Supplier Lead Time & Reordering

Understand how long suppliers really take and build that into when and how much you reorder.

4 lessons 35 min 5-question assessment 75% to pass

What you’ll learn

Define supplier lead time and its parts

Measure real lead time, not the promise

Build lead time into reorder timing

Handle lead-time variability

Lesson 1 of 4 Reading 8 min

What lead time is

Lead time is the total elapsed time from placing an order to having the stock on your shelf ready to sell. It includes order processing, supplier production or picking, shipping, and your own receiving and putaway.

It matters because lead time is the window during which you are selling without resupply — the longer it is, the more stock you must hold to bridge it. Underestimating lead time is a direct cause of stockouts.

If you think a supplier takes 5 days but the true door-to-shelf time is 8 (2 to process, 4 to ship, 2 to receive and putaway), every reorder point built on "5" is 3 days short. At 20 units/day that is a 60-unit gap — enough to empty the shelf before each delivery lands.

Key takeaways

Lead time is order-to-shelf, not just shipping.
It includes processing, production, shipping, and receiving.
It is the window you sell without resupply.
Example: a true 8-day lead time vs an assumed 5 leaves a 60-unit gap.

Lesson 2 of 4 Practice 9 min

Measuring real lead time

Measure lead time from your own records: the time between each PO date and its goods-received date, averaged over recent orders. The supplier’s promise is a starting point, not the truth.

Measuring matters because suppliers quote optimistic lead times and reality includes their delays, customs, and your receiving backlog. Planning on the promise rather than the measured average bakes in stockouts.

If a supplier promises 5 days but your last six POs took 6, 8, 7, 9, 6, and 8 days, your measured average is about 7.3 days — nearly 50% longer than promised. Reordering on 7.3 (with a buffer for the worst case of 9) is honest; reordering on the quoted 5 guarantees you run dry before deliveries arrive.

Key takeaways

Measure PO-date to goods-received date over recent orders.
The supplier’s promise is a starting point, not the truth.
Promises are optimistic; reality adds delays.
Example: a "5-day" supplier may actually average 7.3 days.

Lesson 3 of 4 Reading 9 min

Building it into reordering

Lead time drives reorder timing: you must reorder while you still have enough stock to last the whole lead time, plus a buffer. The reorder point is, at its core, demand across the measured lead time.

Building it in matters because the reorder point and the lead time are two halves of one calculation — get the lead time wrong and even a carefully tuned reorder point fails. Accurate lead time is what makes reordering reliable.

With a measured 7.3-day lead time and 20 units/day demand, you need a reorder point around 20 × 7.3 ≈ 146 plus a safety buffer, not the 100 that a 5-day assumption gives. Feeding the real lead time into AWRA’s reorder point is the difference between stock landing just in time and landing two days after the shelf emptied.

Key takeaways

Reorder while stock can last the whole lead time plus buffer.
Reorder point is essentially demand across lead time.
A wrong lead time defeats even a good reorder point.
Example: 20/day × 7.3 days ≈ a 146-unit reorder point, not 100.

Lesson 4 of 4 Reading 9 min

Handling variability

Lead times are not fixed — they swing with the supplier’s workload, season, and shipping. The wider that swing, the more safety stock you need to cover the slow deliveries, not just the average one.

Handling variability matters because planning on the average alone means you stock out roughly half the time a delivery runs late. Safety stock sized to the variability, not just the average, is what keeps you covered on the bad weeks.

If lead time averages 7.3 days but ranges from 6 to 9, a delivery taking the full 9 burns 20 × 9 = 180 units against a 146 plan — a 34-unit gap a buffer must absorb. A supplier whose lead time swings wildly (5 to 14 days) needs far more safety stock than a steady one, or a second supplier to reduce the risk.

Key takeaways

Lead times swing with workload, season, and shipping.
Wider swings demand more safety stock.
Planning on the average alone stocks out on late weeks.
Example: a 9-day delivery vs a 146 plan needs a buffer to cover 34 units.

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Supplier Lead Time & Reordering

What you’ll learn

Course content

What lead time is

Measuring real lead time

Building it into reordering

Handling variability

Finished the material?

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Warehouse & Locations

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