Lead Time Calculator: Definition, Examples & Guide

Lead time is one of the key Kanban metrics that allow us to understand the team’s velocity and identify issues early on. Lead time shows us the average time it takes for the team to complete a task from the time it was requested. To track this metric, teams can use lead time calculators (included later in the post) or review automatic lead time reports found in the Kanban board tools.

What is Lead Time?

Lead time is the average time it takes for the team to deliver an item to the client from the time it was requested.

In other words, lead time represents the total amount of time an average item spends traveling from the backlog to the completion stage on your Kanban board. This metric comes in very handy when you need to give estimates to clients or better understand what are the delivery terms for your work.

For example, by knowing that the average lead time is 10 days, you can estimate the delivery window will be longer for larger items, and equal to 10 days or shorter for smaller items in your Backlog. This gives valuable insight into your Kanban projects and allows for more precise estimation.

How to Measure Lead Time?

To measure lead time, you will simply need to calculate the difference between the item’s completion and creation dates. For example: Let’s say an item was created on the 1st of September 2022 and finished on the 10th of September 2022. The lead time, in this case, would be the difference between these dates, which is 9 days.

In most cases, lead time is measured in days. Alternatively, for more fast-paced environments you can measure lead time in hours and with slower processes, it could be measured in weeks or months. However, if you are using the smaller or larger metrics, it could potentially indicate that your items are too small or too big of a size and should be adjusted.

Lead time percentiles

Most teams track the average lead time to get an understanding of the whole progress. However, there is also value in tracking certain percentiles in your data. Most commonly – the 95th, 80th, and 70th percentiles. This allows us to take a deeper look into the data and better understand the largest outliers (items that take longer than the average to complete) and how they affect the overall lead time.

Here, you can see a graph from Teamhood depicting the largest percentiles and their averages tracked for the past 4 months. As you can see, there was a large spike in the 95th percentile in June that later dropped. Indicating the team’s process has become more effective overall.

Lead Time Calculator

Lead time is calculated by subtracting the request date of an item from the delivery date for the item. The resulting difference in the lead time for that item.

Item lead time = Item delivery date – Item request date

As you can see, the calculation of lead time is quite simple. However, when you need to get an average for a hundred or more items on your board, this becomes an unnecessarily large task. So, instead of calculating the lead time by hand, most teams rely on the lead time calculators built into their Kanban board software. Most of such tools, offer automated reports that show the average lead and cycle time, as well as other Agile metrics.

For example, in Teamhood you will find a performance metrics report that shows the items aging in progress, lead time, amount of new vs completed items, as well as specific items that are overdue or taking longer than expected.

If you do not use one of the free Kanban solutions, you can track the lead time metric by using a manual calculator. Here is one we found to be handy from Free online calculators.

Lead Time Examples

Depending on your process and the type of industry you work in, there may be a need to track different lead times instead of just one. In such cases, the different lead times mark the specific processes that need to happen between the initial request and its completion.

For example, in a manufacturing company, there may be a need to track 3 separate lead times – customer, material, and production. The customer lead time would measure the time from the initial request to the completion of the order. The material lead time would indicate how much time will it take to get the materials needed to execute the order. And the production lead time would identify how much time it would take to manufacture the product when the materials arrive. By adding up the material and production lead times you would get the customer lead time.

By dividing the lead time, the company will be able to track the processes more closely and know where the problem lies if delays occur.

Looking for a Kanban board that offers time tracking as well as lead and cycle time reports? Check out this post comparing the best kanban time tracking solutions.

Automated Lead Time Calculator in Teamhood

Ready to start tracking lead time for your team? Check out Teamhood for a free Kanban board with WIP limits and automated Kanban board metric tracking. Easily compare the lead and cycle time and get additional insights into which items need more focus.

Kanban System with Lead time Calculation

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