Variable Lead Time describes situations where the time between placing an order and receiving goods fluctuates due to factors like supplier performance, transportation delays, or production variability. This unpredictability complicates inventory management and increases the risk of stockouts or excess inventory. To manage variable lead times, companies use statistical methods to estimate average and worst-case lead times and adjust safety stock accordingly. Inventory optimization systems incorporate lead time variability into reorder point calculations to balance service levels and costs. Improving supplier reliability, enhancing communication, and using advanced tracking technologies can reduce lead time variability. Reducing this uncertainty leads to leaner inventories, lower carrying costs, and more predictable supply chain operations.
