Lead time in Brazil: what it is, how to calculate it and how to cut it

Lead time is the total time between the start of a process and its completion. When buying, it runs from your purchase order to goods in your stock in Brazil. When selling, it runs from the customer's order to delivery. To calculate it, add the time of each stage; to cut it, attack the longest stage first.

It sounds simple until you import. The supplier says "30 days", the goods reach your warehouse in 70, and nobody can say where the other 40 went. Meanwhile stock runs out, sales stop and the urgent order goes out on the most expensive freight. Measuring lead time stage by stage turns that surprise into a number.

What does lead time mean?

The term combines "lead" (to bring forward) and "time", and describes how long an order takes to turn into a result, whether that is a product on the shelf or a parcel in the customer's hands. In Brazil, companies use the English term as is, and the Portuguese equivalents are "tempo de espera" or "tempo de ressuprimento" (replenishment time).

The concept applies to any process with a clear start and finish. A factory measures production time, an online shop measures time to delivery and an importer measures the purchasing cycle, which is usually the longest and the hardest to predict because it depends on people in three or four countries.

What are the types of lead time?

The type depends on which point of the chain you are measuring. The table shows the four that come up most for companies buying from or selling abroad, with the event that starts and ends each count.

The purchasing cycle decides how much stock you need to carry. The delivery cycle is what the customer feels. The two are linked: if purchasing runs late, delivery runs late too, unless there is stock in between.

How do you calculate lead time?

The basic formula is the sum of the stages: lead time = order processing + production + transport + clearance + receiving. In practice, you calculate it as the difference between two recorded dates, the order date and the date goods enter your stock.

Three habits make the number reliable:

• Use the median of at least ten orders, not the best case the supplier promises.
• Also record the longest lead time in the period, because that is the one that empties your stock.
• Split the stages, even in a simple spreadsheet, so you know which one varies most.

A single total hides the problem. If real delivery swings between 45 and 80 days, the useful question is which stage produces that 35-day difference.

What is the lead time of an import into Brazil?

The lead time of an import is the sum of production at the supplier, loading, international transit, customs clearance and transport to your warehouse. Here is an example of a sea shipment from an Asian supplier, with illustrative times:

1. Order confirmation and deposit payment: 3 days.
2. Production at the supplier: 25 days.
3. Pickup, consolidation and loading at the port of origin: 5 days.
4. Ocean transit to Santos: 35 days.
5. Release of the cargo in Brazil: 7 days.
6. Trucking to the warehouse and receiving: 3 days.

The total is 78 days, and only 35 of them are spent on the ship. The release stage deserves a closer look.

The time release study by Receita Federal (Brazil's federal revenue and customs authority), based on imports from June and July 2019, found an average of 7.4 days between arrival and physical release of the cargo, with more than 87% released in under 7 days.

The same study showed that clearance by Receita Federal accounts for less than 10% of that time, while actions by importers, customs brokers, carriers and terminal operators add up to more than half. Source: Receita Federal, Time Release Study, June 2020.

In other words, most of the waiting on arrival is in the importer's hands: incomplete documents, licences requested late, taxes paid at the wrong moment. Our guide to importing into Brazil lists what needs to be ready before the cargo lands.

How does lead time affect your inventory?

The longer the replenishment time, the more stock you need to cover the wait. The most common calculation is the reorder point: average daily demand multiplied by lead time, plus safety stock to absorb variation.

With sales of 40 units a day and a 78-day lead time, you need to place the next order while you still have 3,120 units, before adding any safety margin. If a change of transport mode or supplier takes 30 days out of the cycle, the reorder point drops by 1,200 units. That is capital leaving the shelf and returning to your cash flow.

Variation matters as much as the average. A supplier who always delivers in 60 days needs less safety stock than one who delivers anywhere between 40 and 90, even if their averages are similar. So when comparing suppliers across your supply chain, look at consistency before the promised date.

How can you cut lead time?

You shorten the cycle by removing waiting time, not by speeding up a stage that is already fast. Start with the stage that has the most days or the most variation:

1. Send the invoice, packing list and NCM (Brazil's tariff code) before loading.
2. Request import licences and agency approvals early.
3. Agree the production date in writing and check in halfway through.
4. Replace large, infrequent batches with smaller orders for fast-moving items.
5. Use express for samples, critical parts and emergency replenishment.
6. Compare routes before closing the purchase, with a rate quote and transit time.

The fifth item often surprises people once they run the numbers. Many companies compare only freight per kilo and forget the cost of carrying idle stock, which includes tied-up capital, warehouse space, insurance and the risk of obsolescence.

On paper, the logic flips. Paying more to ship a small batch can cost less than holding two months of extra stock of a slow-selling item, and it also lowers the risk of a stockout.

Frequently asked questions about lead time in Brazil

Sources

• Receita Federal: Time Release Study, Executive Report (June 2020)

Fewer days of waiting start with your next shipment

If your imports into Brazil have stages that repeat with every purchase, such as samples, spare parts and small batches, an account ready for express shipping takes days out of your lead time without changing the rest of the chain.

With a business account you can compare routes, book pickups and track every shipment through to delivery. Open a DHL Express business account and use express where every day counts.