How is lead time defined in supply chain management?

• A. The time from starting production to shipping.
• B. The total time from when a customer places an order to when they receive the product, including order processing, production, and delivery.
• C. The time to pay for goods after receipt.
• D. The time goods spend in inventory before being ordered.

Answer: (B)

Lead time in supply chain management is the total time from when a customer places an order to the moment they receive the product. It includes everything from processing the order, through any production or assembly, to the actual shipping and delivery. This full order-to-delivery window is what customers experience and what a company must manage to meet promised timelines and maintain service levels. Breaking it down helps: order processing time covers what happens once the order is received, production lead time covers any manufacturing or assembly, and transport time covers getting the finished product to the customer. The other options describe only parts of that flow or different concepts entirely—for example, focusing only on production steps, or on payment timing, or on how long inventory sits before being ordered.