How to reduce lead time?

In a market where e-commerce giants are redefining speed standards and global disruptions (health crises, geopolitical tensions, commodity volatility) demand greater resilience, the companies that succeed are those able to turn lead time into a lever for overall performance.

Reducing lead times is therefore not just about accelerating flows, but about cutting uncertainty and complexity: rethinking supplier collaboration, integrating real-time digital control tools, adjusting multi-echelon stock models, and developing urban logistics closer to customers.

What is lead time?

In logistics, lead time (turnaround time) is the total time required for a product or service to move from order placement to its actual delivery to the end customer. It therefore includes not only transport, but also all supply chain processes: sourcing of raw materials, production, order preparation, transit and final distribution.

A well-controlled lead time is a strategic factor: it directly influences customer satisfaction, the service level (OTIF – On Time In Full), as well as the company’s working capital.

Breaking down lead times

To analyse an overall delay effectively, it’s essential to break it down into several sub-categories:

Procurement lead time

• Time needed to obtain raw materials or finished goods from a supplier.
• Includes order placement, any production at the supplier, and the initial transport.

Example: in the textile sector, sourcing from Asia can account for up to 60% of total lead time.

Production lead time

• Internal manufacturing time, including transformation, assembly and quality checks.
• Heavily dependent on planning, capacity flexibility and equipment availability.

Example: in the automotive industry, optimising Just-in-Time (JIT) flows can reduce this time by several days.

Logistics / transport lead time

Time related to physical transfer, including consolidation, international transit, customs, and national distribution.

Customer lead time (Order-to-Delivery)

Time perceived by the customer between their order and delivery.

This delay has become a central KPI in e-commerce, where the norm has shifted from 5.6 days in 2019 to 2 days in 2025 (source: Fevad and ShippyPro).

Distinguishing Lead Time from Takt Time and Cycle Time

To avoid confusion, it’s crucial to distinguish lead time from other industrial performance indicators:

• Takt time: the production pace required to meet customer demand (production cadence).
• Cycle time: the time needed to carry out a specific task or production step.
• Lead time: covers the whole flow, from the trigger (order) to final delivery.

Concrete example: in an e-commerce company, the packing cycle time for an order may be 5 minutes, the takt time set by demand 1 order every 3 minutes, but the total customer lead time can reach 48 hours including preparation, transport and delivery.

The impact of lead times on Supply Chain performance

1. Inventory and cash costs

Inventory tied up often represents a substantial share of a company’s working capital. According to Slimstock, stock value can account for over 30% of assets, which can heavily weigh on cash flow if logistics processes are inefficient.

Optimised inventory management — through methods such as MEIO (Minimum Expected Inventory Optimisation), segmentation by lead time, or multi-echelon rotation — helps release cash essential for operations.

2. Customer satisfaction and service level

Shorter lead times directly improve customer satisfaction, especially in e-commerce where expectations on speed are increasingly high.

This kind of analysis reveals where coverage is excessive and where efficiency gains are possible.

3. Planning and working capital

Reducing lead times has a direct effect on the cash cycle (Cash-to-Cash Cycle Time, C2C), a KPI often prioritised by finance teams. A shorter C2C cycle means stocks convert into cash more quickly — thereby reducing the need for external financing.

4. Risk and supply chain resilience

Long and volatile lead times increase vulnerability to disruptions — supplier delays, demand swings, logistics disturbances. Supply Chain Risk Management (SCRM) recommends continuous assessment of these risks to ensure supply chain resilience.

Impact table of lead times on Supply Chain performance

Measuring lead times precisely to maximise performance (+ tool)

Overall calculation and composition of lead time

Overall lead time is defined as the total duration between the initiation of a logistics process (for example, an order) and its completion (delivery). It can be expressed by the following simple formula:

However useful, this measure often lacks the precision needed to identify bottlenecks. For greater granularity, it’s recommended to break lead time down by stage:

• Procurement lead time
• Production lead time
• Logistics lead time
• Customer lead time (order-to-delivery)

Segmentation by SKU, coverage and volatility

Beyond simple calculation, a detailed analysis by SKU becomes essential when you are targeting strategic levers

This table reveals over-coverage of products with short lead times, whereas those with long lead times require longer coverage. Such segmentation pinpoints exactly where to adjust stock strategy.

Visibility on volatility

The implication of a long or volatile lead time is twofold:

• Overstock: to compensate for uncertainty, companies tend to oversize inventory.
• Stock-outs: fluctuations disrupt planning and threaten service continuity.

Lead time volatility makes forecasting, planning and customer satisfaction more complex, increasing the risks of stock errors and missed opportunities

Methodological approach: VSM and dual measurement/calculation

For optimal control, combine two complementary approaches:

1. VSM (Value Stream Mapping): map each stage of the process, assign observed times (on site) and identify performance gaps.

2. Analytical calculation: use system data (ERP, WMS) to obtain repeatable overall measurements and track trends. Discrepancies between these measurements and reality on the ground help identify untracked variability

In a nutshell

• The basic calculation is simple but not deeply actionable: Overall lead time = delivery date – order date.
• Step-by-step breakdown, combined with tools such as VSM, allows precise identification of inefficiencies.
• SKU-level segmentation, coupled with coverage and volatility analysis, reveals concrete opportunities to reduce stock and optimise.
• Combined methodology (on-site + calculation) ensures a comprehensive and reliable view.
  
