What is Procurement lead time?

If you do not know your procurement lead time, you either order too early and tie up cash in stock, or order too late and run out. Small store owners often guess this number from memory, which is risky when a supplier changes factories or shipping methods.

Track procurement lead time per supplier and per SKU, not as one store-wide number. A local candle supplier might ship in 3 days while an overseas apparel supplier takes 8 weeks. Use the actual time from past orders, not the time quoted in an email.

Formula

Example

A candle store orders jars from a supplier on March 1. The supplier takes 5 days to produce and pack the order, then ships it, which takes 4 more days. The jars arrive and are checked into stock on March 10. Procurement lead time for that supplier is 9 days.

Common mistakes

• Using the supplier's quoted lead time instead of the actual historical time.
• Treating lead time as fixed when it varies by season or shipping method.
• Forgetting to include the time stock sits unprocessed after it physically arrives.

Procurement lead time and SteadyShelf

SteadyShelf uses each supplier's lead time to calculate an order-by date per SKU, so you place purchase orders before stock actually runs low.

SteadyShelf is launching on the Shopify App Store. Join early access to get the install link first.

Related terms

Lead time · Supplier lead time variability · Transit time · Reorder point · Purchase order

Full inventory glossary

FAQ