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Comparing of TAKT Time vs. Cycle Time vs. Lead Time

TAKT Time vs Cycle Time vs Lead Time

TAKT time, cycle time, and lead time are often used to track various projects, especially those with repetitive processes or production flows. These metrics are crucial in project management, enabling managers to make informed decisions, identify bottlenecks, and drive continuous improvement. Whether you’re an aspiring project manager or looking to advance your career in this field, understanding TAKT time, cycle time, and lead time can equip you with valuable tools to enhance your job, regardless of your industry.

In this guide, we explore the differences between TAKT time, cycle time, and lead time, how to calculate them, and their benefits. At the end of the guide, we’ll also recommend an industry-recognized Six Sigma program that will deepen your understanding of these concepts and help you gain relevant skills for a successful project and quality management career.

What is Cycle Time?

Cycle time is the time required to complete one unit in a process cycle. It denotes the frequency of completing a work section during a lengthy process cycle. It may consist of the production and idle wait times between the active processing hours. Thus, during the production of multiple parts in an assembly line, the cycle time denotes the time interval between two finished products. It is calculated using the following formula:

Cycle time = Net production time in hours / total number of units to be produced

Suppose a factory has ordered 1000 paper lanterns to be delivered in 10 days. Now, say the production hours of the factory are 8 hours per day, excluding the time spent on breaks. The total production time would be:

Net production time = 8 × 10 × 60 = 4800 minutes

The cycle time in hours can be calculated as below:

Cycle time = 4800 / 1000 = 4.8 minutes

Thus, the cycle time for one lantern would be 4.8 minutes.

Also Read: Six Sigma Green Belt Exam Tips

Advantages of Calculating Cycle Time

Cycle time is straightforward for simpler processes with similar steps. However, the typical processes consist of action steps with different process times, which may create bottlenecks and long wait times. Here’s how calculating cycle time is advantageous in such intricate processes:

  • It helps track the overall equipment effectiveness (OEE) by evaluating how efficiently you use it.
  • You can assess how well you can meet the customer demand.
  • You can identify the bottlenecks and devise solutions.
  • Cycle time enables evaluation of production rate.

What is Lead Time?

Lead time refers to the total time from the moment the order is received till it is delivered and the payment is received from the customer. Thus, lead time considers every aspect of the production cycle, from receiving the order, beginning the production process, packaging the product, shipping the packages, and receiving the payment for the order. However, in larger B2B transactions, the payment terms differ from the B2C transactions, and the payment cycles are typically late. So, the lead time may be from when the order is received until it is delivered to the customer.

For example, an automotive supplier has received an order for 10000 aluminum panels. It takes four days from this moment for the production to start. The production of the panels takes ten days, followed by three days for packaging. The shipping takes 15 days to reach the warehouse and another five days to reach the customer facility. Thus, the total lead time would be:

Lead time = time from order to start of production + net production time + packaging time + transit time + time from warehouse to factory = 4 + 10 + 3 + 15 + 5 = 42 days

Sometimes, if the raw material is perishable or requires preprocessing, the lead time may include the time needed to obtain it. Thus, lead time is the total time required to complete the entire set of activities that ensure a smooth delivery of the goods to the customer facility.

Advantages of Calculating Lead Time

These days, when goods are assembled using components sourced from different factories, lead time is a crucial parameter that ensures the smooth production of the final goods. Here are some advantages of calculating the lead time:

  • You can smoothly track the component’s progress since day one and avoid being blindsided by stock shortages or delays.
  • Lead time helps align the arrival of the raw material or components so that the production is not delayed due to the non-availability of one component.
  • Efficient lead time calculation minimizes shipping costs.
  • It helps account for obstacles such as natural disasters, raw material shortages, human errors, and customs delays.
  • Lead time calculation identifies the need for a backup supplier for critical and time-sensitive goods.

Also Read: Exploring Lean Process Improvement in Six Sigma

What is TAKT Time?

TAKT time refers to the time required to complete the customer demand. The motive of TAKT time is to establish the time needed to achieve the production goals. It indicates how fast your production is and whether the production speed is enough to meet the customer’s demands and deliver the product. For example, a restaurant receives an order of one pizza every three hours. Thus, it takes three hours to prepare one pizza, making three hours the TAKT time.

Advantages of Calculating TAKT Time

Let us now look at some of the advantages of the TAKT time.

  • TAKT calculation results in a reduction of the time spent in training.
  • You can estimate the service delivery efficiently.
  • Quality control standards are optimized.
  • You can manage the production flow and reduce overtime.
  • The process errors are minimized, and the work process is standardized.
  • The targets set for task completion become more realistic and manageable, resulting in a positive approach towards the project.

How to Calculate TAKT Time?

