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Lead Time, Cycle Time


Go to solution Solved by Rajesh Chakrabarty,

Cycle Time

 

Lead Time - is the time the customer experiences between placing the order and the delivery of the product or the service. In other words it is the average time that a product/unit needs to flow through a process from entry to exit including delays. Lead time is for the delivery of the product/service.

Cycle Time - Time spent in specific task for one unit – commonly presented as hours per unit. (or minutes per unit). It is calculated as the time spent between start and end of a specific task for one unit. Each step within a process will have its own cycle time.

 

An application oriented question on the topic along with responses can be seen below. The best answer was provided by Rajesh Chakrabarty on 21st November 2017. 

 

 

Question

Q 49. What is the differences between Lead Time and CycleTime? What is the reason for confusion in the two definitions?

 

Note for website visitors - Two questions are asked every week on this platform. One on Tuesday and the other on Friday.

 

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Lead time and Cycle time are important metrics in lean and process improvement . The difference in both is obvious and simple but people tend to misunderstand the concepts and are unable to differentiate between them and use them interchangeably – this is what leads to a confusion in understanding the situation or problem in the process – thus inducing delay or blockages in process improvement. The other reason that causes confusion is also when the process is not defined correctly , ie. The start point and end time are not defined correctly in terms or effort and time – Let us understand in detail-

I suppose the major confusion is created by the different definitions that are available for both these metrices , sometimes connoting similarity between both.

In General the definitions are:

Lead time starts when a request is made and ends when the request is met or confirmed as undo-able. Basically it is the time taken for closure of a request from the moment the request was made.

Cycle Time is the time taken from when an activity starts to the time the activity ends.

 

Let’s say a Customer of a QSR Home delivery service has called, at the Customer Grievance center, to place a complaint about a defective product that he has received. As per the policy of the company the , the QSR offers to replace the product within a lime limit of 30 minutes .

-          The customer has placed the complaint at 8pm in the evening.

-          The Company acknowledges the complaint instantly and delivers the replacement at 8:30 pm, However the activity of customer grievance resolution has started at 8:15pm , a little while after the call came in.

Here, if the complete process of Customer grievance handling is considered as a single process, the lead time is 30 minutes, but the Cycle time is only 15 minutes as that is the time it took as an effort to close the issue.

 

Lead time thus is the time used but not the effort . In the situation above . Thus the lead time could have been 45 minutes as that is what the customer care agent could have committed, but the time taken to actually put effort and close the activity of replacing the product would have taken the same time – 15 minutes as per average time taken to prepare the product and then deliver to the customer.

Another Perspective- The point to note here is that there are two activities happening here:

 

The Customer grievance addressed

The Product Replacement

Started at 8pm

Started at 8:15 pm

Completed at 8:30 pm

Completed at 8:30 pm

As per definition

As per definition

The Cycle time is 30 minutes

The Cycle time here is 15 Minutes to

The Lead time is also 30 minutes

The lead time here is 15 minutes from the moment the customer care agent informed the Outlet

 

So there is a sense of confusion in the single simple example mentioned above-

 

However, There is a better way of looking at the whole scenario which tends to wipe out scope for any confusion-

Let us look at the differences between Lead time and Cycle time

Lead Time

Cycle Time

Lead time is measured by Elapsed Time (Minutes, Hour , etc)

Cycle time is measured by the amount of time per unit (Minutes/ Product or process step,

It is a measure of throughput (Units per Period time)

It is a measure of throughput (time per unit)

It is more a measured and estimated value

It is normally an average value

Lead time is what the customer sees as a a resolution time

Cycle time is the average time taken per sub activity within the whole process that the customer sees as lead time.

 

From the above example it is safe to state that Lead time and Cycle time are related with the work in Progress (WIP) in the entire process, in a relationship described by Little’s law:

 

Lead Time= Cycle Time*WIP

Or,

Lead Time= WIP/Throughput

 

The Cycle time above must be the process cycle time, which is determined by the bottleneck . Cycle times of individual steps cannot be used alone to calculate the process lead time without knowing the WIP.

