Lead Time: what it is, importance, components and examples

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Lead Time is an indispensable concept in business process management , representing the total time required for a process to be completed.

This period represents one of the indicators of a company 's operational efficiency and, from the customer's perspective, is counted from the moment the order is placed until the product is delivered into their hands.

For the company, Lead Time is a little more complex, covering all stages of the production and logistics process — from the acquisition of raw materials to final delivery to the customer.

This time, in turn, can be divided into different stages, each with its own duration, contributing to the total Lead Time. Each of these is carefully monitored to ensure the efficiency of the processes and the punctuality of the final delivery, directly impacting customer satisfaction and the company's operational performance.

Know what Lead Time is
Lead time is the total time interval between the start and completion of a process or operation. In terms of logistics and supply chain, this production cycle refers to the time it takes for an order to be processed, manufactured, transported and delivered to the end customer.

This period includes all intermediate stages, such as material acquisition, production, storage and distribution.

Learn the importance of Lead Time in operations
Imagine two technology companies , A and B, both producing the same type of product.

Company A monitors and calculates its Lead Time rigorously (and with maximum attention to detail). With well-defined and adjustable processes, it identifies and resolves production bottlenecks clearly and quickly, resulting in shorter delivery times and high customer satisfaction. Company A’s reputation is strengthened and its loyal customer base is increased.

On the other hand, Company B does not monitor its Lead Time properly and, without precise knowledge of the times of each stage, it faces delays. As a result, and unlike Company A, delivery times are longer, leading to customer senegal telemarketing data dissatisfaction. The lack of control over Lead Time compromises its competitiveness and damages its reputation in the market.

Understanding and knowing how to manage Lead Time improves productivity, reduces costs and even increases customer satisfaction — and it is for this and other reasons that the importance of this production cycle goes beyond the simple measurement of time.

Difference between Lead Time and Cycle Time
Lead Time and Cycle Time represent two very important metrics, but they measure different aspects.

Lead Time (Waiting Time or Delivery Time)

What it measures: The total time from the start of a process to its completion, including any waiting or inactivity periods.
Focus: From the customer or end product perspective, showing how long it takes for a demand to be met.
Example: The period that begins with the customer's order and ends with the delivery of the product to their home.
Cycle Time

What it measures: The time it takes for a specific step in a process to be completed — disregarding waiting periods.
Focus: At each stage of the process, identifying bottlenecks and points that can be improved.
Example: The time it takes a developer to code a new software feature.
In summary:

Lead Time: Overview of total process time.
Cycle Time: Active time at specific stages of the process.
Which one to use?

It depends on what you want to analyze:

To understand customer satisfaction and overall delivery speed: Lead Time .
To identify bottlenecks and optimize specific process steps: Cycle Time .
Practical example:

Imagine a t-shirt factory:

Lead Time: The period from the moment the customer places the order until the t-shirt is delivered.
Cycle Time: Time to cut the fabric, time to sew, time to print, etc.
By analyzing both, you can identify whether the delay in delivery (Lead Time) is caused by a specific step (Cycle Time) or by waiting times between steps.

Main components of Lead Time
Check out the main components of this production cycle and their respective descriptions – after all, without knowing them, it is impossible to know how to reduce the Lead Time of your company's processes.

Improve customer satisfaction (giving them confidence in your products and services), make informed and strategic decisions, and reduce costs through simple calculations. Less is more — and Lead Time proves that agility lies in simplicity.

From Order to Supplier
This component refers to the time required for the company to place an order with the supplier and receive the requested materials or products. The generation of the order, confirmation from the supplier and the transportation time until the items arrive at the company are all included here.

Of Production
This is the period spent manufacturing products, from the entry of raw materials into the production line until the completion of the final product. It encompasses all stages of production, such as assembly, processing and quality inspection.

From Delivery to Customer
This component comprises the time from when the finished product is shipped by the company until it is delivered to the customer, including packaging, transportation and all logistical processes necessary to ensure the product reaches the end customer.

Internal vs. External
Internal lead time refers to the total time spent on activities within the company, such as order processing, manufacturing, and packaging. External lead time involves the time spent on activities outside the company, such as transporting raw materials from the supplier and delivering the products to the customer.

The distinction between the two is crucial to