Average lead time refers to the average duration between placing an order and receiving the goods. It is an essential metric in inventory planning, as it directly impacts reorder point calculations and safety stock levels. The lead time can vary by supplier, product, or mode of transportation. Accurate understanding of average lead time enables better forecasting and minimizes the risk of stockouts or overstocking. Variability in lead times is especially critical to manage, as it affects the reliability of supply and inventory service levels. Tools such as lead time analysis and supplier scorecards help optimize this metric.
