The Three Essential Manufacturing Times: Lead Time, Cycle Time, and Takt Time Explained

When it comes to manufacturing, understanding Lead Time, Cycle Time, and Takt time is critical. While these terms can be confusing at first, they’re essential tools for improving operations, meeting customer demand, and reducing waste. Let’s break them down, making it crystal clear how each works and why they matter.

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1. What is Cycle Time?

Cycle time is the time it takes to complete a task at a specific operation in your process, measured from start to finish from a defined point, like load to load. Think of it as your "floor-to-floor" time. Importantly, cycle time can only be captured with a stopwatch as it represents the actual time it takes to complete a process.

For example:

• Loading a part into a machine, doing some other work while it’s being processed and then unloading the finished piece, or

• In assembly operations, from picking up the first part (part ABC) to be assembled together, to finishing the quick testing just before picking up a new part ABC to start the process again

Cycle time gives you a baseline for how long tasks actually take, helping you 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:

1. Measure Total Time: Use a stopwatch to record the total time it takes to complete the process, from start to finish.

2. Count Units: Track the number of units produced during that time frame.

3. Apply the Formula: Divide the total time by the number of units to get 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

Don’t be tempted to only include ‘good cycles’ where nothing goes wrong. The reality is that there’ll be waste in the process and we need to acknowledge it when it occurs. Varying cycle times tell you something about the stability of a process.

A Better Way to Set Cycle Time

Many manufacturers fall into this trap of using the average of multiple timings to set a new process’s cycle time. However, this approach often results in a number that doesn’t reflect real-world performance.

Instead, use the Minimum Repeatable Time (MRT):

1. Record individual instances of the process being completed multiple times.  

2. Write the times in order from smallest on the left to biggest on the right

3. Choose the second smallest time, this ensures repeatability without compromising safety or quality.

This smarter method highlights variability in your process and provides a realistic benchmark for improvement.

But remember, cycle time must always align with customer demand, which brings us to TAKT time.

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2. What is TAKT Time?

TAKT Time is all about meeting customer needs. It is a calculated number, not something measured with a stopwatch, indicating how frequently a finished product must come off the end of a production line/cell to satisfy our customer.

How to Calculate TAKT Time

You can calculate TAKT time using this formula:  

TAKT Time = Daily Operating Time ÷ Daily Customer Demand

Steps to Calculate TAKT Time:

1. Determine Daily Operating Time: Calculate the total working time available in a day, excluding breaks, planned downtime or planned maintenance. Don’t include unplanned downtime

2. Know Your Customer Demand: Identify how many units the customer requires within the same time frame.

3. Apply the Formula: Divide the daily operating time by the customer demand.

   
   

TAKT Time Example

A a shift lasts 8 hours, with a 50 min break and 10 mins for wash up and 5s, the daily operating time is 7 hours (or 420 minutes). Customer demands 70 units per day

TAKT Time = 420 minutes ÷ 70 units = 6 minutes per unit

Key Takeaways:

• TAKT Time represents the rate of production needed to meet customer demand.

• All cycle times in your production process should be less than or equal to Takt Time to avoid delays or bottlenecks.

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3. What is Lead Time?

Lead Time is the total time it takes for a product to move through the entire process, from the moment materials arrive at your factory to when finished goods are delivered to the customer. It’s a big picture metric, calculated by adding up all Cycle Times along the process and converting any inventory between stages into time, based on demand.

Lead Time offers a bird's eye view of your operation, helping you see delays or inefficiencies across the entire value stream.

How to Calculate Lead Time

You can calculate Lead Time using this formula: 

Lead Time = Total Cycle Time + Waiting Times (from Inventory and Other Delays)

Steps to Calculate Lead Time

1. Define the Process: What happens to a product as it goes through the factory, from when it arrives at the gates, the inventory waits, the processes and finished parts.

2. Convert Inventory to Time

3. Add up the time it takes to complete

Lead Time Example:

Step 1 Defining the process: A factory has 5 processes: A, B, C, Paint and Assembly. the product is received from the supplier and passes through A, B, C, Paint and Assembly and then is shipped to the customer (see below)

Step 2 Convert Inventory to Time: We use the inventory between processes and divide it by customer demand (here it is 70) to calculate how long it will take to process

Time from Inventory = Inventory Quantity ÷ Daily Customer Demand

Step 3 Sum Everything: We add the total days to get the lead time.

20 + 2.4 + 1 + 2 + 5 + 4 = 34.4 Days

Key Insight on Lead Time, Cycle Time, and Takt Time Explained:

When you add up the cycle times (5min + 6.5min + 5.3min + 5.1min +6.8min) you’ll see that the total value added time is less than half an hour so you need to ask

Why is it taking 34.4 days to get 1 part through the factory when the cycle time is 28.7 minutes? 

That huge gap is packed with hidden waste. Want to learn how to spot it and do something about it? Our 7 Wastes course is a great place to start.

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Quick reference tips for understanding lead time, cycle time, and TAKT time:

1. Cycle Time  

   - Definition: The time it takes to complete one task or process from start to finish.  

   - Measured By: Stopwatch.  

   - Example: How long it takes to load, do the work and then unload a machine.  

   - Tip: Use the minimum repeatable time, not the average, to set realistic benchmarks.

2. TAKT Time  

   - Definition: The rate at which products must be completed to meet customer demand.  

   - Formula: Daily Operating Time ÷ Customer Demand.  

   - Example: If you have 400 minutes available and customer demand is 100 units, Takt Time is 4 minutes per unit.  

   - Tip: Always keep cycle time below Takt Time to prevent delays, but not too far below as that builds in 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 plus time spent on inventory or waiting stages.  

   - Example: The time it takes for a product to move from entering the factory gates as raw materials to leaving the factory gates as finished goods to a customer.

   - Tip: Regularly review inventory and streamline processes to reduce lead time.

We know how confusing these three can be so we created a video to explain the differences and definitions. Check it out here

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Key Takeaway

The Lead Time, Cycle Time, and Takt Time explained here can revolutionise your manufacturing process. These metrics keep your operations efficient, aligned with demand, and focused on delivering value to customers.

Eliminate the 7 Wastes & streamline your operations with our expert-led online course.

Eliminate the 7 Wastes & streamline your 

operations with our expert-led online course.