Thus lead time is more or less clear – In normal spoken verbatim, when someone asks how long will I have to wait after making a request- He is asking what is the lead time for my request.

Cycle time is basically time taken to complete any activity- from start to finish.

The confusion is not there when the following diagram is clear in mind.

 

 image.png.53cdbe23e2b4c99d049ca2567116cf43.png

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Before discussing the lead time vs cycle time differences and confusions, I would prefer to use few examples to make it pretty clear.

 

Most of us are aware about the online shopping platform. Consider you place an order for “T-Shirt “in an online shopping portal today and as per the portal, the expected date of delivery is after 4 days from the date of placing the order.

 

The moment you place the order, time starts for your order. Here you have to wait for 4 days from the date of placing the order to get the delivery. The waiting time, what customer sees, is called lead time.

 

Lead time is the period between a new task’s appearance in your workflow and its final departure from the system.

 

When you placed the order for “T-Shirt”, company got a demand to make the “T-Shirt” production. Based on demand company started the manufacturing process to prepare the “T-Shirt”.

 

 Cycle time clock starts when work begins for the manufacturing of the placed order, and ends when the inputs transformed to final output by the value added process. It is more into the, mechanical measurement of process capabilityAverage cycle time is the average time taken to produce a lot /batch/item from the process starts to end.

 

In other word,

Cycle Time = Operating Hours / items or batch produced.

For example,

assume the manufacturing plant operates for 16 hours per day and produced 64 T-Shirts each day. The Cycle Time is 16 / 64 = 1/4th of an hour i.e. 15 minutes.

In this example, while making a “T –Shirt” takes only 15 minutes but the customer gets his order delivered after 4 days of placing the order.

If you look at the workflow of lead time in this example, you will find valuable information about the workflow, some of the task is taking more time, it may be dispatch time or delivery time compared to cycle time. Whichever the bottleneck in this process can be identified and eliminated or reduced to acceptable limit to improve the lead time efficiency.

Confusion:

Cycle time is the time taken to complete the process, normally production process. What is cycle time is not often clear. This is because of confusion between cycle time and lead time.

 

Cycle time is not the overall time that producing a production order takes; it is the actual time that the production works being performed. Product issues from store/warehouse or product release in system cannot be cycle time, it’s lead time. However it is not being described using lead time.

 

People in manufacturing plant talks about cycle time, which refers to specific operation within the manufacturing process and People in supply chain managements talk about overall production cycle time, they also refer to the time of other non-production process in the supply chain, but in practice, it is not.  Lead time is closely used to describe these timings.

 

Such timings creates mostly confusion – simply waiting time what customer sees, is lead time and the time taken to complete the specific operation of manufacturing is called cycle time.

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An Operation is any process that takes a few inputs through a few steps and returns a more useful Output. Example: any manufacturing plant, Insurance claim process and so on.

 

Cycle Time is the average length of time of the operation i.e. the time taken by the steps to complete. In other words, it is the time taken from start of work till finished product is ready for delivery. It can be said to be the total Working Time.

 

Lead Time is the entire taken from the request for the product till the delivery is made. It can be said to be the total Wait Time.

 

But there are few other terms and definitions which cause confusions:

1.       Order Lead Times which is more in line with the Lead Time definition above i.e. Wait time

2.       Production/ Engineering/Manufacturing Lead Time: This is more in line with Cycle time definition i.e. Working time.

Lead time is a Customer's perspective, while Cycle Time is a Manufacturer /Service Provider's perspective (Process' perspective)

 

So, when we talk about lead times in general,  it may become confusing which Lead time we are talking about or the perspective and at times it gets used interchangeably used with Cycle time.

 

To avoid this confusion, Cycle Time can be understood as being a measure of process capability.

 

Average Cycle time can be computed as the ratio of operating hours per day to the quantity produced per day or Throughput for the day

i.e. Cycle Time = Operating Hours per day / Throughput per day

 

Lead Time units will be same as time - hours, minutes, days, week and so on.

Cycle Time  would be time/unit.

