Order lead time is a supply chain term that describes the amount of time it takes from when a business orders supplies or products to when they receive them.
Order lead time, also known as purchase order lead time, refers to the amount of time between a business ordering and receiving their products or supplies from a manufacturer. In other words, it describes the order fulfillment timeline, giving businesses an estimate of when their materials or products will arrive.
Many supply chain factors influence order lead time, including material availability, the location of the manufacturer/supplier, the location of the ordering business, and the type and number of items ordered.
The order lead time estimate covers all of the steps it takes between ordering and receiving, which can be extensive depending on the supply chain workflow.
It’s critical for businesses to know their order lead time so they can accurately manage their inventory, predict sales for a given period, and fulfill customer orders. Understanding — and working to reduce — order lead time helps businesses save time and money.