The formula
Lead time = date fulfilled − date requested. For a single process step: lead time = cycle time + waiting time. Because waiting usually dominates, two processes with identical cycle times can have very different lead times.
Types of lead time
- Customer lead time: order placed to order received by the customer.
- Production (manufacturing) lead time: release to the floor until the finished product is complete.
- Procurement lead time: purchase order to receipt from the supplier.
- Cumulative lead time: the longest chain of procurement plus production needed to make the product from scratch.
Lead time, cycle time and takt time
Cycle time is how long one unit takes at a process. Takt time is the rate the customer requires. Lead time is the elapsed time through the whole chain. A value stream map shows the three together: processing time is typically a small fraction of lead time, and the gap is waiting, inventory and transport.
How to reduce lead time
- Map the value stream and measure waiting at each step.
- Cut batch sizes so work does not queue behind the batch ahead.
- Reduce changeover time with SMED, which makes small batches practical.
- Balance the line so no step starves or floods the next.
- Remove approvals and handoffs that add waiting without adding value.
- Fix the causes of unplanned downtime and rework, which create queues.
Why lead time matters on the board
Lead time is the delivery measure the customer feels. On a tier board it sits beside schedule adherence and on-time delivery; when it slips, the daily meeting asks where work waited, and the answer becomes an action or a problem-solving project.