 

Lead Time is always greater than Cycle time.

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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.

image.png.01b7ea0f40ed55d1dcde615531e88f61.png

 

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

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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.

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Lead time :  Calculation starts from when the customers request is received for a product or service until the product /  service is delivered to customer .

In other words 

Lead time = End date - creation date

 

Cycle time : Calculation starts from when the actual work with respect to product / service starts. Until the delivery of product / service to customer

Cycletime : Enddate - start time.

 

The confusion is basically between the creation date and start date.

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Lead time is the total time taken from receiving an order to delivering an item, thereby measuring the production process from the customer's perspective.

Cycle time is the time taken to complete a unit from start to finish, i.e. the time taken when the actual work begins on the unit and when it is ready for delivery. It is the average time taken to finish one unit.

In other words, cycle time measures the completion rate and lead time measures the arrival rate. If the lead time is much higher than cycle time, it means that there are lot of units in the inventory.

For example if one has to manufacture a small gadget,

Cycle time is the time it takes to manufacture the gadget. It tells how efficiently processes and resources can produce one single gadget. Improving the internal process will help reduce cycle time.

On the other hand Lead time is the time taken for the gadgets to come off the assembly line. It tells how much time the customer has to wait to get the gadget. Lead time includes cycle time and also delay time between processes.

In short, Cycle Time is a metric that focuses on improving the production time and Lead Time is the overall capacity to produce.

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Cycle time is the time taken for execution of the process, point when work starts until the product is ready for delivery, whereas lead time is the end to end time from point where customer gives the order till customer gets the good or services. One of the confusing aspects is to choose the point of customer request initiation as that is the point where cycle time starts, in cases of multiple stakeholders involved, choosing this key point would be confusing point. Cycle time also is looked at as the time taken for completion of every key step in the process, this also adds to confusion. Inclusion of waiting time as part of cycle time is another confusion point. In case where customer is actively involved in the services process, where the customer reviews and provides continuous feedback then the lead time will be tricky to measure, as scope of the services may undergo modifications.

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Cycle time:- Actual average time taken to make a product. It can be total of all the process time/cycle time of different machines. Cycle time is more for internal process improvements.

If there are more machines for the same process, we can divide the cycle time for one process by no. of machines.

Unit for cycle time is minutes/unit.

 

Lead time:- Time taken to deliver the product to customer from the time order is placed. Lead-time includes total cycle time. Hence, lead times will always be greater than cycle time.

Lead times are for customer, when to expect the product.

Unit for lead-time is time (days, months, weeks)

Example:- There are 5 main process to manufacture SS seamless pipes.

1.     Cutting

2.     Drilling

3.     Extrusion

4.     Chemical treatment

5.     Inspection

We have measured average cycle time for each process

1.     Cutting (CT1):- 5 minutes/unit

2.     Drilling(CT2):- 3 minutes/unit

3.     Extrusion(CT3):- 2 minutes/unit

4.     Chemical treatment(CT4):- 3 minutes/unit

5.     Inspection(CT5):- 2 minutes/unit

Here total cycle time will be CT1+CT2+CT3+CT4+CT5 = 15 minutes/unit.

Now time taken to convert customer order to process order is 10 minutes

And time taken for transportation of finish good to customer is 10 days.

 

Lead-time will be 10 minutes+15 minutes+ 10 days = 10 days and 25 minutes.

Lead-time will be higher if an organization wants to keep some WIP/backlog.

Cycle time is important to find the bottleneck in the process. The machine with greater cycle time drives total production.

In our example cutting is the bottle neck, because cycle time for cutting process is 5 minutes.

Now if we install one more cutting machine with same capacity as the current one, our cycle time will be reduced to 2.5 minutes/unit.

Moreover, our improved cycle time will be 12.5 minutes/unit. There will be new bottleneck to our process i.e Drilling and chemical treatment.

Thus, cycle time is very important to process balancing and identifying bottlenecks.

