Lead time is the total time from an order or item starting in the process until it is finished and delivered — including all waiting and inventory time. It differs from process time, which is only the time actively worked on the item.
The ratio between process time and lead time (flow efficiency) is often shocking: minutes or hours of work take weeks to get through the system, because the item waits in queues and buffers 95% of the time.
Little’s law gives the relationship: lead time = work in progress (WIP) ÷ throughput. To halve lead time without increasing capacity, you must halve WIP.
The most common measurement error is starting the clock too late. Measure only from “the order is released to production”, and all the waiting the customer actually experiences disappears — the number looks good while delivery performance does not. Measure from the customer’s order to the customer’s receipt; anything else measures your internal comfort, not your delivery time.