Introduction to Cycle Time: Formula, Benefits, and Examples

In this blog, you will learn what cycle time is and how to calculate cycle time using the cycle time formula. Moreover, you will learn the difference between cycle time, lead time, and takt time. The terms related to cycle time will also be discussed in this detailed guide.

Table of Contents

• What is Cycle Time?
• Formula to Calculate Cycle Time
• Cycle Time Example
• Benefits of Calculating Cycle Time
• Cycle Time Vs. Lead Time Vs. Takt Time
• Cycle Time-Related Terms
• Conclusion
• FAQs

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What is Cycle Time?

The total time spent on producing one unit of product or service by a team is known as cycle time. It includes the duration of time between the beginning and completion of the project. It calculates the speed of delivery of a product or service. In different industries, the cycle time is calculated for different processes. For example, in the software development industry, the cycle time tells the time taken to complete the project. In restaurants, the cycle time will be calculated based on the average time it takes for a customer to receive their meal.

Cycle time includes two parts, i.e., process time and delay time. Here, process time is when the team is actively working on the project, and delay time is when the team is waiting for some action to be completed so that they can move on to the next step of their project. For example, the team may be waiting for materials to arrive or some other action to occur. 

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Formula to Calculate Cycle Time

To calculate the cycle time, we use the following formula:

Cycle Time = Total Production Time/Number of Units Produced

Here, total production time is the time the team has taken to finish the project. It is usually calculated in hours. To calculate the total production time, we need to subtract the delay hours from the total time the team spends in the workplace in a day. For example, if a team spends 9 hours at their workplace, out of which they spend some time for breaks and meetings, let’s say 2 hours, the total production time will be calculated by subtracting 2 from 9, i.e., 9 − 2 = 7 hours. So, 7 hours will be the total production time. 

Then, the number of units produced is the total number of units of a product produced during the project. For example, a company counts the total units of product developed during its project and finds that it manufactured 150 units of product.

After calculating the total production time and the number of units produced, we divide them to get cycle time. For example, if the team produces 150 units of product and the total production time is 48 hours, the cycle time will be 70/150 = 0.46 hours. This number can be converted into minutes to measure the amount of time it took to complete the project in minutes. We convert this decimal proportion into hours by multiplying it with 60. If we multiply 0.46 by 60, we get 27 minutes, which is the cycle time. 

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Cycle Time Example

Many different industries and businesses calculate cycle time. It impacts the overall efficiency and success of any business. Let’s say a fast-food restaurant tracks the time it takes to serve a customer from the moment they place an order to the moment they receive their meal. They’d use this data to calculate the cycle time, i.e., the average time it takes for an order to be processed and delivered to the customer. This helps them measure efficiency and make improvements to their service.

Customers place their orders either at a counter or via a digital system. This marks the beginning of the cycle. The kitchen staff starts preparing the order immediately after it’s received. The time taken to prepare the meal is tracked. The kitchen team cooks the food and assembles the order. This time is also noted for each order. Once the meal is ready, it’s served to the customer or made available for pickup. The time taken for delivery is recorded.

Consider that if in one hour the restaurant served 30 orders and the total time taken for all those orders was 150 minutes,

Cycle Time = 150 minutes / 30 orders

        = 5 minutes per order

This means, on average, it takes 5 minutes to process and deliver an order in that specific hour.

By analyzing this data, the restaurant identifies areas for improvement. For instance, they might find ways to streamline cooking processes or optimize the order delivery system to reduce cycle times and enhance customer satisfaction. 

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Benefits of Calculating Cycle Time

When you calculate cycle time, you’re measuring the time it takes to complete a task, a process, or a unit of work. Some of its benefits are mentioned below:

• Efficiency Improvement: By quantifying how long it takes to complete a task or process, you can set benchmarks for efficiency. This helps in implementing strategies for agile project management and reduces unnecessary wait times. Moreover, by understanding cycle time, we can optimize processes by identifying inefficiencies or areas where tasks take longer than expected. This optimization can lead to smoother operations and reduced lead times. 

• Effective Resource Allocation: Knowing cycle times helps in better resource allocation. It enables you to allocate resources more effectively, balancing workloads and optimizing resource utilization. This way, you can set more realistic goals and deadlines. It provides a basis for establishing achievable targets and measuring progress.

• Customer Satisfaction: Streamlining processes and reducing cycle times help in faster delivery or completion of tasks, which leads to increased customer satisfaction.

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Cycle Time Vs. Lead Time Vs. Takt Time

People tend to get confused between cycle time, lead time, and takt time. These three are slightly different from each other. 

• Cycle Time: Cycle time is the total time it takes to complete a specific task, operation, or process. It measures the time from the beginning of a production or service process to its completion, indicating the speed and efficiency of that particular activity.

• Takt Time: Takt time is the available time divided by the customer demand. It represents the maximum time spent on a process to meet customer demand while maintaining a steady production flow. Takt time helps organizations synchronize their production rates with customer demand by preventing overproduction or underproduction.

• Lead Time: Lead time is the total time it takes for a product or service to move through the entire value stream, from the start of the process to the delivery to the customer. It combines all the time spent on processing, waiting, and transit, providing a detailed view of the elapsed time from order placement to delivery. 

The key differences between these three terms are highlighted in the table below:

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Cycle Time-Related Terms

A few other terms related to cycle time are mentioned below:

• Machine Cycle Time: It is the duration a machine takes to complete one production cycle.

• Effective Machine Cycle Time: It refers to the actual time it takes for a machine to complete a production cycle while considering all relevant factors that may affect the process, such as load and unload time, machine changeover time, and minimum batch size. 

• Non-Value Creating Time: This is the time within a business or production process that does not directly contribute to the creation or enhancement of a product or service from the customer’s perspective. It includes any period during which no value is added to the product or service. This time can be associated with activities such as waiting, transportation, unnecessary processing, or idle time.

• Order-Lead Time: It is the total time it takes for a customer’s order to be fulfilled from the moment the order is placed until the products or services are delivered. This includes all stages of the order processing, production, and delivery, including order processing time, manufacturing or service time, and the time it takes for the product to reach the customer’s location.

• Throughput Time: It is the total time consumed in the whole process from beginning to end, i.e., the time taken from the raw materials to be converted into a full-fledged product.

Conclusion

Cycle time is important for guaranteeing high-quality work and cultivating loyal, satisfied customers, not just for calculating production amounts. The cycle time formula is a useful tool that may be used for software development, services, product delivery, or other projects. It can help you and your team improve how you handle jobs and increase customer satisfaction. It’s a versatile metric that guides work toward providing excellence, simplifying processes, and measuring efficiency.

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