Lead times play an important role in supply chain planning and scheduling. Efficiency and agility of supply chain is dependent on accurate lead time information.

Lead time consists of two main elements, they are fixed lead time and variable lead time. Fixed lead time doesn’t change for an item and it is constant. Examples are setup may be same whether to manufacture one item or 100 items.

Variable lead time is proportional to either quantity or lot size. Examples are assembly time to assemble one item is 10hrs and 2 items are 20hrs, it is proportionate to quantity(size) of operation. Other example could be like painting operation in a batch mode and batch size is 100, if you paint one item or 100 items is in same 10hrs, if the size is of the batch is 101 then lead time becomes 20hrs as they need to start another batch.

Lead times can be calculated automatically (rolled-up to higher level) or can be manually maintained. Usually all purchased/buy parts it is maintained manually. For all manufacturing items it is rolled-up (calculated).

Changing lead times can have immediate impact on open work orders, purchase order & sales orders.