Certified Professional Public Buyer (CPPB) Practice Test

How is lead time defined in supply chain management?

1. The time taken from beginning production to delivery

2. The period from order placement to delivery

3. The time spent by employees in logistics

4. The duration it takes to manage inventory

The correct answer is: The period from order placement to delivery

Lead time in supply chain management is defined as the period from order placement to delivery. This definition encapsulates the entire process that a purchase order undergoes, starting from when a buyer places an order with a supplier until the goods are received and ready for use or sale. Understanding lead time is crucial for effectively managing inventory and ensuring timely delivery to customers. It impacts various aspects of the supply chain, including production scheduling, inventory management, and customer service. The efficiency of the lead time can greatly influence overall operational performance, as shorter lead times often lead to improved responsiveness to market demands and better customer satisfaction. In contrast, other choices do not accurately capture the concept of lead time. For instance, the time taken from beginning production to delivery relates more specifically to manufacturing time, rather than the broader scope of order fulfillment. The time spent by employees in logistics does not measure lead time; it focuses instead on labor aspects within logistics operations. Lastly, the duration it takes to manage inventory pertains to inventory management processes rather than the timeline associated with order fulfillment.