The TAKT time depends on two main parameters: Net production time (NPT) and customer demand. Net production time refers to the time spent in production, excluding the time spent on lunch or tea breaks, maintenance, meetings, and reviews. Customer demand is the number of goods your customers purchase per unit of time, typically daily. Using these two parameters, the TAKT time is calculated using the following formula:

Takt Time = Net Production Time / Customer Demand

Suppose a plastic container factory receives about 1000 weekly orders from various customers. A working week consists of 5 shifts of 10 hours each. So, the customer demand is 200 orders per shift. Now, the net production time is 8 hours per day, excluding the average downtime of 2 hours per day. Therefore, the TAKT time would be:

TAKT time = (8 × 60) / 200 = 2.4 minutes

Thus, the factory must finish one plastic container every 2.4 minutes.

If the customer demand changes to 500 orders, the TAKT time will relax to 4.8 minutes, while it will accelerate to 1.2 minutes if the orders double per week to 2000 containers. So, TAKT time denotes how much time the workers must spend per unit product to complete the customer order.

If the same team or equipment is involved in producing more than one type of goods, then the net production time will change, and the calculations have to be adjusted to include only the personnel time spent on that single type of product.

Also Read: Lean Thinking: Transforming Efficiency in Your Business

Calculating Cycle Time vs. Lead Time

Lead time depends on the cycle time, as cycle time tells you the production rate of the goods. For example, say a company has an order of 100 ruled notebooks with 50 pages each. The typical production process includes cutting the paper to size, printing lines, collating 50 papers, aligning the cover pages, and binding them. Here, the cycle time is required for each notebook to complete the process, from cutting paper to binding. It also indicates the time interval between the completion of two notebooks.

This cycle time will define the production rate and the total number of days required to produce 100 notebooks. Lead time adds this number to other factors, such as the time between the order and the start of production, packaging, shipping, and delivery. Thus, cycle time is the main defining parameter. Little’s law defines the relationship between cycle time and lead time as:

Lead time = Cycle time x Work-In-Progress (or ’WIP’)

However, the typical production processes are much more complex and require multiple factors. So, an accurate method to reconcile the cycle and lead times is crucial. This is where the CFD comes in.

CFD, or Cumulative Flow Diagram, is a graph used to track the progress of a project. It maps the WIP units on the Y-axis and the time on the X-axis. The CFD is divided into multiple segments, each depicting one Kanban board column. The diagram plots the data on the order from when it is received until it is delivered. This data can be used to calculate lead time. You only need to consider the production cycle data to measure the cycle time.

Thus, CFD is a tremendously useful and practical way to visualize and calculate the lead and cycle times on a single plot and note points of inefficiency or bottlenecks.

Why it is Important to Understand Cycle Time vs. Lead Time vs TAKT Time

Losing even one day of production can snowball into a major issue affecting multiple suppliers, manufacturers, distributors, and consumers. Hence, precise timelines must be developed accurately by clearly distinguishing between the three terms.

For example, some people may confuse the terms cycle time and TAKT time and use them interchangeably. However, TAKT time is dependent on customer demand, while cycle time is determined by the equipment and worker capabilities. So, if a bakery orders 50 cupcakes to be delivered in 5 days, the production hours per shift are 4. So, in one shift, the bakery can produce 10 cupcakes. Now, the TAKT time would be:

TAKT time = 4 × 60 / 10 = 24 minutes

This means that to complete the order of 50 cupcakes in 5 days, the bakery has to spend 24 minutes to finish each cupcake.

In practice, the bakery will not produce one cupcake at a time. It will set up a process where operations such as placing the cups, mixing the batter, pouring the batter, baking, and icing will be done simultaneously for 50 cupcakes. Further, if the oven can hold only 10 cupcakes simultaneously, the cycle time will vary accordingly.

Thus, while the TAKT time denotes what the bakery should do to complete the order, the cycle time denotes what the bakery can do.

Lead time denotes when the bakery received the order, the cycle time, the total production time, and the time for the final delivery of the cupcakes.

Also Read: What is a Quality Engineer? A Comprehensive Guide to the Profession

Want to Dive Deeper into Lean Six Sigma and Other Quality Management Concepts?

Lean and Six Sigma professionals working towards process improvement must be conversant with cycle time, TAKT time, and lead time. Only when they have established the differences and values of these terms can they work on developing, tracking, and troubleshooting the process.

You can achieve this by completing a comprehensive Six Sigma bootcamp to help you build a solid foundation in these concepts. The training is specially curated to impart key concepts such as agile management, DMAIC, quality management, and lean management. You will learn how to minimize errors, improve the quality, and enhance the process by learning crucial skills in the Lean Six Sigma Green Belt and Lean Six Sigma Black Belt certifications aligned with IASSC courses.

You might also like to read:

What is Continuous Improvement? Definition, Examples, and Tips

Six Sigma Implementation Strategies [2024 Guide]

Exploring Six Sigma and Total Quality Management: Differences, Similarities, and Qualifications

Best Green Belt Projects: Examples, Tips, and Best Practices

Six Sigma Yellow Belt Certification: Requirements and Advantages

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