Supply Chain Performance

Lead time: Why is it important?

In logistics, efficiency is key to meeting market demands and staying competitive. An essential concept in this area is lead time, which directly influences planning, customer…

On January 21, 2025

In logistics, efficiency is key to meeting market demands and staying competitive. An essential concept in this area is lead time, which directly influences planning, customer experience and operating costs. At FM Logistic, experts in logistics warehousing services, we know that managing and optimizing lead time is crucial to improving supply chain processes.

What does Lead Time mean in logistics?

Lead time, or delivery time, is the total period that elapses from the time a customer places an order until it is received. In logistics, this concept also applies to the time required to replenish inventories, produce goods or perform specific tasks within the supply chain.

How can you calculate lead time?

The lead time calculation depends on the logistic context, but generally includes the following stages:

Order processing: Time from the time the customer places the order until it is processed.

Production or preparation: Period required to manufacture or prepare the products.

Transportation: Time required to ship the products to the final destination.

Basic lead time formula:

Lead Time = Processing Time + Production Time + Transportation Time

The importance of optimizing lead time

Reducing lead time not only improves operational efficiency, but also positively impacts customer satisfaction and business profitability.

Benefits of reducing it

Increased customer satisfaction: Shorter delivery times generate trust and loyalty.

Cost reduction: Time optimization minimizes storage and transportation costs.

Operational flexibility: Efficient lead time allows better adaptation to changes in demand.

Competitive advantage: Offering fast deliveries translates into a competitive advantage.

Tips to optimize lead time

Digitalization of processes: Implement technologies to automate order tracking and inventory.

Efficient inventory management: To have a logistics warehousing service that guarantees the availability of products at the right time.

Collaboration with sustainable and reliable logistics partners: Choose companies such as FM Logistic that offer complete and customized solutions.

Freight transport service optimization: Design more efficient routes and use real-time monitoring tools.