 

In our example, drilling process is a customer for cutting process, so lead-time for getting a unit from cutting to drilling process is 5 minutes. Which is wrong because in this people ignore the time taken for one unit to transfer from cutting area to drilling area. Major difference between both the terms is units. Lead-time is in time, while cycle time is minutes/units.

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Here is the difference between Lead Time and Cycle Time:-

 

Lead Time => LT

Cycle Time => CT

 

A. Although LT & CT don't share same unit  both are called “Time.” LT is actually the elapsed or spent time (sec, min, hrs etc.), whereas CT is actually the amount of time spent per unit (min/customer or hrs/part, etc.). It is not meaningful to add/subtract one to/from another respectively.

 

B. CT is actually a count of Throughput (units/period of time), and is the reciprocal of CT. CT is an average value.

 

C. In the entire process, LT & CT, both are related by Work-in-progress (WIP), This is called Little’s Law:

LT  =  CT  *  WIP

Or,

LT = WIP/Throughput

D. CT must be the process cycle time, which is actually determined by the bottleneck of the whole process. We need to know WIP, without WIP, individual step's CT cannot be used alone to find out the process LT

 

 

I think the best description about CT & LT and for some other terms is here: https://hbswk.hbs.edu/archive/hbs-toolkit-basic-operations-self-instructional-workbook#definition 

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Lead Time is defined as the time duration required to deliver from the time customer placed the order.

 

Cycle Time is defined as the time duration starting from when the work begins on a unit of production until it is ready for delivery. “Cycle” as the term implies, refers to repeated rounds of an activity.

 

Lead Time is very important from the customer point of view, since it determines when the order needs to be placed in order to avail the product (or service) by a specified time. The Lead Time is important for the supplier to set the expectation to customer as to when the product will be available.

 

Cycle time is important for production planning and execution purposes, since it is the time that will have to repeat for every unit produced.

 

Time elapsed for ‘Set-ups’, batching, storage and transportation will be part of the Lead Time. Lead Time may also apply for “Designing a product”, whereas Cycle Time comes into play during repeated production of units.

 

In case a batch of products has to be ordered, the Lead Time will apply for the batch to be delivered, whereas the Cycle Time will apply for the production of each unit of the batch.

 

The reason for confusion between these terms can arise if the exact ‘start’ and ‘end’ times are not specified, which is the key differentiator for these terms.

 

Another situation is for ‘One time’ special made-to-order large Product, for a single unit where it is just the lead Time that is relevant and Cycle Time does not apply since there is no repeated production.

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Lead time and cycle time are two important matrices in lean and process improvement. Many people are confused between them and don't understand difference between them. It may lead to confusion in understanding the actual problems in the process and decisions in process improvement . let us see one by one,  cycle time and lead time. 

 

Cycle time is the time required to complete one unit from the beginning of the process to the end of the process.  The average cycle time is computed o error the completion of multiple units and thus cycles. If the cycle is greater than the take time,  the customer demand will not be met without a modification to the process. 

 

Lead time starts when the request is placed and ends at the delivery. Lead time is the time that customer see for how long he has to wait for delivery. If lead time is more it can cause dissatisfaction in customers. Cycle time is more Mechanical measure of process capability on the other hand lead time is what the customer sees. Lead time depends on cycle time and also on customer patience a d his readiness for delivery.  On the other hand if we think in another way lead time measures the arrival rate but cycle time measure the completion rate. 

 

For example,  a customer goes to a car showroom to buy a car and he ordered there for one car.  Now customer will get a expected delivery date of the car,  customer will wait for that and let's say after 30 days he gets the car time.  So this 30 days time will be called as a lead time although it does not mean that company is producing cars in 30 days,  cycle time of the company will be different. In thus 30 days is the lead time that for how long a customer wait for his car to be dilelivered.  But if lead time increases drastically,  it can crate dissatisfaction in customer and customer may go for another option.

For example,  maruti suzuki new swift desire,  when people ordered the car they got expected delivery date of 2 to 6 months.  Now the question comes,  is the company cycle time more or demand has been increased,  in this case demand increased so it's it's upto customer patience whether he will wait for six months to have new swift dezire or will go for another company car. So this is what lead time is that a customer wait for his product to deliver after raising the request. 

