Supplier lead time
Supplier lead time is the number of days from placing a purchase order to the goods being received and ready for sale; it is tracked as an average together with its variability.
Also calledlead time, procurement lead time, tedarik süresi
Formula
Σ (Goods receipt date − Order date) ÷ Number of deliveries- Order date
- Date the purchase order was sent to the supplier; not the confirmation or approval date.
- Goods receipt date
- Date the goods were counted in and taken into stock.
- Lead time variability
- Standard deviation of actual lead times; an input to the safety stock formula.
Calculator
Enter your own figures and the result updates instantly. The defaults are the figures from the worked example below.
Result9,3 days
Worked example
How to read it, and what good looks like
Lead time has four parts: preparing and sending the order, the supplier's picking or production, transport, and receiving and putaway. Measurement starts at the order date and ends at the goods receipt date, and both ends are fixed in writing. Keep the lead time the supplier committed to separate from the actual one; the gap explains the on-time component of OTIF.
"How many days should lead time be?" depends on the supply type; the benchmark is the lead time agreed with the supplier and your own delivery history. The real decision variable is variability, not the average. Safety stock = Z × √(Lead time × Demand deviation² + Daily demand² × Lead time deviation²). In the example, a deviation rising from 2 to 5 days lifts safety stock from 179 to 418 units. Weigh a cheaper but inconsistent supplier's price advantage against the carrying cost of that extra stock.
Record lead time at every delivery and show average and deviation together in the monthly supplier report; a supplier whose deviation is rising goes onto the buying agenda. In Mindpera, Mind Stock records the goods receipt as a stock movement with its date; Mind Ops calculates lead time with a defined formula and routes any supplier over threshold to its owner's task list. Where the order date sits in the ERP and the receipt on a handheld terminal, installation brings them onto the same line.
Where it misleads
- Only the average is tracked; of two suppliers with the same average, the inconsistent one doubles safety stock and the report never shows it.
- The confirmation or approval date is used as the start instead of the order date; lead time looks short and planning runs on less stock than it needs.
- Goods receipts are keyed days after physical delivery; lead time looks long and the discussion with the supplier is about the record, not the data.
Data you need
- Purchase order lines and order date
- Goods receipt record and date
- Standard lead time agreed with the supplier
- First and last delivery dates for partial deliveries
Mindpera products that calculate this KPI
Mind Stock
Stop treating stock accuracy as something that waits for a count and a month-end close. See movements in and out, expiry dates and profitability on one screen.
Mind Ops
Run audits and performance across your grocery branches from one place, with a set of more than 100 KPIs. Audits, reporting and camera event tracking meet on the same screen.
Frequently asked questions
- What is lead time in procurement?
- Lead time is the time from placing a purchase order to the goods being received and ready for sale. It covers order preparation, the supplier's picking or production time, transport and goods receipt. Planning uses both its average and its variability; each is a direct input to the reorder point and the safety stock calculation.
- How does lead time affect safety stock?
- In two ways. A long lead time means demand uncertainty has to be covered over a longer period. An inconsistent lead time enters the formula through its own deviation: for a product selling 50 units a day, a rise in deviation from 2 to 5 days lifts safety stock from 179 to 418 units at the same service level.
- From which date is lead time measured?
- From the date the order is sent to the supplier to the date the goods are received into stock. Starting from the confirmation or approval date makes lead time look short, and planning runs on too little stock. For partial deliveries, use the final delivery date, since the order is only complete then; keep the first delivery date in a separate field.