What's a Lead Time - and Why Should You Care?

Display portlet menu

What's a Lead Time - and Why Should You Care?

Display portlet menu

What’s A Lead Time – And Why Should You Care?

Man using a soldering tool to work on a circuit board

A weak link in the supply chain can ruin your delivery times

By Bob Merriman

Amazon has forever changed the way we think about purchasing goods. From food to clothing or technology, we can buy millions of items at a moment’s notice. For a price, we can even get them in a couple of days, if not just a couple of hours.

I’ve seen it time and time again in my own life and, admittedly, have fallen victim to it for birthdays and anniversaries. (Sorry, honey!) While the option to receive something today is appealing from a gratification standpoint, it’s also a trap for poor planning.

This kind of thinking can be extremely problematic in the world of technology products. Many new creators tend to think of their products as being greater than the sum of their parts. While this is generally true, it means that creators are not thinking of the parts that create the sum.

Protect your delivery dates by watching your lead times
In the world of technology components, there is no Amazon to save the day, nor is there a place where you can walk in and pull an item off of a store shelf. The components in your device have to be purchased through a distributor. While you may have a predisposed concept of a distributor as nothing more than a middle man, it may surprise you to learn that most original equipment manufacturers (OEMs) won’t even take customer calls for orders.

Sales is expensive and requires additional overhead: sales staff, support staff, billing processes, order tracking, and on and on. Rather than focusing on those things, OEMs make their technology available to distributors, and you (the customer) purchase the technology from the distributors. This model creates some real advantages for the end customer, but also some very unique challenges.

The benefits of a distributor on lead times
A good distribution partner will provide some value-added services to help you with your design and buying decisions, to ensure you’re getting the right technology for your product. They’ll also help you tackle one of the biggest traps that creators can fall into: lead times.

Since the OEMs require the use of distributors, they use the massive orders from the distributors to create their sales forecasts. The OEMs then create their technology (sensors, batteries, micro controllers, etc.) to satisfy expected demand. This production cycle creates something known as a lead time. A lead time is the time it takes from when you place your order until you actually receive it.

This matters to you as a creator because your manufacturing partner cannot begin producing your product until they have every component in your bill of materials (BOM).

How lead times have a direct effect on delivery, bottom line
For example, let’s say your BOM has five components on it. Four of those components have a 4 week lead time, and one component on your BOM has a lead time of 20 weeks. If you’re that Amazon shopper (like me) who didn’t do a great job of planning, and you place your order today, it’s going to be 5 months (20 weeks) before you can begin production. That can be problematic if you’ve promised investors or crowdfunding campaign backers you’ll be shipping in two months.

Plus, lead times can change seemingly overnight. It’s not uncommon to see a lead time jump from 16 weeks to 32 weeks if a forecast was off or a major player announces a new product.  If the OEMs budget 50 million units of a specific sensor and Apple and Samsung both announce new products using that sensor, it’s not hard to imagine a shortage in product available for smaller customers, resulting in longer lead times and pushed delivery dates.

This is where a strong distribution partner’s factory and OEM relationships can help. Distributors offer a unique service that is outside the wheelhouse of most contract manufacturers. They can help you keep a standing order for specific components with long lead times so that your technology is arriving to your manufacturer on time. They can also simply keep an eye on lead times and let you know when there’s a jump in a component you’re using.

So don’t Amazon your next project. Keep a close eye on your lead times—or get a partner to do it for you so you can focus on your IP.  

What's a Lead Time - and Why Should You Care?

Display portlet menu

What's a Lead Time - and Why Should You Care?

