Inventory 101 - Lead time Calculation

Inventory Management 101 – Lead time Calculation

Lead time is the time between the initiation and completion of a production process.

Total Lead time is the total time that need perform production till completion. These includes Supply chain management, manufacturing ,logistics transportation and clearance.

How to calculate lead time?

Sample of Total lead time for production and export

Total Lead time (for incoming and outgoing inventory or SKUs)

= Supply Chain Management + Manufacturing + Logistics + Transportation

How to calculate total lead time in Excel  

1.    Input your date (in this example is either at Purchase Order Creation date or Sales Order Creation date)

2.    Input the Supply Chain Management and Production Lead time. This should be in days (in this example enter the total days at Supplier Lead time or Kitting and Production Lead time).

3.    Input the Logistics and Transportation Lead time. This should be in days (in this example enter the total days at Logistics).

4.    Total Lead time (Days) is the sum of Supply Chain Management, Production Lead time and Logistics) (e.g. D6=B6+C6)

5.    Create a formula to add the days to the date (e.g. E6=A6+D6)

6.    Estimate Arrival date (ETA) is the either Purchase Order Creation Date or Sales Order Creation Date . Format the result as a date.

About the Author

Grace is a freelancer for Supply Chain Management specialized in helping companies reducing operation costs and increase profits through optimized Supply Chain, Sourcing and Procurement Operation.

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