CPIM Practice Exam

What does the term "lead time" refer to in supply chain management?

1. The total time taken from order placement to delivery.

2. The time taken to manufacture a product before it can be shipped.

3. The waiting period between transportation modes.

4. The time taken for product development before production.

The correct answer is: The total time taken from order placement to delivery.

The term "lead time" in supply chain management primarily refers to the total time taken from order placement to delivery. This encompasses all stages of the supply chain process, including order processing, manufacturing, and logistics, providing a holistic view of how long it will take for a customer to receive their order after it has been placed. While other options describe important aspects of supply chain activities, they are more specific to particular phases in the process. For instance, the second option focuses solely on the manufacturing duration, which is only one component of the overall lead time. The third option mentions a waiting period between transportation modes, which is part of logistics but does not account for order processing or manufacturing. The last option pertains specifically to product development, which is separate from the delivery timeline once an order is placed. Thus, the totality captured in the first option best represents the comprehensive definition of lead time in supply chain management.