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Demystifying the difference between Lead Time, Takt Time and Cycle Time

Demystifying the difference between Lead Time, Takt Time and Cycle Time

Introduction

Every project requires a calculation of time that is taken to operate. Such times are briefly classified into three main categories. Popularly in the project management industry, they are known as ‘the Lead’, ‘the Cycle’ and ‘the TAKT’ time. All of these three concepts are of utmost importance to a project or a quality management professional. The following article will take you through each of these times. It will highlight its relevance. The method of calculation for each of these timings has also been mentioned. The reader will be able to comprehend through the comparisons shown between Lead Vs Takt, and Cycle Vs Takt.

What is Lead Time?

To define lead time, one can say that the time between the commencement of a process and the completion of a process. The lead time is the overall time. It does not exclude any time from the process. It shows the time of the process in totality. In this case, the analyst gets a more realistic picture of the scenario. Unlike the takt and the cycle, it does not pick up a specific time from a process. Following are a few examples of lead time.

Example 1

So, what does lead time mean to a pizza joint like Domino’s? The Domino’s Pizza guarantees the delivery of a pizza within half an hour. If not, they deliver it totally free of cost. Therefore, their lead time is from when the customer confirms an order to the time when he receives the delivery.

Example 2

Another good example of lead time can be given through the example of customer support teams in companies. There exists almost no company that doesn’t have a customer support team. Such teams resolve issues that the customer faces. In this case, the lead time would be from the time when a customer files an issue with support team till the time, the support team successfully resolves the issue.

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Lead time consists of:

  • Pre-processing Lead Time

This time incorporates the planning phase. This may include all sorts of formalities and paperwork at the time of incorporation.

  • Processing Lead Time

This is the time involved in manufacturing.

  • Post-processing Lead Time

This time involves the phase where the product is in post-production. This may include inspection, quarantine, etc.

Calculation of Lead Time

Calculation of Lead Time 
Source: https://stefanroock.files.wordpress.com/2010/03/leadtimes3.png

The diagram above reflects that the lead time is a much broader a term than the cycle time.  Lead begins just when the ticket/order is generated. The cycle time begins when the work gets started. Therefore, the lead time can be calculated with the generation of the order and ends with the time of delivery.

Lead Time Formula

Lead Time = Cycle Time * Work In Progress

Or,

Lead Time = Work In Progress/Throughput

What is Takt Time?

The word takt is of German origin for a heartbeat. However, lean has a meaning for takt. If a manufacturing unit has a five minutes takt time that means the manufacturing unit is producing a product every five minutes.

The takt time is crucial to an organization. It helps eliminate any wastage of time that usually goes unnoticeable. The total number of hours worked should not be a matter of just an illusion.  The total hours need to be without any hindrances midway like tea breaks, meetings etc. It has to be strictly the hours dedicated to production. This is done to avoid any miscalculations.

Since the products here usually move along an assembly line, the bottlenecks are better identified. Bottlenecks are the products which take more time. There are many bottlenecks at times, due to certain error face breakdowns. Determination of takt usually eliminates the wasteful time-consuming tasks. These tasks could be to arrange for tools, set-up machinery etc. The men perform tasks that are similar in nature. Rather, they could exactly be the same. New processes are not adopted every day. This increases the efficiency of the production process.

TAKT Time Calculation

Takt time formula:

Time Available for Production/Units of Production Required

Or,

Working Time Available/Customer’s Demand

Lead Time Vs Takt Time

Lead time is calculated for the time taken for the completion of a process. However, the takt time is calculated for determining the time taken for the production of each unit. This is done for a given number of hours.

Lead time can be calculated for either a process, batch etc. Takt is usually adept at a manufacturing process.

The lead time is usually calculated in totality. It is inclusive of any time that is that is added to the manufacturing time of the output. For takt, the time that is strictly used for manufacturing is taken into consideration.

It is essential for a quality management professional to determine which of the two is adept for a project. The calculation of these times is essential for quality management projects.

Discover Costs And Efficiencies In Lean Six Sigma

What is Cycle Time?

The cycle time starts from the time when the manufacturing is initiated to the time when the manufacturing is completed. The cycle time doesn’t take into consideration any other time than this. As compared to the lead time, it is a narrower term. It is strictly restricted to the time consisting of the completion of manufacturing.

In the industry of service, a broad range of process types is covered. These may include preparation of meals and provisions in a restaurant. Maintenance of electrical equipment can also be classified as a process. Mechanical equipment too needs repair at regular intervals of time. Measuring of cycle time and its reduction is critical to continued success.

However, measurement of cycle time is adept for the processing of a batch. If you consider that a company from the pharma sector is producing in batches. The batch consists of ten thousand units. Cycle time here is calculated on the basis of previous continuous process. Unit of measure here is taken as the batch. Therefore, the cycle time is the batch’s cycle time.

Calculation of Cycle Time

Cycle Time = 1/Throughput Rate

Throughput Rate = (Units Produced)/ Time

Or,

Throughput Rate = Tasks Completed/Time

The calculation of cycle time is a continuous process. There is a large number of products or services being processed at a given moment. Therefore, the formula of cycle time has been reworked:

Cycle time = the average of the time between the completion of units.

