What is Lead Time?
The total time from when a customer places a request until the request is fully delivered.
Detailed Explanation
Lead time encompasses the entire duration a customer experiences from the moment they initiate a request (such as placing an order or submitting a service request) to the moment they receive the finished product or service. Lead time includes processing time, waiting time, transport time, and any other delays. It is the customer-facing measure of how responsive your business is. Lead time can be broken down into components to identify which segments contribute most to the total delay.
Why It Matters
Lead time is what your customers actually feel. In a world of increasing expectations for speed, shorter lead times win more business and improve customer satisfaction. Understanding and managing lead time also helps you set realistic expectations and avoid overpromising.
Example
A custom furniture maker tracks their lead time from order to delivery at 10 weeks. By breaking it down, they find 2 weeks of material procurement, 3 weeks of build time, and 5 weeks of queue time waiting for the workshop to start. Implementing a scheduling system reduces queue time to 1 week, cutting total lead time to 6 weeks.
Related Terms
The total elapsed time from the start of a process or task to its completion.
A metric that measures the percentage of orders, projects, or services delivered by the promised date.
A formal commitment between a service provider and a client that defines the expected standard of service, including response times, availability, and quality metrics.
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