Updated on March 18, 2023
Lead time is defined as the time taken from the start of a process to its completion. Lead time concept is used prominently during the pre-processing, processing and post-processing stages and is largely applicable for project management, construction, supply chain management and manufacturing industries, though it is used in customer facing businesses as well. Lead time is also used as an indicator of efficiency in these industries and the results are benchmarked against the established lead time indicators for various activities.
Why is Lead time important?
Lead time is used for:
1. Identification of inefficient systems or processes internally
2. Improvement in productivity, streamlining of operations & manufacturing processes and increase in output
3. Shorter lead time results in demand uptick, quick turnaround, faster movement of goods and better sales
4. Better capital allocation and investment in strategic sectors
5. Increased customer satisfaction and repeat customers