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Glossary

What is Lead Time?

Last updated July 2026

Definition

Lead time is the elapsed time from placing an order to receiving it. Longer and more variable lead times force higher safety stock and inventory.

Lead time drives both the reorder point and safety stock. In industrial and energy supply chains, long-lead spares are a major reason DSI runs high.

Reducing lead-time variability often frees more cash than reducing average lead time.

Part of Working capital & inventory turns.

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