Leaderboard

Q 49. What is the differences between Lead Time and CycleTime? What is the reason for confusion in the two definitions? Cycle time, lead-time are the most generic terms, which always get confused in terms of usage and representation of the work. Some people may call the avg time taken to complete a chart – as production lead-time not cycle time. Some call it as cycle time. Hence understanding the term what it stands for is very important to avoid such confusions. These confusions will lead in wrong data collection, poor / worse decision making. Definitions: 1. Cycle time – it is the time taken to complete one unit’s production from start and finish. It is based on work process based. CT = Net production / no. of units produced 2. Takt time – It is the rate at which you have to complete the production in order to meet the customer requirements. It is based on customer demand. TT = Net production / customer demand 3. Lead time – It is the time taken for production of one unit through its multiple processes of operations from frond to end. i.e from the order received to payment received. LT = T from order to dispatch. Difference between Cycle time and Lead time: Aspects Cycle time Lead time Definition "Cycle time" is the time it takes to complete the production of one unit from start to finish. "Lead time" is the time it takes for one unit to make its way through your operation from taking the order to receiving payment. Meaning CT starts when the actual work of production is started in the unit and ends when it is ready for delivery. It measures the time elapsed between order and till delivery to he customer Perspective / View this is done in terms of organization's perspective this is done in the customer's perspective. Rate of Measures Measures the work completion rate. More of a mechanical process capability. Measures the arrival rate Aims to measure cycle time in terms of demand Customer waiting time. It is measured in Amount of time / unit( minutes / customer , Parts / hr) minutes / hours etc Relationship related by Work in progress but within the unit Related by work in progress, but there is no unit. VA / NVA It segregates the Value add activity time from NVA. It includes both VA & NVA Cases if one time is higher, If CT is higher than Lead time, demand of the customer is not met. If lead time is higher than CT, inventory is more. Example A train manufacturer offers custom manufactured replacement parts to customers. When an order is placed it is goes through several internal business processes each with its own cycle time including order processing, manufacturing and delivery. The lead time is the sum of these cycle times plus a delay of two days due to a manufacturing backlog. Conclusion: Cycle time and lead time are two different entities from the different stakeholders perspective. Both are related by common term of net production, work in progress, etc. But the difference is lead time is measured from customer’s point and cycle time is done in internal process point of views. Both are to be well understood with its own limitations in terms of usage. To me, the word production gets into confusion mode to many. Another example, in a coding company, client provides a batch today at 8 am to the company to code and give. If the company delivers the completed batch at 8 pm, the lead time for this process is 12 hours. But when the batch start time and end time is noted, the cycle time taken to complete the batch is only 2 hours. It shows that the inventory is more. Here the company would have involved in other client works. Hence, understanding the concept is very important to define the data collection process and in valid decision makings. Thanks Kavitha

Lead Time is basically from customer's point of view, whereas Cycle Time is from process' point of view. Lead time starts when a request for delivery of a product or service is made and ends when this product or service is delivered to the customer. Cycle time starts when actual work begins on product or service and ends when that product or service is ready for delivery.