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lead time (in purchasing/procurement)

Contributor(s): Matthew Haughn

Lead time is the amount of time between the commencement and finishing of a process.

In procurement, lead time includes the first effort to initiate acquisition of goods or services, up to the time of their arrival. Procurement lead time includes identifying a need, selecting a good or service and sourcing vendors, in addition to time spent negotiating, ordering and paying. Lead time in procurement also includes purchasing and its lead time. The procurement process is more variable than purchasing lead time, depending on sizes and scopes of what is being procured. Usually lead time in procurement is measured in months.

Purchasing lead time starts when the goods or services are ordered and ends when they are received. This lead time includes availability confirmation, ordering, order acknowledgement, shipping notice, receipt of goods or service, invoice recording and payment. Purchase processes are less customized than procurement processes and tend to have similar best practices across various types of businesses.

This was last updated in April 2016

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