Manufacturing Metrics: Understand Takt Time, Cycle Time and Lead Time

Takt Time, Cycle Time, and Lead Time are important time measurements used by managers in companies and factories to help them:

• better understand where to make improvements in the process of product production
• better understand where to make improvements in available resource usage
• better understand where to make improvements in team workflow

Each of the listed time measurements is distinct from the other two. Yet, people often confuse the three.

So, what is Takt Time?

What is Cycle Time?

What is Lead Time?

How do we measure and calculate them?

And how do they relate to one another?

Let’s lean into these time concepts and provide you with everything you need to know about them + give you useful calculators you can use to easily calculate your Takt Time, Cycle Time, and Lead Time in Excel.

TAKT TIME

What is Takt Time?

According to the Takt Time definition, Takt Time is the “takt” rate at which you need to work and finish the production process in order to meet customer demand.

Let’s look at a rough example, to illustrate:

If one customer buys 1 product every 2 hours, then you have 2 hours to finish 1 product — 2 hours is your Takt Time. In line with that, finishing 1 product every 2 hours is your takt rate.

Knowing your Takt Time will help you optimize your production process in such a way that you meet the realistic customer demand — if you follow your expected takt rate, you won’t make less or more products that you actually need.

Takt Time originated in the German aircraft industry in late 1930. The name for this concept originates from the German word “takt”, which stands for “beat”, “rhythm, ”or “pulse” — the entire phrase originated from the German word “Taktziel” (which literally translates to “Takt Time”). The company Toyota took on the concept used by the German aircraft industry and reinvented it to the Takt Time concept we know and implement today.

How to calculate Takt Time?

There are two components crucial for your Takt Time calculation:

• Your Net Production Time (NPT)
• Your Customer Demand

The Net Production Time (NPT) is the clean time your team has at their disposal to finish a product. To calculate your NPT, you can subtract the time your team spends on downtime (lunch breaks, other breaks, meetings, machine maintenance…) from the total time your team spends at work. That’s how the formula usually goes.

However, it would be quicker if you were to track only the clean time you spend on the production process. You can use our time tracker Clockify to track your Net Production Time for a product and separate it from your downtime. Now, tracking the time you spend on downtime may not be crucial for your Takt Time calculations, but it can be useful on its own — you may find that you waste a lot of time, time you could be putting to better use.

Your Customer Demand is the number of products your customers buy on a regular basis — usually, your customer demand is counted on a daily basis.

And here is the formula:

Takt Time = Net Production Time/Customer Demand

Now, this formula is simple enough. However, your calculation will be more complicated if your company produces several different products, each with its own customer demand. In such a case, you’ll need to divide your day across different production processes or create separate teams for each type of product.

Takt Time example ( + Takt Time calculator in Excel)

Say you manage a raggedy doll factory, and you want to know how to calculate the Takt Time for Team #1, responsible for making Doll #1 (Jessica) on a daily basis.

Say that Team #1 needs to assemble 55 dolls during a 10-hour shift – and your time tracking results show that you spend a clean 9 hours and 10 minutes (550 minutes) of that 10-hour shift working on product production:

Net Production Time = 550 minutes

Daily Customer Demand = 55 dolls

Takt Time = Net Production Time/ Daily Customer Demand

Takt Time =  550 minutes/ 55 dolls = 10 min/doll

So, according to this calculation, Team #1 is expected to assemble one Doll #1 (Jessica) per 10 minutes (600 seconds), in order to meet the Customer Demand.

Takt Time calculator in Excel — You can use this calculator to calculate the takt rate at which you need to work to meet customer demand.

🔽 Click here to DOWNLOAD Takt Time calculator in Excel

CYCLE TIME

What is Cycle Time?

According to the Cycle Time definition, Cycle Time is the time it takes you to complete the production process of one product, from start to finish.

Cycle Time vs Throughput Time

To better understand Cycle Time, it’s best that we relate it to Throughput Time.

Throughput Time is the number of units you produce in the production process during a specific period of time.

In line with that, Cycle Time is the average amount of time you need in order to produce one unit.

For example, during a specified period of time (once again, this is your Net Production time, and let’s say it equals 60 minutes) you produce six units — six units per 60 minutes, this is your Throughput Time. We can further conclude that it takes you 10 minutes to produce one unit during that 60 minutes (6 X 10 = 60) — 10 minutes per product, this is your Cycle Time.

How to measure Cycle Time?

The Total Cycle Time formula takes into account your Net Production Time and the number of units you produce during this time — all for the purpose of singling out the amount of time you really spend producing one unit.

Cycle Time = Net Production Time/Number of Units made

Cycle Time example (+ Cycle Time Calculator in Excel)

Let’s take the doll factory example once again, and look at the Cycle Time for Doll# 1 (Jessica). We’ll take the same Net Production Time, and assume that 45 dolls are really made during this time:

Net Production Time = 550 minutes

Number of units made = 45 dolls

(Daily Customer Demand = 55 dolls)

 Cycle Time = Net Production Time/Number of units made

Cycle Time = 550 minutes/ 45 dolls = 12,22 minutes/doll

Further observations about this Cycle Time example 

Currently, with a Cycle Time of 12,22 minutes, you’re running 2,22 minutes behind for each doll — considering that your Cycle Time is longer than your Takt Time.

