Ask a supplier how long delivery takes and you get the brochure answer: five working days. Ask your own records and you get a different one: eleven days on average, and once, twenty-three.
Lead time is the second number in every reorder point, and the brochure figure is the wrong one to use. The right one is in your purchase orders.
What lead time includes
Lead time is the time from the decision to order to the goods being usable on your shelf. It has more parts than the supplier’s delivery promise:
| Stage | Who controls it |
|---|---|
| Order drafted and waiting for approval | You |
| Order sent to the supplier | You |
| Supplier processing and picking | Supplier |
| Transit | Carrier |
| Goods received, checked and put away | You |
The supplier’s “five days” covers the middle two stages. If an order waits three days for approval and the delivery sits two days on the dock before it is recorded, the lead time your stock actually experiences is ten.
Measuring it from your orders
For each delivery, the lead time is the delivery date minus the order date. You have both on every purchase order. Take the last ten or twenty deliveries from a supplier and list them:
| Order | Ordered | Delivered | Days |
|---|---|---|---|
| PO-2041 | 3 Feb | 12 Feb | 9 |
| PO-2077 | 24 Feb | 6 Mar | 10 |
| PO-2110 | 17 Mar | 26 Mar | 9 |
| PO-2158 | 9 Apr | 2 May | 23 |
| PO-2199 | 5 May | 16 May | 11 |
| PO-2230 | 2 Jun | 13 Jun | 11 |
Two figures come out of this list, and they do two different jobs.
The average, here about 12 days, is the lead time to use in the reorder point. It says when, on a normal order, you need to have placed the order so the goods arrive before stock runs out.
The spread is what the safety stock is for. One order in six took twice as long as the rest. If a stock-out costs you a lot, size the safety stock to cover that longer delivery, not the average. A simple approach is to use the longest delivery in the last year, or the 90th percentile if you have many orders: the lead time that nine deliveries in ten beat.
Measure per supplier, and per product where one supplier ships different products from different places. A supplier with a 9-day average for stocked items and a 40-day average for made-to-order ones has two lead times, not one.
What the figure does to your stock
With a product used at 10 units a day:
| Lead time used | Reorder point (safety stock 100) | Effect |
|---|---|---|
| 5 days (brochure) | 150 | Stock-outs on most orders |
| 12 days (average) | 220 | Right on a normal order |
| 23 days (worst) | 330 | Never out, 110 extra units held all year |
The gap between the second and third rows is the cost of the supplier’s variability, and it is a real number: 110 units held permanently. The cheapest safety stock is a supplier who delivers the same way every time.
Shortening it
Start with the days you control. They are the easiest to remove and often the largest.
- Approve orders the day they are raised. An approval queue adds lead time to every product the supplier supplies. If approvals wait for a weekly meeting, the whole catalogue carries five extra days.
- Send the order the moment it is approved, and ask the supplier to confirm a date. A confirmed date turns a guess into a figure you can plan on.
- Record the delivery when it lands. Goods on the dock that are not in the system are not available to anyone.
- Order on a rhythm the supplier can keep. A supplier who gets one consolidated order a week ships more reliably than one who gets five small ones.
- Keep an alternative for the critical products. A second supplier with a shorter lead time, even at a higher price, is cheaper than the safety stock the slow one requires.
- Review the figure twice a year. Suppliers change carriers, warehouses and workloads. A lead time set in January can be wrong by June.
Lead time in StockBold
In StockBold each product has an expected lead time in days, which feeds its reorder point: safety stock plus average daily use multiplied by the lead time. The safety stock can be set by hand, calculated in months of use, or both, with the higher figure applying, which is where the spread of the supplier’s deliveries goes.
The dates you need to measure the real figure are on record: every purchase order carries its date and an expected delivery date, and every delivery recorded against it carries the date the goods arrived. Approved orders not yet delivered are listed as incoming shipments, and completed ones stay in their own list. The organisation owner can export every record as CSV to compare order and delivery dates for a supplier in a spreadsheet, and the AI assistant can answer questions about orders and deliveries from your own data.
Read more about reorder and low-stock alerts, or the help guide on setting lead time, safety stock and cover days.