Lead time

Order Monday, goods on the shelf a week on Thursday. That is ten days, not the seven the supplier quotes.

Measure the whole thing

The quoted figure usually starts when the supplier accepts the order and ends when it leaves their building. Yours has to include:

• The days between you deciding and the order actually going out
• Their processing time
• Transit
• Your own putaway, because stock in a box by the door is not sellable

Work out your own

Take the last ten deliveries from that supplier. Count the days from order sent to stock on the shelf. Use the longest one, not the average.

You do not reorder for a typical week. You reorder so you do not run out in a bad one, which is what safety stock is for.

Where it goes wrong

Lead time gets treated as fixed. It stretches in the run up to Christmas, it stretches after a factory shutdown, and it stretches when you are a small account and someone bigger orders first.

The number also hides variation. A supplier averaging eight days but swinging between four and eighteen needs a much higher reorder point than one that takes ten days every single time.