Optimization of the production process is always on the mind of a manager. Lesser the production time of a product means more items can be produced in that time; Hence, more will be the revenue generation of the organization. Therefore, different processes are opted by an organization for the optimization of the production process.
The cycle time and lead time are two metrics to measure the production time. To optimize the production process, the manager tries to reduce these both.
Many people get confused between cycle time and lead time, as both of these times are related to production times. however, there is a considerable difference between both of these times.
In this article, you will learn about what is cycle time, what is a lead time, and what are the key differences between cycle time and lead time.
What is cycle time?
Cycle time in production is referred to the total time taken for the production of a unit of product. Cycle time starts when raw material is collected and assembled to get the final product. A cycle time consists of various small cycle times of small sub-processes included in the production process of a unit and all waiting times between any two sub-processes of production of a unit.
Lower the production time, the better will be the performance of manufacturing. Therefore, companies try to optimize the manufacturing time, processing time, pre-processing times and try to reduce the waiting time between two production processes.
Moreover, in order to optimize the cycle time, companies try to manufacture two different parts of the products and assemble them when they are ready. In this way, the production time of two processes is merged and two processes can be completed in the time of one process.
Cycle time starts when the production process starts and ends when the product is packed and is finally ready to deliver to the customer. Cycle time is different for the production of two different types of goods as a process involved in the production of two different goods is different.
However, when the cycle time of two similar goods is different then the lower cycle time of a production process is considered better than the other production time. For example, the cycle time of a company XYZ is 2 days if it can get ready one unit of the car ready to be delivered in 2 days. The management of the company decides to optimize the cycle time.
Therefore, the management of the company decides to perform Business process reengineering so as to check how the performance of different processes involved in the production process can be optimized. (Click here to learn more about Business process reengineering). With the successful implementation of Business Process Reengineering, management gets to succeed in lowering the cycle time from 2 days per unit to one day per unit.
Now, the company can produce two cars instead of 1 car in 2 days. This means the company can generate double revenue at the same time. Lower the cycle time, better will be the use of resources available in the organization.
What is lead time?
Lead time is the total time between when a customer places an order and the product is delivered at the doorstep of the customer. Lead time is always higher than the cycle time and it is more important to optimize lead time than the cycle time of a production process. In order to optimize the lead time, companies are required to review the processing time, pre-processing time, production time, and the time taken by the supply chain.
The incredible amount of lead time can be reduced by optimizing the supply chain time. Because generally it has been observed that the maximum time of the total lead time is taken up by the supply time. The production time can’t start if the raw material required for the production process is not supplied on time. This problem can be solved with proper inventory management.
There is various software available in the market which can be used for enhanced inventory management operations. With the proper inventory management, delay at the beginning of the production process can be avoided. Manufacturing time can be optimized by optimizing the operations of the production process and at last, with a preplanned delivery process, the delivery time can be reduced considerably.
In addition to this, lead time can also be reduced by making the analysis of the market demand and getting ready the products to be delivered as soon as an order is placed by a customer. This will help in reducing the average lead time. (click here to learn how to calculate lead time.)
Table of key differences between cycle time and lead time
| Cycle Time | Lead Time |
|---|---|
| The total amount of time taken between the start of the production of a unit of product and when it is completely ready to be delivered is called the cycle time. | The total amount of time taken between receiving an order and final delivery of the product at the door of the customer is known as the lead time. |
| Cycle Time consists of the total time required for manufacturing and waiting time taken in between the different processes. | A lead time consists of time which passes when order is in the queue to be a manufacture (pre-processing time), processing time, manufacturing time, waiting time, and the delivery time. |
| Cycle time is always lower than the lead time. | Lead time is always greater than the cycle time. |
| Cycle time can be reduced by inventory management, manufacture process optimization. | Cycle time can b optimized by inventory management, supply chain management, and manufacturing process management. |
Conclusion
Cycle time and lead time are both the metrics used for the performance improvement of the production process of a company. Each company makes efforts to enhance its performance by making small changes and using the automation process and inventory management.
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