The Benefits of Cycle Time, Lead Time, and Takt Time
The Benefits of Cycle Time, Lead Time, and Takt Time
Industry Insights
The Benefits of Cycle Time, Lead Time, and Takt Time
Combining Takt Time with Cycle Time and Lead Time helps managers steer resources to meet production demands.
April 5, 2021

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1 - Meeting Cycle Time, Lead Time, and Takt Time

2 - Takt Time

3 - How Will Calculating Takt Time Help an Organization?

4 - How to Calculate Takt Time

5 - Cycle Time

6 - How to Calculate Cycle Time

7 - Lead Time

8 - Manufacturing

9 - Project Management

10 - Supply Chain Management

11 - How to Calculate Lead Time

12 - Comparing Cycle Time vs. Lead Time vs. Takt Time

13 - Conclusion

Anyone who’s been around manufacturing for any length of time eventually observes that the terms “Cycle Time,” “Lead Time,” and “Takt Time” are used as if they were synonyms. However, purists beg to differ. If only they earned a dollar for every time someone misused the terms. They’d rather there was an unmissable bold sign at every plant saying, “Cycle Time is Not Lead Time. Lead Time is Not Takt Time.” This article explores the nuances between these Lean processes.


A clear understanding of these concepts is necessary for a manufacturing and assembly environment. The deliberate focus on the topic stems from the fact that the ideas have some relatedness. In developing project plans, project managers aim to optimize every resource, workflow, and project completion time.


1 - Meeting Cycle Time, Lead Time, and Takt Time

Growing any business often boils down to keeping track of multiple metrics. Cycle Time, Lead Time, and Takt Time are time metrics that managers use to accomplish several goals, namely:

  • Understanding critical areas of the production process to focus on for improvements,
  • Having a better grasp of how and where to improve resource use, and
  • Learning where to eliminate hiccups in team workflow.

Each of these time metrics is significantly different from the other two in several ways that this article explores. We’ll also review effective ways to measure them using familiar tools.


2 - Takt Time

It’s important to complete production to meet customer demand. “Takt Time” refers to that rate at which you ensure this happens. “Takt” is a German word meaning “pulse.” Yes, as in biological pulse. Just as your heart rate can slow down or pick up pace, your organization’s Takt Time can be high or low, relative to customer demand.


It’s important to break this down to the simplest terms: If you have to take 12 minutes to finish making one bowl of Greek salad and serve it to the customer, that’s about the time it takes to fulfill one customer’s demand. Therefore, Takt Time is the rate the chefs work to meet the customer demand.


Takt Time is a rate – precisely the “takt” (pulse) rate at which you need to run through the production process with the aim of meeting customer demand. Here’s a breakdown with more detail than the Greek salad example:


1. What’s the interval between two customers buying a bowl of Greek salad?

If one customer buys a bowl of salad every 30 minutes, then your restaurant has half an hour to finish one bowl of Greek salad. Your Takt Time is 30 minutes.

 

2. What does it mean to finish one bowl of salad every thirty minutes?

Finishing one bowl of salad every thirty minutes is your Takt Rate.

Measuring Takt Time allows managers to resolve issues of underproduction or overproduction. It’s a key number to improve Quality Control (QC) standards. Matching Takt Time with customer demand helps managers to optimize their systems.

The origins of Takt Time in the German aircraft industry dates back to the late 1930. The phrase originates from the German word “Taktziel” with the literal meaning “Takt Time.” As they have done with other manufacturing improvement concepts, Toyota (the Japanese automaker) refined the concept to the modern implementation we’re familiar with.

Visionary industrialist, Henry Ford, put it aptly in separating material waste from time waste. He highlighted time as the easiest resource to waste and the most challenging to reverse. Since time leaves nothing physical in its trail, it’s easy to accumulate many losses before taking any concrete resolution steps.

As long as the heartbeat or pulse is steady across your production systems, it’s possible to ensure that consumers get the right products with the right quality as and when due.


3 - How Will Calculating Takt Time Help an Organization?

Why is it important to calculate Takt Time? Here are some reasons:

  1. Your organization will have an easier time estimating service delivery processes.
  2. It’ll enable your organization to sustain production flow.
  3. Your organization can standardize work processes.
  4. Efficiency will grow, and training times will drop across your company.
  5. You’ll be able to set feasible time targets.
  6. Overtime will diminish over time (you should like the rhyme).
  7. Your organization will experience fewer errors and improve overall quality.

Calculating Takt Time enables managers to observe overworked teams trading quality for impossible standards. It also has the potential to reveal what teams have close to zero activities, allowing you to redistribute workloads accordingly.


4 - How to Calculate Takt Time

Calculating Takt Time requires specific data. You need two variables are necessary to do this:

  • Net Production Time (NPT)
  • Customer Demand

Your team needs to first track its net production times (NPT). Net production time is the time they put towards producing a product or service. In other words, it’s the clean time allotted to your team to finish a product.

NPT does not take breaks of any kind, machine (or tool maintenance), or meeting times into consideration. Therefore, you need to subtract such downtime from the cumulative time your team puts in on the job.

A more rapid way to collect NPT data would be to track only the clean time you spend on the production process. There are tools to track this for a product and isolate it from all your downtime.

Tracking downtime is not essential to calculate Takt Time. However, it can reveal if you’re wasting time or using it judiciously.

Now, that second parameter – customer demand – refers to how many products your customers purchase regularly. It’s ideal for calculating customer demand daily.

