What are the Differences between Throughput Time, Lead Time and Cycle Time? – Definitions & Examples
Production is the race against time for manufacturing businesses.
A slight delay of a department or a machine running a little over time may seem insignificant. Still, these small delays might result in production catastrophes because they have failed to deliver an order for an important customer on time.
In this blog post, we will discuss the core concept of throughput time, lead time, and cycle time, their differences and examples.
What is Throughput Time?
Throughput time is the actual time an article takes to be produced. This includes the entire duration from start to end of the production process, which in many cases means the time a factory needs to convert raw materials into finished goods.
For example,
A steak needs:
12 hours to defrost;
5 minutes to season;
3 minutes to cook one side;
3 minutes for the other side;
and 1 minute to garnish.
Its throughput time would be 732 minutes (12.2 hours).
Being the lifeline of manufacturing businesses, throughput time pre-determines the manufacturer’s upcoming production plan and the delivery date of a production order. Ideally, all manufacturers wish to reduce it to a minimum for maximum production efficiency.
Differences between Throughput Time, Lead Time and Cycle Time
Often, the concept of throughput time is mixed with others, such as lead time and cycle time. However, these three are individually different concepts with roots in different industries.
Throughput Time and Lead Time
Simply put, throughput time is the time it takes for goods to go through the production process, while lead time is the time between the time a customer orders an article and an article is delivered to them.
An example of lead time:
You have ordered a steak in a restaurant;
The waiter takes 2 minutes to walk back to the counter and enter what you have ordered;
For the next 15 minutes, the chef receives the order and starts cooking;
And 2 minutes later, the waiter servers the dish on your table.
Thus, the lead time for your steak is 19 minutes.
Throughput time is manufacturers’ main focus, but lead time is not just for the manufacturing industry but also industries like logistics, retail, service providers, and hospitality. Differentiating them is very important as they are from different perspectives. Depending on your form of the production process (e.g. Make-to-order (MTO) and Make-to-stock (MTS)), these two will vary.
Throughput Time and Cycle Time
Throughput Time and Cycle Time are both monitored in the manufacturing industry.
Simply put, Cycle Time is the time it takes for goods to go through one work step in the production process, while Throughput Time is the time for goods to go through the whole process.
In the steak example, if the throughput time of a steak dish is 12.2 hours, the cycle time of the stove would be 6 minutes – as the chef needs 3 minutes to cook each side of the steak.
Cycle Time: Target/Actual Time
In production planning, cycle time is divided into target and actual time.
Target time, sometimes called “target cycle time”, is the total time a worker or a machine takes to complete a specific task at an estimated pace. Target time could originate from the average time or the standard time required to complete the task and is the manufacturer’s goal to reach every time a work-in-process product goes through the work step.
Actual time, also known as “actual cycle time” and “real time”, is how long a worker or a machine actually took to complete a certain scheduled work step for a certain order. Actual time often is the practical counterpart of the theoretical target time. By comparing the two (known as “target/actual comparison”), manufacturers can visualize and analyze how much the production deviates from their current production plan.
Since the duration of cycle time ties closely to your shop floor management, it can make a strong impact on production efficiency and is possibly the easiest way for manufacturers to start reducing their overall throughput time.
Conclusion
Throughput time, cycle time, and lead time are 3 vastly different yet equally important pieces of information for manufacturers to value their production efficiency.
However, not all solutions can calculate them all.
A well-informed manufacturer should be aware of these concepts when choosing a digital solution for their production processes, because many solutions often promise to improve throughput time by only observing the overall lead time, providing little transparency on the production process.
planeus is the cloud-based production planning system made for manufacturers of all sizes to plan and improve their production times, including throughput time, cycle time, and lead time.
Click to see more.
Further Readings
- Jovanovic, J. R., Milanovic, D. D., & Djukic, R. D. (2014). Manufacturing cycle time analysis and scheduling to optimize its duration. Strojniški Vestnik – Journal of Mechanical Engineering, 60(7-8), 514–524. https://doi.org/10.5545/sv-jme.2013.1523
- Groover, M. P. (2021). Fundamentals of modern manufacturing: Materials, processes, and systems. Wiley.
