Understanding Lead Time, Cycle Time, and Takt Time in Manufacturing
- Russell Watkins
- Apr 25
- 6 min read
Updated: 2 days ago
In manufacturing, understanding Lead Time, Cycle Time, and Takt Time is crucial. These terms can be confusing initially, but they are essential tools for enhancing operations, meeting customer demand, and reducing waste. Let’s break them down, clarifying their significance in your processes.
1. What is Cycle Time?
Cycle Time refers to how long it takes to complete a specific task in your process. This measurement is taken from start to finish, from defined points, like load to load. Think of it as your "floor-to-floor" time. Cycle time can only be captured with a stopwatch, representing the actual time taken to finish a process.
Here’s a simple example:
Loading a part into a machine, processing it, and then unloading the finished piece.
In assembly, it’s the time from picking up the first part (part ABC) to the quick testing just before starting the next part ABC.
Cycle time acts as a baseline. It provides insight into how long tasks actually take and helps identify areas of inefficiency.
How to Calculate Cycle Time
You can calculate Cycle Time using this formula:
Cycle Time = Total Time Spent ÷ Number of Units Produced
Steps to Calculate Cycle Time:
Measure Total Time: Use a stopwatch to record the total time taken for the whole process.
Count Units: Track the number of units produced during that time frame.
Apply the Formula: Divide the total time by the number of units to find the cycle time per unit.
Cycle Time Example:
A machine operates for 100 minutes and produces 20 units:
Cycle Time = 100 minutes ÷ 20 units = 5 minutes per unit
Avoid the temptation to only count ‘good cycles’ where nothing goes wrong. Realistically, there will be waste in the process, and we must acknowledge it when it occurs. Varying cycle times also indicate stability within a process.
A Better Way to Set Cycle Time
Many manufacturers mistakenly use the average of multiple timings to establish a new process’s cycle time. This approach rarely reflects real-world performance.
Instead, try the Minimum Repeatable Time (MRT):
Record individual process completion times multiple times.
List the times from smallest to largest.
Choose the second smallest time. This method ensures repeatability without compromising safety or quality.
This approach reveals variability in your process and establishes a realistic benchmark for improvement.
How to Reduce Your Cycle Time (By Eliminating Waste)
Put simply, you can reduce your cycle time by stripping out all or some of the 7 wastes that are baked into your process. Whether that's
Transportation: Moving products or materials around when it’s not necessary.
Inventory: Having too much stuff sitting around that’s not needed right away.
Motion: Extra movement, like walking back and forth or constantly reaching for tools.
Waiting: Standing around, waiting for materials, equipment, or approvals.
Overproduction: Making more than what’s needed or making it too early.
Overprocessing: Doing more work or higher-quality work than necessary.
Defects (or Bad Quality products): When something doesn’t meet quality standards, you’ve got to spend time and resources fixing or scrapping it.
By eliminating these wastes, you can streamline your process and significantly reduce cycle time.
Derek, a Team Leader at a £15m electrical components group, made significant reductions to cycle time by stripping out Waste. Read his story here
If you want a step-by-step guide check out our 7 Wastes course to learn how to spot and remove inefficiencies.
Remember, cycle time must always align with customer demand. This principle leads us to Takt Time.
2. What is Takt Time?
TAKT Time is essential for meeting customer needs. Unlike cycle time, it is a calculated figure that indicates how frequently a finished product should come off the production line to satisfy customer demand.
How to Calculate Takt Time
Use the following formula to determine Takt Time:
TAKT Time = Daily Operating Time ÷ Daily Customer Demand
Steps to Calculate Takt Time:
Determine Daily Operating Time: Calculate total available working time in a day, excluding breaks and planned downtime. Do not include unplanned downtime.
Know Your Customer Demand: Identify how many units your customer needs within the same timeframe.
Apply the Formula: Divide the daily operating time by customer demand.
Takt Time Example:
If a shift lasts 8 hours, with a 50-minute break and 10 minutes for cleanup, the daily operating time is 7 hours (or 420 minutes). If customer demand is 70 units per day:
TAKT Time = 420 minutes ÷ 70 units = 6 minutes per unit
Key Takeaways:
Takt Time represents the production rate needed to meet customer demand.
All cycle times in your production process should be less than or equal to Takt Time, preventing delays and bottlenecks.
3. What is Lead Time?
Lead Time is the entire duration it takes for a product to progress through your process, from when materials arrive at your factory to when finished goods are delivered to customers. This big-picture metric is calculated by adding up all Cycle Times and converting inventory between stages into time, based on demand.
Lead Time provides a comprehensive view of your operations. It helps identify delays and inefficiencies across the entire value stream.
How to Calculate Lead Time
Calculate Lead Time using this formula:
Lead Time = Total Cycle Time + Waiting Times (from Inventory and Other Delays)
Steps to Calculate Lead Time:
Define the Process: Understand the journey of a product as it passes through the factory.
Convert Inventory to Time: Use inventory between processes divided by customer demand to determine how long processing will take.
Sum Everything: Add the time taken through each process to finalize Lead Time.
Lead Time Example:
Step 1: A factory has 5 processes: A, B, C, Paint, and Assembly. The product arrives from the supplier and progresses through each process before being shipped to the customer (see below).
Step 2: To convert inventory into time, divide the inventory quantity by daily customer demand. For example, if the demand is 70 units, input that figure into the calculation.
Step 3: Sum the total durations to find the lead time. Suppose the computations yield a total of 34.4 days.
Key Insight on Lead Time, Cycle Time, and Takt Time Explained:
When you aggregate the cycle times (5min + 6.5min + 5.3min + 5.1min + 6.8min), you might see that the total value-added time is less than half an hour. This disparity raises the question:
Why is it taking 34.4 days to process one part when the cycle time is only 28.7 minutes?
The vast gap between these figures likely indicates hidden waste. Ready to learn how to identify and eliminate waste? Our 7 Wastes course is a great place to start.
Quick Reference Tips for Understanding Lead Time, Cycle Time, and Takt Time:
1. Cycle Time
Definition: The time taken to complete one task or process from start to finish.
Measured By: Stopwatch.
Example: Loading, processing, and unloading a machine.
Tip: Use the minimum repeatable time, not the average, to set realistic benchmarks.
2. Takt Time
Definition: The rate of production required to meet customer demand.
Formula: Daily Operating Time ÷ Customer Demand.
Example: With 400 minutes available and a customer demand of 100 units, Takt Time is 4 minutes per unit.
Tip: Keep cycle time below Takt Time to prevent delays, but not too far below to avoid unnecessary waste.
3. Lead Time
Definition: The total time from when raw materials enter the process to when finished goods are delivered to the customer.
Includes: All cycle times and time spent in inventory or waiting stages.
Example: The duration it takes for a product to move from raw materials entering the factory to leaving as finished goods for a customer.
Tip: Regularly review inventory and streamline processes to reduce overall lead time.
To further clarify these concepts, we created a detailed video explaining the differences and definitions. Check it out here.
Key Takeaway
The understanding of Lead Time, Cycle Time, and Takt Time can revolutionize your manufacturing process. These metrics ensure your operations are efficient, aligned with market demand, and focused on delivering value to customers.
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