What is meant by "lead time" in the context of supply chain management?

In supply chain management, "lead time" refers to the total time elapsed from the moment an order is placed until the product is received and ready for use. This encompasses several stages of the process, including order processing, production time, and shipping duration. Understanding lead time is crucial for managing inventory levels, planning production schedules, and meeting customer delivery expectations.

Options that refer to training new employees, stockholding duration, or contract negotiations do not encapsulate the essence of lead time within the supply chain context. They focus on different operational aspects rather than the specific timeframe involved in the ordering and receipt of goods. Thus, the definition that indicates the complete timeline from order placement to receipt directly addresses the critical factors influencing supply chain efficiency and responsiveness.