Production lead time is the time between acceptance of an order to the shipment of the finished product regardless of actual production time. The lead time includes actual cycle time, order processing time, and time lost due to the 7 Wastes of production. Lead times in traditional manufacturing facilities tend to be in excess of eight times the actual total product cycle time and can even be hundreds of times the actual total product cycle time.
Lead time is distinguished from cycle time by the scope of operations included. Cycle time is the time required for one operation. Lead time is the time it takes for the process that includes many operations. Lead time can be defined to start and stop at any point in the business process or transaction; it can be defined to start at shipping and end at payment collection if the billing and collections process is the subject of intended improvement.