Purchase & store glossary
Lead Time in Purchase: Meaning & Calculation
Lead time, in short
Lead time in purchase is the total time from recognising a need to having the material available in the store. It includes internal time (indent, approval, enquiry, PO) and supplier time (processing and transport). It is a key input for reorder level and safety stock.
Also called: Procurement lead time, Purchase lead time, Supply lead time
Most people think of lead time as the vendor's delivery time. In a factory, a big part of it happens inside your own office.
The parts of lead time
| Stage | Who controls it | Typical time |
|---|---|---|
| Indent raised and approved | You | 1–3 days |
| Enquiry and quotations | You and vendors | 2–5 days |
| PO created and approved | You | 1–2 days |
| Vendor processing and dispatch | Vendor | 3–15 days |
| Transport | Vendor or transporter | 1–7 days |
| Receipt, quality check and GRN | You | 1 day |
(Typical ranges, not benchmarks.)
How to calculate it
For each item or vendor, take the last several orders and measure:
Lead time = date of GRN − date of indent
Use the average for planning, and the longest for safety stock.
Example
Bearing 6210 ZZ, last four orders: 9, 11, 10 and 14 days from indent to GRN. Average lead time is 11 days, maximum 14. Of those 11 days, approval and PO took 3. (Illustrative figures.)
Why internal lead time matters most
You can't make a vendor's truck faster. But the days an indent waits for approval, because the owner is travelling or the approver is in a meeting, are fully in your control. Cutting two days of internal delay:
- Lowers the reorder level for every item
- Reduces safety stock, freeing cash
- Cuts emergency "urgent" buying at higher rates
How IndustryPrime handles it
Indents and POs are approved from a phone, with the quotations and last rate in front of the approver, so approvals don't wait for someone to be at the plant. Every PO is tracked from approval to delivery, and pending POs are listed, so late vendors are visible. See mobile approvals and prevent stockouts.