What is lead time? (and why it matters for your store)

Lead time is the time between a customer placing an order, or you placing one with a supplier, and the goods actually arriving. Everyone thinks of it as the courier's journey. It is really the total of every step in the chain.

A clear illustration

Suppose you sell stainless steel lunch boxes that you buy from a supplier. You want to restock.

• The supplier takes 10 days to prepare and dispatch your order.
• Shipping to you takes 4 days.

Your lead time for restocking is 10 plus 4, which is 14 days. If you wait until your shelf is empty to reorder, you will be out of stock for two weeks. That is the cost of not knowing your lead time.

This is one number. The customer faces a different one. When a shopper orders from you, her lead time is how long you take to pack plus how long the courier takes. Two lead times, two jobs: yours with your supplier, hers with you.

Why it matters

1. It decides when you reorder. You must order while you still have stock to cover those 14 days of waiting. See setting a reorder point for your products and reorder point formula, a worked example.
2. It decides what you can promise. Telling a customer "3 days" when your own packing takes 2 and the courier takes 5 is a promise you cannot keep.
3. It shapes your cash. Money paid to a supplier is stuck for the whole lead time before it comes back as sales. Working capital, a simple formula for sellers shows why.

Where lead time hides

Look at the steps one by one:

• Supplier or workshop preparation time
• Transit to you
• Quality checking and labelling
• Your packing and dispatch cut-off
• Pickup by the courier
• Delivery to the customer

Each looks small. Together they can surprise you. Many sellers measure only the last one.

How to measure yours

Take your last five restocks. Write the date you placed the order and the date it reached your door. Find the average, and note the longest. Plan around the longer number, not the shorter. Then do the same for customer orders: order time to delivery time, from your own records.

Promising customers a time

I cannot promise courier timings, and neither should you beyond what you can see in your own records. When you set an expectation, add a margin and be clear about what you control. Setting honest delivery time expectations has examples of wording.

In your Varchas admin

Orders move through statuses such as New, Packed, Shipped and Delivered, so the timestamps and states help you see where orders spend their time between placing and delivery. That is your own lead time data waiting to be read. Export it and look for the slowest step; exporting store orders to a spreadsheet explains how.

Next step

Write your supplier's lead time on the first page of your stock notebook. Then count back from your fastest-selling item and see whether you are already late.