Calculate Cycle Time vs Lead Time: Example & Cycle Time Reduction

Learn difference between Cycle Time calculation and Lead Time calculation. How to identify non value added activities and step by step approach to reduce cycle time and non value added activities.

What is Cycle Time

Cycle time is defined as the amount of time needed to complete a single task and to move it forward in the process. The cycle time may differ by task, but to make the line flow, all operations must be completed under the given Takt time.

Cycle time is also known as turnaround time for any given task, in many industries people are familiar with this term and use it rather than cycle time. An example of cycle time from service industry could be installation of internet connection at home. If the provider does it in 24 hrs, then the cycle time here would be 24 hrs.

Let us take another example(refer to image below), customer places and order of a particular product. The manufacturing process involves 3 tasks.

Task 1 took 4 days to complete and Task 2 took 5 days to complete. So, 4 days and 5 days are the cycle time for Task 1 and Task 2 respectively. Similarly the final Task took another 5 days to complete.

So, we can have different cycle times for different activities while they are part of a single process. However the total cycle time of the process would be 10 Days in our example.

What is the difference between Takt Time and Cycle Time?

Takt time is calculated based on customer demand or requirement, it is not based on actual time that it takes to complete the task. While Cycle time is calculated basis actual time to complete the task.

We always work on adjusting Cycle time keeping Takt time in mind. We work on Cycle time reduction not Takt time reduction.

Reducing Cycle time benefits in terms of improving productivity and reducing costs.

Why Cycle Time Reduction

As you can see cycle time and Lead Time calculation is independent of customer requirement, while takt time calculation is based on customer requirement.

In our business processes, we always try to reduce cycle time because it is directly linked to cost reduction and customer satisfaction. We take up projects to reduce cycle time for following reasons:

  • To please a customer: If we can deliver product or service before the customer expectation then obviously customer would be happy in most of the scenarios. It will set us apart from the competition.
  • To reduce waste: When we work on to reduce Non Value Adds (NVA), we can reengineer and redesign the process. It helps us to understand the process constraints better. As we start measuring NVAs, we can track and try to reduce it through different measures. It can be a process change or better training of staff. As we reduce NVA, cycle time reduces and benefits all stakeholders.
  • To increase capacity and productivity: As we reduce cycle time, we can produce more with less resources being used. It decreases overall cost of operations.
  • To simplify the operations: When we study the process, we try to automate activities which can be automated and eliminate steps which are not required. This can be done as a Kaizen event or can be part of Value Stream Mapping.
  • To remain competitive: To keep the costs low and customer happy, we have to keep the cycle time at the lowest and very competitive. Firms conduct benchmarking studies to compare their cycle times with competitors. Many top consulting firms provide these kind of benchmarking studies.

Cycle Time Reduction

Let us reconsider the below example again, it is a line of 5 stations and observed cycle time for each station.

In this case let us assume the Takt time required by the customer is 60 Sec, as you can see station 3 is at 60 Sec. It is good that station 1,2 and 5 are below the Takt time. Station 4 is above Takt time so something should be done to bring station 4 below the Takt time.

How to reduce cycle time?

This is a very frequent problem faced by process managers and here we will talk about the approach which can be taken in addressing such a scenario.

We can take the approach of a Kaizen Blitz event or the similar thing can be done over a longer period of time. The basic approach is to do Time and Motion and understand current non value adds (NVA) in the process. The next step would be to find solutions to reduce NVAs or automate some of the steps.

Let us understand the Kaizen Blitz approach –

A team of subject matter experts would be formed with a facilitator. The team facilitator would guide the team to a significant cycle time reduction within 5-6 days using Kaizen event.

There is a general format to the Kaizen:

  • Training must be provided, since some members may not be familiar with lean thinking techniques
  • Time limit of 5 days to accomplish the change
  • 2 days of training provided on lean techniques
  • 2 days are allocated for collecting data and making changes
  • The last day consists of a presentation on the results to the workforce

While this is the Kaizen format, we can take a similar approach for more complicated processes, but it generally takes more time. Following are the critical steps explained:

Step 1 Training and Calibration:

Before we initiate identification of NVAs, the auditors need to be trained and calibrated so that the data collected is correct. Some of the things which need to be covered in training are:

  • Identification of value add and non value add activities, explain with examples
  • Identification of Muda
  • Principles of motion study
  • 5S workplace organization
  • Next process as customer
  • Problem solving techniques like 5 Whys
  • Poka yoke techniques
  • Work flow patterns

Once the training is done, next step is calibration of the team members. Let trained employees capture time and NVAs, facilitator needs to calibrate each auditor.

It is advisable to use video recording for time and motion. It becomes very easy and accuracy levels increase many folds, in case of any doubt you can always go back and calibrate.

Step 2 Time and Motion with NVA identification:

Next step is to capture time and motion, operators and other staff members can all be team members and be involved in this activity.

The work sampling studies will provide a picture of the work content of the station. This will reveal the content and ratio of work, inspection, walking and other factors.

As you can check in the table, value add is around 60% only for each station. The activities of inspection, delay, walking and other are considered Muda and are NVAs.

We usually study 30 cycles of the line in order to determine average cycle time, this is statistically valid sample size.

Step 3 NVA elimination:

Now that the team knows break up of different NVAs, the team can investigate ways to eliminate these Muda types. We can try different layouts to reduce walking, example of a U shaped layout or L shaped. Change place of tools to reduce motion.

Inspection Muda can be reduced by better calibration or automation of inspection process. Stations might be inspecting something which may not be required. We can check the defect rate out of inspection activity, RCA and solutioning can be proposed to eliminate those defects itself.

There are many opportunities for innovation and creativity in the composition of line work layout.

Process Reengineering and Automation:

So far, we have discussed ways to reduce non value added activities like waiting, unnecessary steps etc. other than these activities we can also plan to do Automation study or Process Reengineering project.

These are vast topics and we are just going to talk the basics of them. Let us talk about automation, automation can be done for hardware or machines as we know. These are robots working in our manufacturing units.

Any repetitive process following a logic can become a candidate for an automation study. Based on the cost benefit study we can decide on the installation of these automated machines.

Other than these machines, we can also automate many back end processes like email replies, order fulfillment, report automation, automated voice or chat response to customers etc.

Many manual activities performed in our banks, financial agencies, corporate offices can be automated. All this can save time and make the process more productive and error free.

Many a times, management may also decide to start a process reengineering project. In these projects, As Is processes are studied by experts to see what all steps can be changed or eliminated to reduce cycle time and reduce errors. These can also follow DMAIC roadmap for break through improvement.

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