When any project plan is formulated, the project managers are required to optimize their resources, time, and also workflow. For this purpose, there is a need to understand the concept and difference in lead time, takt time, and cycle time. All these time management metrics are also needed for the calculation of six sigma and other project management statistics. Such metrics are also applicable when organizations prefer to manage time for remote employees.
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Takt time, cycle time, and lead time are not synonymous with each other. All three of them are three different time management strategies. Although many manufacturing industry professionals make use of these terms interchangeably, you should not. Brush your knowledge with in-depth knowledge on all three and use the right term at the right place. Be a pro!
Understand Takt Time v/s Cycle Time v/s Lead time
1. Takt time
‘Takt’ is a German word that means ‘pulse’ in the English language. Similar to the role of pulse in our body, the ‘Takt’ time measures the rate at which the demands of the customer are met in a manufacturing unit. Therefore, the takt time measures the time taken by the team of workers to efficiently and effectively complete the production schedule or to meet the demand of the clients.
Takt time = (Available work time / Client demand)
Takt time = (Available production hours / Units required)
Takt time = (Net production time / Customer demand )
*The available production hours are exclusive of the lunch breaks or other such rest breaks.
- An accounting firm has to prepare 20 accounting forms and provide them to the customer.
- Total working hours per employee in the firm are 9 hours, inclusive of 1 hour of lunch break.
Available production hours = 9-1= 8 hours or 480 minutes
Takt time = 480 minutes / 20 forms
= 24 minutes per form
Therefore, each employee needs 24 minutes to prepare 1 form in a day.
Significance of takt time calculation in an organization
- Takt time gives an estimated time required to complete the delivery process.
- It provides an estimate of the sustainability potential of the production flow.
- It helps to standardize the work process.
- Standardization further improves the efficiency level and reduces the training needs of the team involved.
- Feasible targets are set for the team.
- The need for working beyond production hours reduces, as the targets get achieved on time.
- Work quality improves and the error rate reduces.
- It becomes easier to conclude if the team is overworked or under-worked. Managers can then redistribute the work accordingly to ensure the thorough productivity of the team.
2. Cycle time
Cycle time is the time taken by the firm to complete an entire project. It takes into consideration the time taken to complete the production of the item from start to end. In software departments, cycle time will refer to the duration spent from the beginning of coding to the point when the software gets released. Remember, cycle time is only the time spent in production. It can also be referred to as the time needed for equipment to complete a process or movement in the workstation. In other words, it is the meantime needed to produce one unit.
Cycle time = (Net production time / Number of units made)
- Net production time = 3 hours or 180 minutes
- Number of units produced in the net production time = 36
- Cycle time = 180 minutes / 36 units = 5 minutes/ unit
Significance of cycle time calculation
- Cycle time determines the efficiency level of the team.
- Cycle time is calculated and compared with takt time, to comprehend the productivity of the team.
- Cycle time should equal the takt time to ensure a balanced productivity level.
- Cycle timeless than takt time might hint towards the overproduction of items. It is not good as it might require extra warehouse space for managing the surplus production.
- Cycle time more than takt time shows underproduction.
- When cycle time is more than lead time, it means the time taken to meet the demand of the client is much more and there is a lingering phase involved. All this shows inefficient workflow.
- Cycle time equals the lead time, it can mean there is overlapping of processing and approval time. It can lead to a decline in the level of customer service.
3. Lead time
Lead time is the total time taken from the point of taking up the new project or task to the point of project or task delivery. In the case of a software development firm, the lead time is the time taken to process the request plus the time taken to complete the project plus the time taken to review the project.
Lead time = Pre-process time + cycle time + inspection time
Lead time = Order delivered – Order received
- Order receipt date is July 3rd, 2020
- Order delivery date is August 20th, 2020
- Lead time = 8/20/2020 – 7/3/2020 = 1/17/0
Or 1 month, 17 days, 0 years
Significance of lead time calculation
- Lead time provides an estimate for the time needed to complete the task once it is taken up.
- Lead time helps in the timely identification of bottlenecks in the work process.
- It gives an understanding of the team’s work capacity.
- Provides an accurate insight regarding new projects.
- It addresses the delays in initiating and completing the project.
- Lead time metrics apply across project management, supply chain management, and manufacturing process.
Understanding the concept of takt time vs cycle time or takt time vs lead time or cycle time vs lead time is the first step for any project manager to elevate the efficiency of their work. Now that organizations are making a shift towards the virtual world for improved efficiency and effectiveness, they are also exploring the importance of employee time tracking software for their production process. Apart from this, organizations depend on time tracking apps to improve the productivity of their work process. Using time tracking tools and applications makes the calculation of time management metrics much easier and accurate.
In any manufacturing or production unit, the project manager should make all efforts to reduce the gap between takt time vs cycle time. This step helps to deliver the order on time. Also, the efforts should be targeted to make the lead time as short as possible. Optimization of cycle time automatically optimizes the lead time of the project. Do share your views about the use of the three-time management metrics and how you benefit from them, in the comment section below.