Lead Time

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.

BREAKING DOWN '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.

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