Inventory planning
Lead Time
By the Supply Chain Manager team · Updated October 16, 2026
Lead time is the time between deciding to replenish a SKU and having the goods available to sell, usually counted in days from purchase order to receipt.
For a distributor the main component is supplier lead time: how long the supplier takes to ship plus transit. Internal steps add to it: time to approve and send the purchase order, and time to receive, check and put the goods away.
Quoted lead time and actual lead time are often different. Planning on the quoted number when the supplier routinely runs late is one of the most common causes of stockouts.
How to calculate lead time
Lead Time = Date goods are available to sell − Date the replenishment decision was made
Lead time example
Illustrative numbers: a supplier quotes 10 days. Your last five receipts took 9, 12, 14, 11 and 13 days from order date, an average of 11.8 days. Add one day to raise and approve the order and one day to receive and put away, and the planning lead time is closer to 14 days than 10.
Why lead time matters for distributors
Lead time sets how far ahead you have to see. The longer it is, the more stock you need to cover demand while you wait, and the more expensive a forecast error becomes. Cutting lead time is often a cheaper way to lower inventory than squeezing safety stock.
Common lead time mistakes
- Using the supplier's quoted lead time instead of measured receipts.
- Ignoring internal time to approve, send and receive orders.
- Ignoring lead-time variability: the average alone hides the late deliveries that cause stockouts.
Lead time in Supply Chain Manager
Supply Chain Manager uses each supplier's lead time in its safety stock and reorder point, and tracks actual purchase-order cycle time so you can compare the quote with reality.
Open the live demoExamples on this page use made-up round numbers to show the calculation. They are not benchmarks or results from real businesses.