When developing project plans, project managers want to optimize resources, workflow, and the time it will take to complete the project. Understanding the difference between TAKT Time, Cycle Time, and Lead Time are important Lean processes that are crucial for Six Sigma and Project Management candidates alike.
Takt Time vs. Cycle Time vs. Lead Time
Takt Time is a measure of the amount of time between the completion of one unit and the beginning of the next. Cycle time refers to the average time taken to complete a single unit. The Lead Time refers to the length of time it takes from the date of receipt of an order to the date of delivery.
Here’s all that you need to know about Cycle Time vs Lead Time vs Takt Time:
Lead time refers to the number of hours or days between placing an order and delivery
Cycle time refers to the number of hours or days it takes to manufacture a unit.
Customers can see it since it also affects processes outside of manufacturing.
Due to the fact that only production-related processes are included, only business management may see it.
gives a general overview of the manufacturing and sales operations. It is employed to calculate the arrival rate.
gives a sense of the rate of output. It serves as a gauge for completion rates.
to investigate the causes of the customer’s solution delay
To investigate the solution’s need.
Takt time is the average time that passes between the beginnings of two successive product units being manufactured.
Inventory cycle time is a term used internally to describe how long it takes to turn raw materials into finished goods.
Takt time = Available Production Time / Number of Ordered Units (Customer demand)
Cycle Time = Net Production Time / Number of Produced Units.
Takt time is the average amount of time that passes between the beginnings of two successive product units being manufactured.
In inventory management, lead time refers to the time between when a customer requests a product or service and when the order is delivered.
Takt time = Available Production Time / Number of Ordered Units (Customer demand)
Lead Time = pre-processing time (planning) + processing time (procurement and manufacturing) + post-processing time (dispatch)
What Is Lead Time?
Lead time is, in general, the interval of time between the commencement and conclusion of a procedure. Several different solutions vary depending on the business when it comes to the precise meaning of lead time.
Manufacturing, supply chain management, and project management are the three industries where the lead time gets most commonly used:
- Pre-processing time is about the time required to create plans and manage paperwork), and the processing time is the time necessary to build the product. Post-processing time is a component of lead time in manufacturing (i.e., the time needed to deliver the product to the customer).
- The lead period in supply chain management is the time that elapses between when you place an order for supplies and when the supply delivery arrives from the supplier.
- Lead time is a term used in project management to describe how long it takes to accomplish a particular collection of activities. It refers to overlaps between the two and includes dependencies between operations.
What Is Cycle Time?
Essentially, it is the amount of time required to complete one task. The process includes the time required to produce the item as well as the wait stages (the length of time the item is left ‘waiting’ on the board) between active work sessions.
Cycle Time refers to the period a team works on manufacturing a product before the product gets prepared for shipment. It is the amount of time required to execute one operation. It considers the actual time spent making the item and the wait periods, or the length of time the job is kept “waiting” on the board between active work periods.
Most people think about cycle time when they confuse “lead time” and “takt time” interchangeably. It is an important KPI in manufacturing.
Cycle Time may be calculated using two numbers. The total 𝑥 number of goods produced and the total time it took to make the 𝑥 number of goods.
In German, TAKT stands for Takzeit, meaning Music or Rhythm of Music. TAKT is a measurement and a discipline based on known and existing production principles and practices. TAKT time is the maximum acceptable time to meet the demands of the customer. In other words, TAKT Time is the speed with which the product needs to be created to satisfy the needs of the customer.
The TAKT Time Formula = (Net Time Available for Production)/(Customer’s Daily Demand).
Let’s consider this example from the service industry: Accounting forms are read by a company’s staff and returned to the customer. The company has a 9-hour workday for its employees, of which 1 hour is the allocated lunch break.
- Available production time = 8 hours or 480 minutes
- Assume that the customer sends in 20 accounting forms to be read
- TAKT Time Formula = 480/24 = 20 minutes/form
This means that the staff would have to work at a speed of 20 minutes per form to meet the customer’s needs or demands. This calculation makes several implicit assumptions, so let’s look at these first.
- The above calculation doesn’t factor in work done in parallel, meaning that more than one person is working on the same form at the same time. To illustrate: Jane does step A of the work in 10 minutes, while Rodney does step B of the work in 5 minutes—in parallel. Then, Gigi reconciles the two pieces in 2 minutes. The TAKT Time per form in terms of delivery is 12 minutes.