We can then plug both variables into the following formula:


Takt Time = Net Production Time (NPT) ÷ Customer Demand


As simple as this formula appears, it gets pretty complicated in proportion to the number of products your company produces. Each product maintains its unique customer demand. The two possible solutions in such circumstances are to:

  1. Split your day to accommodate each production process.
  2. Create separate teams to deal with each product.


5 - Cycle Time

If we’re considering the time your plant needs to complete the production of one unit, that’s Cycle Time. It tracks finished items and net production time (NPT) in order to determine how long it takes to complete one cycle.

Going back to our Greek salad example, Cycle Time represents the 10½ minutes it takes to make each salad bowl. That is the effective production time per bowl of salad.

Understanding Cycle Time requires understanding Throughput Time, a related concept referring to the number of units you produce within a specific period. Therefore, Cycle Time would be the mean amount of time you need to produce one unit.

So, let’s say that during a specific period, say 3 hours (your Net Production Time), you produce 36 units. It translates to producing 36 bowls of Greek salad every 3 hours. The 3 hours for 36 units is your Throughput Time.

We can go extrapolate to say it takes 1 hour to produce 12 units, 10 minutes to produce 2 units, and 5 minutes to produce 1 bowl of Greek salad. 5 minutes is our Cycle Time.


6 - How to Calculate Cycle Time

Here, we look at how to measure Cycle Time. The Total Cycle Time formula requires two variables:

  • The Net Production Time (NPT)
  • The number of units you produce during the NPT

The aim is to isolate how much time you’re spending to produce a bowl of salad.


Cycle Time = Net Production Time (NPT) ÷ Number of Units Made


7 -Lead Time

A third Lean process question to ask is, how long does it take to fulfill the complete production cycle? That is, how long is the interval between taking an order and receiving payment? When Lead Time far exceeds Cycle Time, your inventory is full of stock.

Now, how does the Lead Time relate to our Greek salad scenario? Remember that the customer makes the order before the chefs set to work. Let’s say the entire process (start to finish) takes 13 minutes. Therefore, the Lead Time is the process interval between placing an order and serving the finished bowl of sumptuous Greek salad.

Lead Time addresses the delay between initiating a process and completing the process. There are a few definitions of the concept across industries; however, the Lead Time metric has many applications in supply chain management, project management, and manufacturing.


8 -Manufacturing

Lead time in manufacturing will perhaps hold the most significant interest for most people. But, Lead Time comprises three stages:

  • Pre-processing time: the time to plan and handle the paperwork.
  • Processing time: the time to produce or manufacture the product.
  • Post-processing time: the time to deliver the product to the customer.


9 - Project Management

Here, Lead Time considers the time for completing a group of tasks under a project. It involves taking into account the dependency between activities, notably the point where they overlap.


10 - Supply Chain Management

Lead Time in supply chain management comprises the time interval between placing an order for supplies and the moment the supply delivery arrives. One needs to consider well what counts as Lead Time in a specific industry. Our focus in manufacturing is the Lead Time with a relationship to Cycle Time and Takt Time. So that the concept is as clear as daylight, we’ll consider a few differences with how Lead Time works in supply chain management and project management.


11 - How to Calculate Lead Time

Lead Time in Manufacturing:

We’ll first illustrate with measurement of Lead Time in manufacturing. Lead Time measurement in manufacturing considers the time you spend on pre-processing, processing, and post-processing tasks. You can break down each of these tasks any way you find to be suitably transparent.

Order Lead Time

Order Lead Time is the time between when you receive the customer’s order and when you deliver the order.

Order Handling Lead Time

Order Handling Lead Time is the time from when you receive the order and when you create an official sales order request.

Manufacturing Lead Time

Manufacturing Lead Time refers to that time from when you receive the order to when you complete the production process.

Production Lead Time

Production Lead Time is the time between when you commence production to when you complete production.

Delivery Lead Time

Delivery Lead Time is the time between when production is complete and when the customer receives the product.

There’s a significant overlap between some of these Lead Times. We also see that Order Lead Time consists of all stages of the process.

The formula for Manufacturing Lead Time is thus:


Manufacturing Lead Time = Pre-processing Time + Processing Time + Post-processing Time


Lead Time Measurement in Project Management:

Every project will typically involve handling sets of related tasks. Often, we’ll need one task to end before another can begin. Other times, one begins while another is finishing, since they should end at the same time. Considering such overlap, we measure project management Lead Time as follows:


Project Management Lead Time = Time For First Task – Time For Final Task


Lead Time Measurement in Project Management:

Here, we consider the time we need for procuring supplies necessary for production. Here’s the formula:


Supply Chain Management Lead Time = Supply Delay + Reordering Delay


Supply delay refers to the time it takes for suppliers to replenish your supplies. It needs to be as minimal as possible.

Reordering delay is how much time elapses before you can reorder supplies (primarily due to supplier constraints).


12 - Comparing Cycle Time vs. Lead Time vs. Takt Time

Cycle Time vs. Takt Time

Making adjustments to your workflow is necessary to meet customer demand. It’s also essential to tweak Cycle Time to suit your Takt Time.

Productivity and time management skills can improve your work process or enable you to hire who you need to enhance your ability to meet customer demand. Also, if you track downtime on a different project, you might notice time windows that other production processes could use.


Cycle Time vs. Lead Time

Lead Time in manufacturing is the time component from Cycle Time and Takt Time. Since it comprises the time from product order to product delivery, it also includes Cycle Time as a critical component, where the Cycle Time is the processing time.


13 - Conclusion

In the final analysis, combining Takt Time with Cycle Time and Lead Time should give the manager a handle on how best to steer resources to meet production demands. The formulas for these times are simple, but you’ll need good doses of creativity to use them in suitable ways at any company, whether you’re making aircrafts or tasty Greek salad.

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