Dynamic Hedging Strategy

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Definition / Meaning of

Lead Time

Categories: Business and Management, Marketing, Operation and Production,

the time interval between the start of an activity or process and its completion, for example, the time between ordering goods and their receipt, or between starting manufacturing of a product and its completion in inventory control, the time between placing an order and its arrival on site. Lead time differs from delivery time in that it also includes the time required to place an order and the time it takes to inspect the goods and receive them into the appropriate store. Inventory levels can afford to be lower and orders smaller when purchasing lead times are short. in new product development and manufacturing, the time required to develop a product from concept to market delivery. Lead time increases as a result of the poor sequencing of dependent activities, the lack of availability of resources, poor quality in the component parts, and poor plant layout. The technique of concurrent engineering focuses on the entire concept-to-customer process with the goal of reducing lead time. Companies can gain a competitive advantage by achieving a lead time reduction and so getting products to market faster.