- TAKT Time assumes a constant daily demand during the day; if demand fluctuates during the day, TAKT Time needs to be adjusted.
Interested in learning Lean Six Sigma and its importance? Check out the Lean Six Sigma Green Belt Certification course preview.
The Benefits of Calculating TAKT Time
There are many advantages to calculating TAKT Time. Among them are:
- Estimating any service delivery processes
- Standardizing your work processes
- Increasing efficiency by decreasing training times
- Maintaining a constant production workflow
- Setting realistic time targets
- Minimizing worker overtime
- Reducing errors and increasing product or service quality.
In summary, TAKT Time helps you spot when teams are getting overworked teams, which leads them to sacrificing quality so they can meet unreasonable standards. Conversely, you could discover teams that have nothing to do. After all, having workers sitting around wasting time is just as bad as overworked employees who are so stressed out that they’re making mistakes.
If you place a high priority on evenly distributing workloads, TAKT Time can be a huge help.
TAKT Time Calculator
Using the example above, we’ll assume that the accounting process adds a new step for a total of 4 steps, with actual cycle times indicated. Here’s how we’d calculate TAKT time:
- Step A = 4 minutes
- Step B = 5 minutes
- Step C = 5 minutes
- Reconciliation = 6 minutes
Add these up, and you’ll find that on an average, the company staff spends 20 minutes to complete a form, meaning they’re right on target! If the staff is consistently able to maintain this rate of work, they’ll meet the customer’s needs.
TAKT Time is used to calculate a host of other parameters, too, such as Batch Size. Now, we’ll add up all the cycle times we had in the previous stage. We got a Total Cycle Time of 20 minutes; therefore, the TAKT Time is 20 minutes. Now:
Total Cycle Time/TAKT Time = 1
This calculation demonstrates that you now need one workstation to complete this order of 24 forms in a day of 480 possible minutes, working to a TAKT of 20 minutes. This is often known as Crew Size.
How to Calculate Lead Time vs Cycle Time?
If you have all the information and access to the appropriate project management tools, calculating any project’s lead time and cycle time is really simple. The Cumulative Flow Diagram is the most practical and widely used method of determining both lead and cycle times (CFD).
In its simplest form, CFD is a graph that maps the project’s progress onto a graph. While the horizontal axis displays the time, the vertical axis indicates the WIP units. Each segment of the CFD, which is separated into distinct sections, shows a single column of a Kanban board. The three fundamental categories are scheduled tasks, tasks in progress, and finished tasks, just like the Kanban board.
To determine the lead time, you only need to interpret the data from the moment at which a request is added to the system’s backlog, moves through the process (in progress), and finally achieves completion (completed). This dataset’s timespan corresponds to the Lead time.
The initial period while the item remained in the backlog must be skipped for computing cycle time, but the time after work is initiated must be considered. It’s also crucial to remember that cycle time is calculated as time spent per unit.
Understanding Manufacturing Time
Although TAKT Time and cycle times are fantastic tools, there are situations where they can’t tell the entire story. An order won’t do any good to the customer until it’s actually in their hands. Although cycle times are part of lead time, the former doesn’t consider:
- The time between the customer placing the order and the beginning of production
- The time between the order’s completion to its delivery
These times are part of the manufacturing lifecycle and must be taken into consideration. Smart managers will subtract the abovementioned times from the TAKT formula’s workable hours. This should factor in situations like maintenance, tool changes, and even allowing for unexpected or unplanned downtime.
This is what we mean by “manufacturing time.” It’s simply acknowledging the realities and pitfalls of manufacturing, and factoring in the appropriate amount of downtime to your overall production projections.
But rather than placing the burden on your staff to monitor and collect downtime data, consider investing in a machine monitoring solution that tracks downtime automatically.
Looking to make your career in the fastest growing industry? Join our Post Graduate Program in Project Management. Enroll now!
Earn 146 PDUs | 8X higher live interaction | Multiple Capstone Projects
Understanding Cycle Time, Lead Time, and TAKT Time is the first step for Project Managers and Lean practitioners to move one step closer to improve the efficiencies of their operations. Simplilearn offers complete training options for Project Management, Quality Management, and more. Experienced, certified professionals teach all our courses, and they’re designed to help you pass your exams on the first try!
Go through this Simplilearn video on “Introduction to Lean Six Sigma” delivered by our Six Sigma experts that covers the basics of Six Sigma.
Learn for free! Subscribe to our YouTube Channel & Be a Part of 400k+ Happy Learners Community.