Inventory glossary
What is Lead time variability?
Lead time variability is how much a supplier's actual delivery time swings above or below the lead time they quote you.
If a supplier always delivers in exactly 14 days, you only need enough stock to cover those 14 days. If the same supplier sometimes takes 10 days and sometimes 25, you need extra safety stock to cover the slow deliveries, or you risk running out before the new stock arrives.
Track actual delivery dates against quoted lead times for each supplier. If the gap keeps growing or swinging widely, raise your safety stock for that supplier's SKUs, order earlier, or talk to the supplier about what is causing the delays.
Formula
Example
A candle supplier quotes a 14 day lead time. Over the last six orders, actual delivery took 12, 14, 13, 20, 15, and 24 days. The average is 16.3 days but the spread from 12 to 24 shows high variability. A store selling 10 candles a day would need extra buffer stock beyond the 14 day quote to avoid a stockout during a slow delivery.
Common mistakes
- Using the quoted lead time as if it were fixed, with no buffer for delays.
- Averaging past delivery times but ignoring how wide the spread is.
- Treating all suppliers the same instead of tracking variability per supplier.
Lead time variability and SteadyShelf
SteadyShelf uses each supplier's lead time to set an order-by date per SKU, so suppliers with wider delivery swings should be given earlier order-by dates to stay safe.
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Related terms
Lead time · Safety stock · Reorder point · Supplier lead time variability · Stockout
FAQ
Why does lead time variability matter more than the average lead time?
Because two suppliers can have the same average lead time but very different risk. One that always delivers in 14 days needs no buffer. One that swings between 10 and 25 days needs extra safety stock even if its average is also 14 days, because the slow deliveries are what cause stockouts.
How do you reduce the impact of lead time variability without carrying huge extra stock?
Order earlier for suppliers with inconsistent delivery, keep a modest safety stock sized to their actual spread, and consider a backup supplier for your most important SKUs if one supplier is chronically unreliable.
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