Lead time refers to the amount of time that passes from the initiation of a process until its completion. In business, it often describes the time taken from placing an order to receiving the product. This period can vary based on factors such as production schedules, shipping times, and supplier efficiency. Understanding lead time is crucial for effective planning and inventory management. Shorter lead times can enhance customer satisfaction by ensuring quicker delivery, while longer lead times may require businesses to maintain higher inventory levels to meet demand. Efficient management of lead time can lead to cost savings and improved operational performance.