under favourable conditions, using it as an average means you go out of stock roughly as often as your supplier is late. That feels like misfortune and is arithmetic.
The spread matters more than the average. Two suppliers averaging four weeks are not equivalent if one is reliably four and the other alternates between two and six. The second forces you to plan for six on every line.
The four segments
| Segment | Typically counted? | Who controls it |
|---|---|---|
| Order to acknowledgement | No | The supplier's admin |
| Acknowledgement to ready | Yes, this is the quote | The supplier's production |
| Ready to shipped | No | Freight and consolidation |
| Shipped to sellable | No | Carrier, customs, your receiving |
Where people get it wrong
- Accepting the quoted figure. Measure two dates per purchase order instead: sent, and sellable.
- Planning against the mean. Plan against something closer to the slowest recent order you are willing to accept.
- Treating seasonality as randomness. A supplier who is slow only around a factory shutdown is predictable, and needs a bigger buffer for those weeks rather than all year.
- Never asking what drives the variation. Suppliers usually know and have often never been asked, and the cause is frequently something you can change for free.
Common questions
Why is my supplier's lead time wrong?
It usually is not wrong so much as narrow. It describes production time under good conditions, and excludes acknowledgement delay, waiting for shipping, transit and your own receiving.
How do I measure real lead time?
Record two dates per purchase order: the day you sent it and the day the stock became sellable. Six to eight of those per supplier give you a usable distribution.
Should I plan against the average lead time?
No. The average tells you what to expect; the spread tells you what to protect against. Plan closer to your realistic worst case.
Can lead time be reduced without changing supplier?
Often. Ordering on their production cycle, giving a rolling forecast, or paying for a dedicated collection instead of waiting for consolidation can each remove real time.