Every day your inventory sits in transit or in production is a day you can't sell it. Long lead times force you to forecast further into the future—and the further out you forecast, the more wrong you'll be. They tie up working capital in inventory buffers and make your whole supply chain less responsive to change.
But here's what most brands get wrong: they think cutting lead times requires expensive air freight or moving production closer to home. Those options work, but they're not the only options. The biggest lead time improvements often come from fixing processes, not paying for speed.
Understanding What Makes Up Lead Time
Total lead time isn't just how long it takes to ship something. It's the entire duration from when you decide to order until product is available to sell. That includes:
- Order processing time: How long from when you send a PO until the supplier confirms and starts working on it
- Production time: How long to actually make or prepare the product
- Supplier lead time: Any delays on the supplier's end before shipping
- Transit time: Actual shipping duration
- Receiving time: How long from dock arrival until items are checked in and available in your system
Most brands obsess over transit time because that's the number suppliers quote. But transit is often only 30-40% of total lead time. The rest hides in handoffs, queues, and internal processing.
Quick Wins: Fixing Internal Lead Time
Before negotiating with suppliers or paying for faster shipping, look at what you control.
Speed Up Purchase Order Creation
How long does it take from identifying a need to sending a PO? If orders sit waiting for approvals or someone to manually enter them, that's lead time you're adding. Consider setting approval thresholds so routine reorders don't need executive sign-off. Use automated PO creation based on reorder points instead of waiting for someone to notice low stock.
Streamline Receiving
Product that's sitting on a dock or in a staging area isn't available inventory. Measure your dock-to-stock time—how long from when a truck arrives until those items show as available in your system. Common fixes include scheduling receiving appointments so you're staffed appropriately, using mobile scanning to check items in immediately, and pre-receiving against ASNs (advance ship notices) so you're ready when product arrives.
Reduce Order Frequency, Increase Order Size
This seems counterintuitive, but hear it out. If you're placing small orders frequently, you're paying lead time penalties on every single order. Consolidating into larger, less frequent orders means fewer total lead time cycles per year. Yes, this ties up more inventory, but run the math—sometimes the inventory carrying cost is less than the cumulative lead time costs.
Working With Suppliers to Reduce Lead Time
Share Forecasts, Not Just Orders
Suppliers can't start preparing your order until they receive it. But if they know what's coming, they can position raw materials, schedule production time, and allocate capacity in advance. Sharing rolling forecasts—even rough ones—lets suppliers plan ahead. A supplier who sees your order coming can often deliver faster than one who's surprised by it.
Negotiate Stocking Agreements
For products with predictable demand, ask suppliers to hold finished goods or raw materials for you. A stocking agreement might add a small carrying cost, but it can cut weeks off your lead time by eliminating production queuing. This works especially well for base products or components that feed into multiple finished goods.
Understand Your Supplier's Constraints
Sometimes long lead times aren't about production capacity—they're about one constrained resource upstream. Maybe your supplier is waiting on a specific raw material that's on allocation. Maybe they batch certain processes weekly instead of daily. Understanding where time actually goes helps you target improvements. Ask your suppliers: where does my order spend the most time waiting?
Consider Supplier Location Strategically
Moving all production domestic is expensive, but what about splitting? Keep fast-moving, predictable SKUs overseas where costs are lower. Move volatile or new products to domestic suppliers where you can react faster. The blended lead time and cost might be better than all-or-nothing.
Transit Time Improvements That Make Sense
Yes, air freight is faster than ocean freight. But at 4-6x the cost, it rarely makes sense as a standard practice. Here's when it actually pays off:
- Emergency stockout prevention: If you're about to lose $50,000 in sales, spending $5,000 on air freight is smart.
- New product launches: When you can't forecast demand yet, shorter lead times reduce the risk of getting stuck with excess inventory if the product flops.
- High-margin, low-weight products: The economics of air freight favor small, valuable items where freight cost is a tiny percentage of product value.
For regular replenishment, look at faster ocean options first. Express ocean services are typically 20-30% more expensive than standard—much less than air—and can cut 1-2 weeks off transit times. Also consider your port of entry and inland routing. Sometimes a different port or using rail instead of truck changes the math.
Measuring Lead Time Performance
You can't improve what you don't measure. Track these metrics by supplier and by SKU:
- Quoted lead time vs. actual lead time: Are suppliers delivering when they say they will?
- Lead time variability: Consistent 30-day lead times are easier to plan around than lead times that bounce between 20 and 45 days.
- Total lead time breakdown: Where is time actually going? Order processing, production, transit, receiving?
Review these monthly with your top suppliers. Make lead time performance part of your supplier scorecard alongside quality and cost.
Common Mistakes to Avoid
- Treating lead time as fixed. Lead times are negotiable and improvable. Don't just accept what suppliers quote as unchangeable reality.
- Focusing only on transit. Transit is visible but often not the biggest chunk of lead time. Map your full order-to-stock process.
- Paying for speed you don't need. Not every product needs the fastest possible lead time. Match lead time investment to demand volatility and margin.
- Ignoring your own contribution. Slow PO processing and receiving add days that no supplier improvement can fix.
- Optimizing in isolation. Cutting lead time only helps if your planning system uses those shorter lead times. Update your parameters after improvements.
Key Takeaways
- Lead time includes more than just shipping—order processing, production, and receiving all add up
- Internal improvements often provide the quickest wins at lowest cost
- Forecast sharing and stocking agreements can cut lead times without changing shipping methods
- Air freight makes sense for emergencies and high-margin items, not routine replenishment
- Measure actual lead time performance by supplier and hold them accountable
Frequently Asked Questions
How can I reduce supplier lead time?
Start by sharing forecasts so suppliers can plan ahead. Negotiate stocking agreements for predictable products. Understand where time goes in your supplier's process and target those bottlenecks. Consider splitting production between distant suppliers for cost and nearby suppliers for speed.
What's a good target for lead time reduction?
Aim for 20-30% reduction as an initial target. Focus first on reducing lead time variability—consistent lead times are easier to plan around than short but unpredictable ones. After stabilizing, work on the average.
Should I pay for faster shipping to reduce lead time?
Only for specific situations: emergency stockout prevention, new product launches where demand is uncertain, or high-margin products where freight is a small cost percentage. For routine replenishment, focus on process improvements and supplier negotiations instead.
How do I convince suppliers to reduce lead times?
Give them something in return. Volume commitments, forecast visibility, longer-term contracts, or better payment terms all give suppliers reasons to prioritize your orders. Make lead time a scored element in supplier reviews so they know it matters to your relationship.
What's the relationship between lead time and safety stock?
Longer lead times require more safety stock to maintain the same service levels. Every week you cut from lead time reduces the inventory buffer you need. Quantify this relationship when building the business case for lead time investments—the inventory savings often justify the effort.