Lead Time
Definition
The total time from placing a purchase order to having inventory available to sell, including production, shipping, customs and receiving.
Want a deeper explanation?
Lead time decides how far ahead you must commit cash. Long lead times mean paying deposits on inventory you will not sell for months.
Measure your actual lead times, not the supplier's estimate. Watch for: reorder points based on quoted lead times while real ones keep slipping, which leads to repeat stockouts.
Example
Production takes 35 days, ocean freight 28 days, customs and drayage 7 days and warehouse receiving 5 days, for a total lead time of 75 days.