Lead Time

AAA

DEFINITION of 'Lead Time'

The amount of time that elapses between when a process starts and when it is completed. Lead time is examined closely in manufacturing, supply chain management and project management, as companies want to reduce the amount of time it takes to deliver products to the market. In business, lead time minimization is normally preferred.

INVESTOPEDIA EXPLAINS 'Lead Time'

Lead time is broken into several components: preprocessing, processing and post processing. Preprocessing involves determining resource requirements and initiating the steps required to fill an order. Processing involves the actual manufacturing or creation of the order. Post processing involves delivery of products to the market. Companies look at each component and compare it against benchmarks to determine where slowdowns are occurring.

RELATED TERMS
  1. Idle Time

    Unproductive time on the part of employees or machines as a result ...
  2. Supply Chain

    The network created amongst different companies producing, handling ...
  3. Aggregate Supply

    The total supply of goods and services produced within an economy ...
  4. Supply Shock

    An unexpected event that changes the supply of a product or commodity, ...
  5. Transloading

    Transferring goods from one mode of transportation to another ...
  6. Trailer Interchange Agreement

    A contract that arranges the transfer of a trailer to a second ...
Related Articles
  1. Working Capital Works
    Insurance

    Working Capital Works

  2. Economic Indicators That Do-It-Yourself ...
    Investing Basics

    Economic Indicators That Do-It-Yourself ...

  3. Interpreting A Company's IPO Prospectus ...
    Fundamental Analysis

    Interpreting A Company's IPO Prospectus ...

  4. Getting To Know Business Models
    Entrepreneurship

    Getting To Know Business Models

comments powered by Disqus
Hot Definitions
  1. Ghosting

    An illegal practice whereby two or more market makers collectively attempt to influence and change the price of a stock. ...
  2. Elasticity

    A measure of a variable's sensitivity to a change in another variable. In economics, elasticity refers the degree to which ...
  3. Tangible Common Equity - TCE

    A measure of a company's capital, which is used to evaluate a financial institution's ability to deal with potential losses. ...
  4. Yield To Maturity (YTM)

    The rate of return anticipated on a bond if held until the maturity date. YTM is considered a long-term bond yield expressed ...
  5. Net Present Value Of Growth Opportunities - NPVGO

    A calculation of the net present value of all future cash flows involved with an additional acquisition, or potential acquisition. ...
  6. Gresham's Law

    A monetary principle stating that "bad money drives out good." In currency valuation, Gresham's Law states that if a new ...
Trading Center