Another example from online shopping,  whenever any customer places a order on any website like flipkart, Amazon, snapdeal, myntra etc,  the customer will get a expected delivery time of 2 to 3 business days,  this 2 to 3 business days is called as lead time.

A car Manufacturing company has so many department and one department need some to have steel coil for processing the further process and you know unless until you koi get steel coils from suppliers you can not start the next process.  Company knows that after giving request for a specific coil for a specific part of a car,  supplier needs 15 days time to deliver so 15 days will be lead time for that coil.  From now company will order in advance of 15 days as lead time is 15 days so that shortage will not be there in any circumstances and end product that is car can be produced on time for delivery to customer. So 15 days is the lead time for steel coil to be delivered to company from supplier. 

If we see example of cycle time in manufacturing industry,  it will tell how much time we are taking to complete a process from start to end. 

For example a machining shop, engine parts are getting machined and worker at station one, starts one part at 10 am for machining at stage one and after processing through all four machines automatically,  the next worker at a station two gets the final machined part at 11:30 am.  So it took around 1.5 hour for that particular part to be machined,  so 1.5 hour will be cycle time for that part. All parts,  Processes will have different cycle time due to part profile,  design of process. 

Cycle time is different from takt time,  takt time is what a complete assembled product comes out from assembly line.

For example in bike and car manufacturering company if we see a complete bike comes out in just 52 to 60 seconds but it does not mean that bike has been assemeled in this short home of one minute,  it is take time that in all three shifts how many bikes can be produced.  Same case with car Manufacturing company,  a complete car comes out within 90 to 106 seconds,  it is also take time that how many cars we are producing in a day, take time is different from lead or cycle time. 

 

 

 

 

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Lead Time & Cycle Time:-

 

Lead time is the time taken or required for a complete process from the beginning to the end.

Where as Cycle time is the time taken or required for a specific process with in the entire process.

 

For example:-

Consider a process of delivering a product online; What is the time that a customer has to wait

The lead time in this case typically would include

1. Receiving the request from customer

2. Processing the request after verification

3. arranging the shipment

4. Delivery person picks up the product

5. Delivery person carries the product

6. Delivery person handovers the product

 

The above are in general ( and not in detail)

 

In the above

The Lead time is the total time taken for all the steps

Cycle time is the time taken for any specific step, say transportation time of 2 days from Delhi to BLR. 

 

Now where is the confusion.

 

In the above case it could be confused that the lead time for transportation is 2 days. Actually it is right to be considered it as Lead time as we are talking about Lead time of transportation. This could be better called Transportation Lead time & not Transportation Cycle time. 

But when you talk about the entire process, then we can also say the cycle time of 2 days for transportation in the process.

To make it simple, if you consider the process as a whole or entire, then the sub process time could be called as cycle time. As each process is considered as a cycle & many cycles forms a total process.

 

 

 

 

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Lead Time :

It is the time taken from the ordering (ordering received by the producer) of a unit/product to its delivery/shipment to the customer.  

 

Eg:In an IT service industry, this could be a requirement coming from a customer and which is picked by the service provider and that functionality is delivered finally to the customer.  In an Agile world, this could be a user story (requirements are called as user –stories) which would be delivered to the customer, as part of the Iteration/Sprint [Iteration and Sprint - denote a time-boxed period for delivering functionalities. Sprint is a term used in Agile Scrum methodology and Iteration – in other Agile methodologies like Extremme Programming (XP) ] or a release. 

 

 Cycle Time

It is the time taken to complete a unit.  

 

For example if there was a 5 member- Agile Scrum team who worked for 10 days (2 working weeks of Sprint duration) with 6 hrs of working on an average /day,  if say 30 user stories are created , then we cay cycle time for this Sprint can be =300(5*6*10)/30 =10 hr/story.

Though in practice, this is not a metric that is used. Nevertheless the idea is about to portray the concept through Agile Scrum.

 

Why confusion between lead time and cycle time

There are quite a few reasons as why this could happen.

