In the apparel export business, garment exporters get lead time from the buyer’s end for shipping finished garment. Sometimes the buyer gives fixed lead time for their orders or buyer asks suppliers to decide the best possible lead time and they mutually agree on a date for shipment. Shipment lead time may vary depending on order volume and product line. This post covers what does lead time means to a supplier and how to calculate the lead time for an order.

What does lead time mean in an export order?

Lead time is the duration from receiving an order to shipping it to buyer. Normally ex-factory date is considered as shipping date. It is expressed in number of days.

Example, if a factory received an order on 1st of January, 2022 and buyer asked to ship the order on 31st March, 2022. Here order lead time is 30(Jan) + 29(Feb) + 31(March) days = 90 days.

Before confirming an order, the buyer should not mention the date the order will be ready (lead time) to the supplier. Instead, they should ask the supplier to calculate and propose a lead time based on the order quantity, process time, supplier production capacity, product development time, and material sourcing time. If the buyer does not mention the ex-factory date, how can the supplier calculate the lead time for an export order?

How to calculate lead time of an order?

Step 1: A Time and Action (TNA) calendar is the best way to prepare for and keep track of your activities, lead times, and deadlines. A TNA template can help you make a list of activities quickly and calculate lead times easily. Remember to also take into account your country’s holiday calendar as well as the buyer’s holiday list when preparing your TNA calendar.

Step 2: In order to accurately calculate the lead time for an order, you will need to determine the process time for all preparatory work, sourcing of materials, sampling, approvals, production, and finishing. To do this, you will need to calculate the production capacity for each process involved in the order. This process should take into account any process start-up time, as well as any weekly off days or holidays that may occur in between processes. For any external processes (such as lap-dip or sample approval) that are not under your direct control, you will need to obtain the necessary process time information from the buyer or supplier.

Step 3: Get a commitment from your supplier for material delivery. According to your sourcing schedule, plan your PCD date. You’ll need a few days for fabric approval before starting bulk cutting.

Step 4: Prepare critical path for all processes and events. This is important to understand which all processes can be done parallel and which all process can’t be started without completing previous process. Consider overlapping of multiple processes and working on multiple processes in the same time period. This way you can reduce lead time.

Step 5: Next step is to write down the start date and end date of the given order. This will help get finish each process quickly.

Step 6: With the received information regarding the receiving date, production completion, and finishing completion date.

• Count days required to complete each event.
• Write dates to complete each of the events in the path.
• To get the total duration between receiving and order and shipment date, count total days from order receiving date to shipment date.

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