What is the significance of lead time?

Lead time is crucial in supply chain management and project planning as it represents the duration between the initiation of a process and its completion. It affects inventory levels, production scheduling, and customer satisfaction, as longer lead times can result in stockouts and delays in fulfilling orders. By optimizing lead time, organizations can enhance efficiency, reduce costs, and improve responsiveness to market demands. Ultimately, effective management of lead time contributes to better overall operational performance.