Example 1

A manufacturing facility exists, producing one hundred units of a product forty hours per week. The average of throughput rate is one unit for every 0.4 hours. This means one unit every twenty-four minutes. The cycle time, therefore, is twenty-four minutes on an average.

Example 2

In a pharma company, a hundred batches of a product are produced. Each batch consists of one thousand units. These are produced in a week of forty hours. The cycle time will be given as twenty-four minutes. A total of twenty-four minutes will be required to produce a batch of one thousand units.

Example 3

A restaurant serves twenty meals an hour. On an average, a meal is served in every three minutes.  Considering the cycle time reduced, it may then allow higher customers throughput being the restaurant’s focus.

Example 4

The customers go to a bank to finish the financial transactions. On an average, a bank counter attendant can finish the requests of transactions ten customers an hour. Then on an average, the cycle time for each customer should be six minutes. How can this be reduced? Either by having the customers complete the form before arriving at the desk or by reviewing the processes so that the cycle time for a customer is reduced.
Reduction of the cycle time increases the customer’s satisfaction. It also improves the operational efficiency of the bank.

Cycle Time Vs Takt Time

The cycle time and the takt, time together convey a lot about the assembly line. However, it is also important to understand their differences. This is especially needed for the assembly line. The amount of time taken to complete a cycle of work is cycle time. This refers to the completion of a specified task from its commencement to its end. It is the time that is measured which explains the frequency at which some part is completed.

Takt time is the concept that is also used in understanding the customer demand. It is always important to understand your customer demand. This is essential for striking demand-supply equilibrium. An easy way to recall the takt time formula is to think, “TD” that is “Throw Dart.” Takt = Time Available / Demand by Customer.

Sometimes the Cycle Time turns out to be more than Takt Time. It simply means that the process is not good enough to keep up with the customer’s demand. This may have consequences in the form of overtime and upset the customers too. An upsurge in the expedited freight charges and poor metrics are also reflected.

However, if the Cycle Time is less than Takt Time, the process is over-designed or overstaffed. Also, there is a risk of overproducing.

  • Over-designing

Money and effort that is spent on the process are overdone. Here, the levels of Capital Expenditure could be high. This would result in a downfall that would weigh the business down for the coming years.

  • Overstaffing

The number of employees could be exceeding the actual need.

  • Overproducing

Overproducing more than the need by the customer can lead to inventory excess, opportunity cost. It may also result in the payment of wages, costs, and expenses for a product that might not sell well. Overproduction is seen as the most unfortunate waste by many professionals. This is because it leads to all the traditional forms of seven wastes.

Related reading: 8 Fatal Lean wastes: How to Identify them?

How to measure Lead Time, Cycle Time & Takt Time?

Measurement of these times can be carried out in many ways. It usually depends on the type of work that is taking place. For a restaurant, the lead time can be calculated by taking an average of all the processing times of orders placed. The start time can be taken for the time of order that is recorded in the software. This time is also printed on the bill.

The cycle time can be taken from the point when the order reaches the chef and he starts cooking. This time can be obtained from the software or apps which are prevalent for the customers. These software and apps help the customer track their order.

Takt time is discoverable through studying daily orders and dedicated working hours. Suppose the daily number of orders (including the footfall and the deliveries) is one hundred. Sometimes the daily number of orders is not the same. In that case, an average maybe is taken. The number of working hours for the chef is eight hours a day. Then the hours (rather converted into minutes) are divided by the daily number of orders.

Purpose

The purpose of calculating these times help in preventing the wastage of time and money. Wastage of time and money can still be reflected in papers. When it comes to time though, the wastage is not easily visible as it is not a tangible thing. The waste cannot be seen lying around on the factory floors. Therefore, these formulae largely help in the detection of the time being lost. Taking corrective measures on the detection of time, wastage can increase productivity exponentially. Profit on the graphs can also show a rising trend with this frequent check. Sometimes a good profit making organization can run into losses due to its neglect of the timings of the processes.

Takeaway

Learning the above mentioned specifications comes very handy to a quality management professional. These are some of the very basic tools that a Project Management Professional or a Six Sigma Professional ought to know. GreyCampus provides training and certification for the PMP and the Lean Six Sigma Green/Black Belt. The trainers are extremely resourceful industry personnel who dive into topics like these in a greater detail.

Find out more | Explore the Lean Six Sigma Course

Another interesting read: Top Quality Management Tips to Enhance Your Business Performance

About The Author

Debashish Roy, is a B. Com Professional from Christ University, Bangalore. A Black Belt in Lean Six Sigma is one of his treasured credentials and is a cybersecurity enthusiast. He is pursuing his MBA in Business Analytics from UPES, Dehradun and is an aspiring data professional. In his free time Debashish likes to spend his time reading, meditating, thinking, listening to music & playing chess. He has received the art of writing as a hereditary gift. Apart from writing for magazines, he is fond of rhyming words in his poems.
 

Debashish Roy

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