Lead time covers everything: order entry, engineering review, material procurement, queuing, setup, machining, waiting between steps, inspection, packaging, shipping. Value-adding time, the time actually spent transforming the product, is usually a small fraction of total lead time. The rest is waste in one of the eight categories.
Cycle time measures how long one step takes. Lead time measures how long the entire journey takes. A factory can have short cycle times at every station and still have terrible lead time, because most of the lead time is spent waiting between stations, not working within them. Improving cycle times without shrinking waiting time barely moves lead time at all.
Short lead times let a factory respond to demand as it changes instead of forecasting weeks in advance and being wrong. They shrink inventory because less material is in flight at any moment. They expose problems immediately, before they accumulate. They give the customer what they want when they want it, which is the definition of value.
Value stream mapping to see where the time actually goes. Small batches to reduce queuing. Pull systems to prevent overproduction. Cellular layouts to cut transport and wait. Setup reduction (SMED) to make small batches economical. Standard work to make cycle times predictable. Every lean tool ultimately shows up as shorter lead time.
Lead time is the honest number. It cannot be improved by working faster; it can only be improved by removing waiting. That is why it is such a good measure of how lean a factory really is, and why it is the number customers feel most directly.
