Lead time, takt time and cycle time. Do you know what these times mean and why should you be interested in them? It’s really the delay, the pace and the cycle. These are key elements of productivity. These concepts are clear and easy to understand in the manufacturing sector because the products are visible. In the services, they are more abstract. Nevertheless, their mastery improves the performance and therefore the results of your organization.
Takt time or pace
The takt time is the pace of customer demand. It is calculated over the shortest possible period, in the idea of just in time.
- In the automotive sector, using the number of vehicles sold per day (500 for example), a plant can calculate the production rate required to meet the demand. If the workers produce for 12 hours a day, then you have to produce almost 42 cars an hour, or one car every 86 seconds, that’s the pace!
- For a hairdresser, it will be measured in a number of customers who request a service every hour, for example.
The rate of customer demand can encounter two types of seasonality: within the day and during the year.
During the year, weather, seasons, school holidays, paydays, can influence the goodwill. Think of shops, a bike shop, a hotel on a beach or a ski resort. Seasonality can also be repeated every week. For example, Monday may be the busiest day for an online business because it processes orders placed over the weekend.
There is also an intra-day seasonality: during the same day, traffic may also vary depending on the service you offer: a restaurant sees a peak of activity between 11:30 and 2 pm for example, or a medical secretary has a peak of activity in the morning, when patients call to see a doctor.
The cycle time is the time required to produce the products or services. It is measured by calculating the time between the first and last step of the operation. Cycle time can be calculated at a very low level, for example for a specific workshop or part or operation. When we look at the whole process, we usually refer to lead time rather than cycle time.
- In the automotive sector, a semi-automated production line can produce one car every five minutes, which is the standard cycle time for this production line.
- The restaurant can serve its customers in one hour (from the customer’s order until payment)
- The hairdresser takes 30 minutes to cut the hair of a client, from the laying of the cloak, until the payment.
- For a doctor the time required to diagnose a patient and prescribe care is 15 minutes.
- The secretary needs 4 minutes to take a patient appointment.
Lead time or delay
This is the time between the order and the delivery of the product or service. In some cases it equals the cycle time but not always. Here are some examples:
- In the automotive sector this time varies from two weeks to several months. It is measured by calculating the delay between the order by the customer and the delivery of his vehicle.
- In the restaurant, this is the time between arrival at the restaurant and departure.
- Same for a medical appointment. The delay includes the time of registration with the secretariat, as well as the possible delay of the doctor…
Customers expect to have the shortest lead time possible. The organization needs to find ways to reduce it as it runs the risk that the customer will change their mind in the meantime.
In a future article, I will give you techniques to reduce these different times, and therefore be more efficient!