Everything you need to know about lead time and cycle time
Everything you need to know about lead time and cycle time, Lead time and cycle time are often confused with each other. Both cycle time and lead time are important time metrics in manufacturing, but they are also used as important strategic tools for project management. Project managers and team leaders must fully understand the differences and similarities between these two metrics in order to use their power.
In this article, we will explore the concepts of cycle time and execution time and what they do.
An introduction to cycle time and execution time
In short, cycle time measures the time required to produce a product by a team, while lead time deals with the time between a customer’s order and the fulfillment of the order. The execution time is always longer than the cycle time because the cycle time matches the execution time schedule. In the Scrum method, cycle time is equivalent to a sprint.
In the following, we describe each of these criteria in detail and discuss their differences and similarities.
What is the completion time?
The business environment is dynamic and constantly creates new customer demands. These requests come to your company as work requests.
Definition of execution time:
Completion time is the time between when a new task appears in your workflow and when it finally exits the system.
However, completion time is best measured when a team member commits to a new request. In this way, the average execution time will be much more accurate. Otherwise, new jobs can sit in the queue for months before anyone has the capacity to start them, increasing their turnaround time dramatically.
What is the cycle time?
When a new task appears on your Kanban board, it usually needs to be reviewed and discussed before it goes live. Naturally, new work spends some time waiting in the queue before a team member has the capacity to start working on it.
Definition of cycle time:
Cycle time starts when the new person enters the “in progress” phase and someone is actually working on it.
After various research, Professor John Little (MIT professor) concluded that the more we are doing, the longer the system cycle time will be. We will discuss this equation called Little’s law further.
The cycle time formula is as follows:
Throughput ÷ work in progress = Cycle time
What is Little’s Law?
We can’t talk about cycle time without mentioning Little’s law.
This law states that the average number of cards in a stable system depends only on the average arrival rate of work items and the average time a work item is in the system.
If we want to express this in Kanban terms, we can say:
Cycle Time × Entry Rate = Work Items in Progress
This is important because it shows that you only have two options for limiting the work in progress:
- Reduce the number of work items you receive
- Reduce the amount of time you spend on an item from start to finish
What is the difference between execution time and cycle time?
Cycle time is the time it takes for a developer or a team to complete a project. Usually, this means when the work item is started and when it is completed. Cycle time officially starts when an item is moved to “in progress” and ends when it is marked “done” in whatever project management software you use.
For example, when a marketing manager creates a social media campaign for Twitter, the cycle time starts when the team starts producing content.
Lead time is the time it takes for a unit of product to be created and added to the backlog at shipping time. This is usually when a project is completed and shipped to the client. If you’re using a Kanban board, the to-do time starts when the item is added to the “To Do” column.
In the marketing example scenario above, the lead time ends when all content is published on the platform.
By measuring cycle time, you can identify areas of concern that need to be addressed to improve team efficiency. But by measuring lead time, you can determine how many items are coming into the queue and how long it will take for your team to review them.
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