Display portlet menu
Related Articles
internet of things visualization with finger pointing to it
Securing the Keys to the Kingdom: Hardening the IoT-connected supply chain
November 21, 2019
To harden the IoT-connected supply chain, cybersecurity strategies need to move beyond a single enterprise’s digital infrastructure and encompass all the players within the value chain.
two robotic arms
Decreasing Time to Design in the Industrial Internet of Things
April 23, 2019
The huge potential for innovation in industrial IoT (IIoT) offers the promise of significant productivity gains, operational efficiency and bottom line revenue increases, but only if it’s enabled by a supply chain based on reliability, stability an
illustration of two people shaking hands with overlay of data points
How to Turn IoT Insights into Action
By   -   March 22, 2019
While an IoT platform can generate a lot of insight, you don’t improve your organization’s efficiency, increase customer satisfaction, or open a new business opportunity without applying it.
Wi-Fi router on desk
How wireless communication protocols make or break designs
November 11, 2018
The design process includes many critical decisions for engineers, such as which wireless communications protocol to use.
group of professionals in a meeting
How startups can integrate with design partners
November 9, 2018
While it might feel like the rubber truly meets the road at the manufacturing stage, the design process is truly where creators’ great ideas take shape. It’s also where you’ll make major decisions that impact your production and deployment.
Thee men standing around a computer monitor
The 3 IoT Security Fundamentals Startups Need to Know
November 6, 2018
In a startup environment, when funding sources—or lack thereof—are looming every day, security might not be on the top of your mind. Here are 3 reasons why it should ... and what to consider about security.
young professionals in office setting around computer screen
How to Turn Your IoT Solution into Recurring Revenue
By Lou Lutostanski   -   November 6, 2018
Companies in almost every industry are investing in Internet of Things (IoT) applications with high hopes of creating new revenue streams. Here's how you can ensure ROI from your deployment.
Solid Tantalum and Tantalum Polymer Capacitors for Surface-Mount MLCCs
Engineering Considerations for the Substitution of Solid Tantalum and Tantalum Polymer Capacitors for Surface-Mount MLCCs
October 18, 2018
Due to current bottlenecks in the procurement of surface-mount ceramic capacitors, designers are looking for substitutes to keep their production lines running smoothly, and to find long term replacements for hard to find ratings.
Electronic body suits hanging on racks
3 Lessons for Hardware Creators from a Desert Music Festival
September 25, 2018
When a creator has a big idea, they often need a big partner to help them make it happen. Music: Not Impossible was no exception.
Three people sitting around a coffee table playing a game with Spatial Gaming
Hardware Studio Helped Spatial Gaming Get Funding
August 15, 2018
If gaming 1.0 is analog board games and gaming 2.0 is video games, then Spatial Gaming is solidly 3.0—merging face-to-face interaction with high quality graphics using augmented reality.
smartphone showing alarm feature
Key Design Considerations for Selecting the Right RF Antenna
March 16, 2018
Know when to choose standard, when to go custom.
two young men working in lab on prototype
Creators See Progress Moving Technology from Development to Market, but Hurdles Still Remain.
March 6, 2018
See how engaging with a partner that has a robust ecosystem can help creators and startups get new and exciting hardware products to market.
Business people in meeting
IoT for Enterprise: 4 Concerns to Consider Before Deployment
By Michael Lamp   -   March 6, 2018
Interoperability, customization and convergence - some of the main concerns businesses tend to face when it comes to deploying IoT.
young man and woman inspecting equipment in computer datacenter
Buy or build your IoT infrastructure?
By Michael Lamp   -   March 6, 2018
Read about the questions many businesses face when starting to create plans for an IoT project.
Three men standing in stairwell talking
Spending on design up front can save you from long-term pain
February 6, 2018
Spending money in the early phase of development may be painful, but problems with quality, production runs and backers can be far more painful.
Avnet Hardware Studio booth at the 2018 Consumer Electronics Show
Hardware Is Hard, But It Doesn’t Have to Be
January 18, 2018
Independent hardware creators share what cool new tech is out there and how it gets made.
microprocessor chip being examined by worker
Zynq SoMs Decrease Customer Development Times and Costs
March 8, 2017
Xilinx’s Zynq®-7000 All Programmable (AP) System-on-Chip (SoC) provides a new paradigm for embedded system design.
puzzle piece put in place
An Overview of FPGAs: The Solution to Countless Design Challenges
March 7, 2017
The field-programmable gate array as a primary processing element offers many design, debug, and production benefits with few, if any, downsides.

What's a Lead Time - and Why Should You Care?

Display portlet menu
Related Events
3 Ways to Make Your System More Robust
Date: December 4, 2019
Location: Webinar
Ultra96 Technical Training Courses
Date: April 29, 2019
Location: Multiple Locations