  

Advanced techniques to reduce lead times

Lean, VSM, Kanban & Just-in-Time: manage flows, eliminate waste

Value Stream Mapping (VSM)

Value Stream Mapping (VSM) is a key Lean tool to visualise every step of a process — from initiation to delivery — and identify non-value-adding activities (waste), friction points or logistics bottlenecks. By establishing a current-state map (“as-is”) and a target (“to-be”), teams can prioritise actions to reduce cycle times and improve operational flow.

Kanban and Just-in-Time (JIT)

Kanban, originating from the Toyota system, regulates production or procurement through a pull flow system, synchronised with actual demand. It helps limit work-in-progress, avoid overstock and cut lead times. Just-in-Time (JIT) complements this Lean approach by producing or ordering only what is needed, when it is needed. Industrial cases show spectacular lead-time reductions: for example, Daman Products cut its lead time from 4-8 weeks to 5-10 days thanks to a JIT strategy combined with Kanban.

Robust forecasting & supplier collaboration (APS, ERP, S&OP)

To sustain shorter lead times, you need solid collaborative planning. An APS (Advanced Planning System) integrated with an ERP, under an S&OP (Sales & Operations Planning) process, ensures synchronisation between real demand, production capacity, procurement and transport.

Supplier lead time — the interval between placing an order and receiving goods — is a strategic control point: tracking the contractual vs actual delay and the supplier service level is essential to make forecasts reliable and anticipate lengthening risks.

Diversifying sources & omnichannel strategies

To mitigate uncertainty and logistics dependencies, strategic supplier diversification is essential. It allows you to:

• Soften delays linked to a single supplier.
• Benefit from secondary sources that are geographically closer or more resilient.
• Access new technologies or innovative capabilities.

Combined with omnichannel logistics, this strategy ensures service continuity, better geographical coverage and shorter lead times via satellite warehouses or local sourcing.

Complementary approaches for more responsive logistics

For an experienced Logistics Manager, these complementary approaches are not ancillary, but decisive:

• Multi-echelon optimisation reduces stock and increases responsiveness.
• Green logistics streamlines the last mile and improves sustainability.
• SCRM protects the chain against uncertainty and reduces volatility.

Combined with Lean methods and digital tools (TMS, WMS, APS), they enable the building of a supply chain that is faster, more resilient and more sustainable.

Multi-echelon inventory optimisation (MEIO)

Cutting lead times is not only about improving transport or production processes: it also requires fine-tuned management of stocks across multiple levels of the chain (multi-echelon).

Multi-echelon inventory optimisation (MEIO) aims to size inventory not in isolation per site, but across the entire supply chain. It balances stock between suppliers, central warehouses and local distribution hubs.

Green logistics and urban warehouses

Green logistics plays an increasing role in reducing lead times, particularly on the last mile, often the most expensive and least reliable link.

1. Flow consolidation: pooling shipments reduces the number of journeys and limits delays caused by urban congestion.
2. Urban warehouses: by bringing stock closer to consumption areas, companies can reduce the average delivery time by several days.

Managing volatility and risk (SCRM)

Lead time volatility — due to supplier disruption, geopolitical crises, or weather events — is a critical factor that logisticians must anticipate.

Supply Chain Risk Management (SCRM) offers methodologies to map risks, measure their probability, and establish contingency plans.

Learn more

Conclusion & technical recommendations

Reducing lead times is not a standalone objective: it is a strategic lever that affects operational performance, customer satisfaction and the financial robustness of the company. For an experienced Logistics Manager, the key lies in a systemic approach combining Lean methods, digital tools, inventory control and proactive risk management.

Sustained lead-time reduction rests on a careful balance between operational efficiency and resilience. An overly taut supply chain may indeed speed up flows, but at the cost of increased fragility in the face of crises. Conversely, a strategy that incorporates a margin of flexibility — through intelligently sized safety stocks or diversified sourcing — ensures not only speed but also service continuity.

FAQ on delivery lead times

What is lead time in logistics?

Lead time is the total delay between placing an order and final delivery. It includes procurement, production, order preparation, transport and distribution. Controlling it is essential to improve customer satisfaction and reduce stock costs.

What are the different types of lead time?

There are four main types: procurement lead time (supplier → receipt), production lead time (manufacture and quality control), logistics lead time (transport and transit) and customer lead time (order-to-delivery). Each impacts overall supply-chain performance differently.

How do you calculate overall lead time?

The basic formula is simple: Overall lead time = Delivery date – Order date. For advanced control, it’s recommended to break the delay down by stage (procurement, production, picking, transport) to pinpoint bottlenecks precisely.

Which KPIs should be tracked to optimise lead times?

Key KPIs include service rate (OTIF – On Time In Full), lead-time variability, Cash-to-Cash Cycle Time (C2C), stock-out rate and stock coverage by SKU. Regular tracking of these indicators helps anticipate deviations and make planning more reliable.

When should you favour Just-in-Time (JIT) over safety stock?

JIT is effective in stable environments with predictable demand and reliable suppliers, as it reduces work-in-progress and internal delays. Safety stock, on the other hand, is necessary in uncertain or volatile contexts to cushion production, procurement or transport disruptions.

What role does digitisation play in reducing lead times?

Digital tools such as TMS (Transport Management System), WMS (Warehouse Management System) and APS (Advanced Planning System) optimise routes, automate order preparation and improve forecast accuracy. According to McKinsey, these solutions can reduce logistics costs by 10–20% while improving delivery speed.

How does risk management (SCRM) influence lead times?

Supply Chain Risk Management (SCRM) anticipates disruptions (supplier delays, geopolitical crises, transport congestion) and puts contingency plans in place. This approach increases chain resilience and reduces lead-time volatility.