1.       Lead time measures the production process from the customer’s perspective whereas cycle time is focussed on delivery readiness perspective. For eg., taking an agile scrum example, a Scrum board which talks about the movement of deliverables across various stages  can be represented as

 

 

User Stories

 

To Do

 

Work in Progress

 

Reviewed

 

Done

 

User Story  1

b

b

b

b

User Story  2

b

b

b

b

 

 

Here ‘Done’ refers to the completed functionalities and the user stories (requirements or functionalities) are ready to be delivered to the customer.   Now lead time, takes into calculation the waiting time on confirmation of user stories as those stories need clarification from business. Unfortunately the development team waits for the business analyst to come up with the user story to be confirmed.  So lead time = cycle time + wait time + delayed time (to start) in general.   But this is not factored in many cases and hence there is confusion in handling these two types.

 

2.       Think of the analogy- Thinking from outside in perspective.   The famous story of how GE approached the problem for Boeing when its plane was grounded and given to GE for service/repair, from which a great concept (Outside-in) materialized.  Here, the SLA of the service provider was not meeting the customer demands / expectations.  Cycle time has to meet the TAKT time (measures customer demand) but Lead time is about the customer waiting time. Often the organisation which provides the service or creates the product,  does not clearly define its process boundaries or define the SLAs required for each of the processing steps or it could be a combination of both. Because of these ambiguity and the lack of awareness (by the workforce) on the process as where the demarcation (in terms of the process steps owned by the organisation), confusions can happen on the cycle time and lead time.

 

Conclusion:
The lead time and cycle time are key elements especially in manufacturing sectors and in service sectors to some extent.  Even though these terms are defined properly by industry experts, as mentioned above with few cases, the terms can be confused with.  

 

Edited by R Rajesh
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Lead Time and Cycle Time are as different as chalk and cheese, which is illustrated below.

 

Cycle Time is the total time elapsed from when raw material enters the production process until the finished product is ready for shipment to the customer. Lead Time is the total time elapsed from when a customer expresses a need to when that need is satisfied.

 

Lead time is also the time quoted to customers (more usually in days or weeks rather than in hours or minutes) between the order date and the shipment date. It is actually the total time a customer must wait to receive a product or service, after placing an order. Lead time is the total of all the cycle times and waiting times for a particular process; or the length of time it takes a product or service to go through the entire process.

 

The Lead time clock starts when a request is made and ends at delivery. The Cycle time clock starts when work begins on the request made and ends when the item is ready for delivery. Cycle time could be termed as a more mechanical measure of the process, while Lead time is what the customer experiences and may include the cycle time of multiple internal processes and delay time between processes. The lead time is the sum of cycle times plus a delay to a pending backlog. This is the lead time that is communicated to customers. The cycle times are used to manage internal business processes.

 

Lead time is often used to indicate how long the delivery of a product will take from purchase order to delivery. Cycle time is the amount of time measured in seconds or minutes the product is produced in.

 

Lead time cannot be shorter than cycle time as the cycle time is a subset of the Lead Time. In processes that have not been leaned out, lead time is a lot longer. Lead time is relevant from the business perspective. The cycle time is what the team can improve by changing its process. To reduce lead times one can and should reduce cycle time. But often, the waiting time before the work starts and between process steps can be really high and so this time should also be reduced.

 

Cycle time is an internal metric and may not be visible to the customer. It signifies the effort spent on making the product. On the other hand Lead time is an external metric and hence it is visible to customers. It signifies the speed of delivery to the customer.

 

The reasons for confusion could probably include some loose usage of the terms inter changeably by those not yet sensitized to the differences. Questions like, “What is your lead time to start working?” can confuse. Additionally, using the cycle time alone for planning production runs and making delivery commitments to the customer add to confusion.

 

Another source of confusion could be the hitherto unfulfilled aspirations of making the Lead Time equal to the cycle time i.e. without any waiting time before, during and after the process. Without leaning out the process and bringing the Lead Time close to the cycle time, some may want to start planning using the two interchangeably. This can also embed the wrong understanding in others.

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