Supplier lead time: why it matters and how to reduce it

Lead time is the gap between placing a purchase order and receiving the goods. A supplier with 2-week lead time is very different from one with 8-week lead time—and that difference affects how much inventory you need to hold.

Longer lead time = more buffer stock = more capital tied up.

Why lead time matters for e-commerce

If your supplier takes 6 weeks to deliver and you sell 100 units per week, you need at least 600 units on hand just to cover the wait. Add safety stock for demand spikes or delays, and you're holding 800+ units.

Now imagine your lead time drops to 2 weeks. Suddenly you only need 200-300 units. That's cash back in your pocket.

How to reduce supplier lead time

1. Order smaller, more often. Large orders often trigger production runs. Smaller, frequent orders may ship from existing stock—faster turnaround, less capital tied up.

2. Use local or regional suppliers. Shipping from Asia takes 4-8 weeks. A European supplier might deliver in 1-2 weeks. The unit cost may be higher, but factor in holding costs and the math often works out.

3. Share forecasts with suppliers. If your supplier knows you'll need 500 units next month, they can prepare stock in advance. When your PO arrives, they ship immediately instead of starting production.

4. Automate purchase orders. Manual PO processes add days. If your system generates POs automatically when stock hits reorder points, you eliminate internal delays.

How Stockpilot helps

Stockpilot tracks supplier lead times per product and factors them into reorder point calculations. When stock drops to the threshold, the system suggests a purchase order—or creates one automatically.

You can also export demand forecasts to share with suppliers, helping them anticipate your orders.

The result: faster replenishment cycles, less buffer stock, and fewer stockouts.

The lead time trade-off

Reducing lead time often means trade-offs:

• Higher unit costs from local suppliers
• Smaller order quantities (missing bulk discounts)
• More frequent ordering (more admin)

But holding inventory has costs too: storage, insurance, obsolescence, tied-up capital. For fast-moving products, shorter lead times usually win.

Track your lead times. Measure your holding costs. Then optimize.