Restock method · 2026
Quick answer: Lead time is the number of days between placing a purchase order and that stock being sellable — and it is the single biggest driver of your reorder point. The formula is reorder point = (average daily sales × lead time) + safety stock, so lead time sits inside the largest term. Most sellers set it once, guess it, and never revisit it. If your true lead time has drifted from 45 days to 70 and your reorder point still assumes 45, you will stock out no matter how accurate your demand forecast is — because the forecast was never the broken part.
Everyone obsesses over the demand side of forecasting. How many units will I sell next month? Is the trend up? Should I trust the seasonality?
Meanwhile the input that actually blows up their reorder point is sitting untouched in a settings field: lead time. It gets typed in once during setup — usually a round number someone half-remembers, like 30 or 60 — and then it is never looked at again, even as suppliers slip, freight slows down, and receiving backs up.
A perfect demand forecast paired with a wrong lead time still stocks you out. Here is why, and how to fix it.
What lead time actually includes (and what everyone forgets)
Most sellers think of lead time as “how long the factory takes.” That is one slice of it. The number that belongs in your reorder point is PO placed → unit sellable, end to end:
| Stage | Commonly counted? |
|---|---|
| Supplier production time | Yes — this is the part people remember |
| QC / inspection before it ships | Often skipped |
| Freight transit (ocean, air, ground) | Usually counted |
| Customs clearance | Often skipped — and highly variable |
| 3PL or prep-center receiving & prep | Often skipped |
| Warehouse check-in until the unit is actually sellable | Almost always skipped — and it can be weeks |
That last row is the one that quietly wrecks reorder points. Stock that has physically arrived is not stock you can sell. Until it is received, checked in, and live, it cannot fill an order — and every day it spends in that limbo is a day your reorder point needed to account for and didn’t.
If your lead time stops at “it landed,” you are under-counting the part of the journey where stockouts are actually born.
The math, in one line
Reorder point = (average daily sales × lead time) + safety stock
Look at where lead time sits. It multiplies your velocity. Which means an error there doesn’t add to your risk — it scales it.
Take a SKU selling 20 units a day, with 14 days of safety stock (280 units):
| Assumed lead time | Reorder point | What happens if the real lead time is 70 days |
|---|---|---|
| 45 days | (20 × 45) + 280 = 1,180 units | You reorder 25 days too late → ~500 units of demand you cannot fill |
| 70 days | (20 × 70) + 280 = 1,680 units | You reorder in time. Same forecast, same product — different input. |
Same demand forecast. Same safety stock. A 500-unit hole, created entirely by one stale settings field.
The bigger trap: you’re using an average
Say you look up your lead time properly and find it averages 55 days. You put 55 in the box. Better — but still not safe.
You do not stock out on an average day. You stock out on a bad one.
If your last six POs landed at 42, 48, 51, 58, 63, and 79 days, the average is 57 — but the 79-day PO is the one that will empty your shelf. Averaging politely hides exactly the tail you need to survive. That spread is precisely what safety stock exists to absorb, which means lead-time variability, not lead-time average, is what should be sizing your safety stock. Two suppliers can share an identical 55-day average and carry completely different risk: one that always lands between 53 and 57 needs very little buffer. One that swings between 30 and 85 needs a lot.
The practical version: don’t just record the average of your last several POs — record the spread. Your reorder point should be built on a lead time you’d bet on in a bad month, not the one you’d quote in a good one.
Lead time is a per-SKU number, not a company number
A single brand-wide lead time is a convenient fiction. In a real catalog:
- Your domestic supplier turns around in 21 days. Your overseas one takes 90.
- One SKU ships in a container. Another is small enough to air-freight when it gets tight.
- A supplier changes, and one product line’s lead time moves while the rest stay put.
Apply one blended number across all of that and you get the worst of both: your fast SKUs carry cash they don’t need, and your slow SKUs stock out anyway. Lead time belongs on the SKU, with a sensible brand-level default behind it for the ones you haven’t tuned yet.
How SKU Compass handles it
Lead time is a first-class input to the restock engine, not an afterthought. Per-SKU reorder points are built from velocity, lead time, safety stock, coverage, MOQ and case pack — and lead time is set at the brand level as a default (adjustable anywhere from 1 to 365 days), with a per-SKU override for the products that don’t behave like the rest of your catalog.
Two things worth knowing:
There is a default, and defaults are sticky
Out of the box the brand-level lead time is 60 days. That is a reasonable starting assumption — and a terrible permanent one. If your real lead time is 30 days, a 60-day setting has you reordering far earlier than you need to and parking cash in stock that could have stayed in your bank. If it’s 90, you’re stocking out on schedule and blaming the forecast.
The system knows whether you’ve ever tuned it
SKU Compass tracks whether a brand’s lead time is still sitting on the default or has been deliberately set. It’s a small thing that tells you something important: an untuned lead time means your reorder points are running on an assumption nobody has ever checked against a real purchase order.
How to fix yours this week
1. Pull your last 5–10 POs per supplier
For each one, record two dates: the day you placed it, and the day the stock became sellable (not the day it landed at the port, and not the day it arrived at the warehouse — the day you could actually fill an order with it).
2. Write down the spread, not just the average
Your best case, your typical case, and your worst case. The gap between typical and worst is the number your safety stock has to cover.
3. Set it per SKU where it actually differs
Start with the SKUs that hurt most when they go out — your top sellers and your longest-lead items. Those two lists are where a stale lead time costs the most.
4. Put a reminder to revisit it every quarter
Lead time is not a constant. It drifts — suppliers get busy, freight lanes congest, receiving slows down in Q4 exactly when you can least afford it. A number you set in January is a guess by October.
See what your reorder points look like with a real lead time
Connect your Amazon and Shopify data and SKU Compass builds per-SKU reorder points from your own velocity and lead time — free for 30 days, no credit card required.
Frequently asked questions
What is lead time in inventory management?
Lead time is the number of days between placing a purchase order and that stock becoming sellable. It includes supplier production, QC, freight, customs, and receiving — not just the factory’s turnaround. It is the largest driver of your reorder point.
How does lead time affect the reorder point?
Reorder point = (average daily sales × lead time) + safety stock. Lead time multiplies your daily velocity, so an error in it scales your risk rather than just adding to it. Understating lead time by 25 days on a SKU selling 20 units a day leaves a 500-unit hole.
Should I use my average lead time?
Not on its own. You don’t stock out on an average day — you stock out on a bad one. Record the spread across your recent POs, not just the mean. Lead-time variability is what should be sizing your safety stock; two suppliers with the same average can carry very different risk.
Can lead time be set per SKU?
It should be. Different suppliers and shipping modes mean different lead times within the same catalog, and a single blended number over-stocks your fast SKUs while stocking out your slow ones. In SKU Compass, lead time has a brand-level default with a per-SKU override for products that don’t behave like the rest.
Related reading:
What is a reorder point? ·
Reorder point calculator ·
How to calculate safety stock ·
How to prevent stockouts on Amazon