Tuesday, July 31, 2012

Lead Time vs Cycle Time

1. Lead Time and Cycle Time don't have the same unit although their names are both "Time." Lead Time is measured by elapsed time (minutes, hours, etc.), whereas Cycle Time is measured by the amount of time per unit (minutes/customer, hours/part, etc.). It does not make any sense to add one to, or subtract one from, another.
2. Cycle Time is actually a measure of Throughput (units per period of time), which is the reciprocal of Cycle Time. This relationship is analogous to Takt Time (amount of time per unit), which is the reciprocal of customer demand rate (units per period of time). Note that by definition, Cycle Time (or Takt Time) is an average value.
3. Lead Time and Cycle Time are related by Work-in-progress (WIP) in the entire process, in a relationship described by the Little's Law:
Lead Time = Cycle Time * WIP
Lead Time = WIP/Throughput
4. 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.