In the end, that builds up to 672,1 minutes you’d need to meet customer demand, making you about 2 hours and 2 minutes short in total each day ((672,1 – 550) / 60). In other words, you’re currently falling short of your customer demand by 10 Jessica dolls.

However, having a shorter Cycle Time than your Takt Time is also a problem. If this is the case, you may be producing more dolls than you need to meet customer demand.

For example, say that your Cycle Time is 7,34 minutes for each doll, and you maintain this cycle for the expected 550 minutes.

By the time only 403,7 minutes have elapsed (7,34 X 55) you will have met your daily customer demand. If you continue at this pace, you’ll eventually assemble about 75 dolls (550 / 7,34), surpassing your daily customer demand by 20. So, if you continue working at this pace, you’ll get stuck with 20 more Jessica dolls in your storage space every day.

In conclusion, it would be ideal if your Takt Time and Cycle Time were equal.

Takt Time vs Cycle Time: How to sync the two

In order to meet your customer demand, you’ll need to make some tweaks in your workflow, and adjust your Cycle Time to your ideal Takt Time.

Use time management and productivity techniques to make sure you speed up your work process and consider hiring more workers, to better meet the customer demand.

As suggested earlier, you can also track your downtime as a separate project, and analyze whether you could allocate some of that time to the production process.

For example, if you spend 50 minutes on routine daily meetings, perhaps you can cut them in half, and allocate the other 25 minutes to production time.

Cycle Time calculator in Excel — You can use this calculator to calculate your Cycle Time, in order to compare it with your Takt Time and decide whether you’re pacing your production process well.

🔽 Click here to DOWNLOAD Cycle Time calculator in Excel

LEAD TIME

What is Lead Time?

In general, Lead Time is the delay that occurs between the initiation and completion of a process. When it comes to the exact definition of Lead Time, there are several available varying answers that depend on the industry.

Most prominently, Lead Time is used in manufacturing, supply chain management, and project management:

• In manufacturing, Lead Time involves pre-processing time (the time needed to make plans and handle paperwork), processing time (the time needed to manufacture the product), and post-processing time (the time needed to deliver the product to the customer).
• In supply chain management, Lead Time involves the time that passes between the moment you place an order for supplies, to the moment the supply delivery arrives from the supplier.
• In project management, Lead Time involves the time it takes to complete a set of tasks in a project. It involves the dependency between activities and points to overlaps between the two.

Lead Time in manufacturing is the Lead Time linked to Takt Time and Cycle Time, so we’ll mostly focus on it. But, we’ll also illustrate Lead Time in project management and supply chain management, to explain the differences between these three main types of Lead Time.

How to measure Lead Time?

How to measure Lead Time (manufacturing)

In order to measure your Lead Time in manufacturing, you’ll need to consider the time you spend on pre-processing, processing, and post-processing activities.

Bear in mind that you can parse your pre-processing, processing, and post-processing activities into even smaller units of time, for better clarity:

• Order Lead Time — the time that elapses between the time you receive the customer order to the time the customer order is delivered.
• Order Handling Lead Time — the time that elapses between the time you receive the order and the time when you create an official sales order request.
• Manufacturing Lead Time — the time that elapses from the sales order request to completed production.
• Production Lead Time — the time that elapses from the start of physical production to completed production.
• Delivery Lead Time — the time that elapses from finished production to product delivery to the customer.

As you’ve probably noticed, some of these Lead Times overlap — And, Order Lead Time encompasses all the process stages. And here’s the final formula:

Lead Time (manufacturing) = Pre-processing time + Processing time + Post-processing time

Manufacturing Lead Time example (+ Lead Time Calculator in Excel)

Let’s see how you can calculate your Lead Time for Doll Type #1 (Jessica).

You’ll need to think about your pre-processing, processing, and post-processing times in order to carry out the calculations.

Say that your pre-processing time involves receiving the orders, reviewing the number of orders for that day, and making sales requests to your production team. You track time on all these activities and see that they take 10 minutes to complete for each order. Roughly speaking, this pre-processing time involves Order Handling Time and Manufacturing Lead Time.

Your processing time is your Cycle Time, which should ideally match your Takt Time. You’ve worked on tweaking your workflow, and now your time tracking results show that your processing time for each product equals the perfect 10 minutes you need to finish 55 products in a day. Roughly speaking, this processing time involves Manufacturing Lead Time and Production Lead Time.

Let’s say that you deliver the Jessica dolls every day to the customers’ home addresses. Roughly speaking, this post-processing time involves Delivery Lead Time, and it takes you up to 1 day for each product.

Pre-processing time = 10 minutes

Processing time = 10 minutes

Post-processing time = 1 day (1440 minutes)

Lead Time (manufacturing) = Pre-processing time + Processing time + Post-processing time

Lead Time (manufacturing) = 10 minutes + 10 minutes + 1440 minutes = 1460 minutes 

So, the Lead Time for the Jessica doll says that the customer can count on receiving the doll 1460 minutes from the time of order.

Now, depending on the complexity of your production process, and whether you ship your products to distant cities or abroad, you can also count your Lead Time in hours or days.

Lead Time Calculator in Excel — You can use this calculator to calculate your Lead Time, to understand how long customers usually need to wait from the moment they order a product.

🔽 Click here to DOWNLOAD Lead Time calculator in Excel

Lead Time vs Cycle Time

Now, as previously mentioned, the Lead Time used in manufacturing is the time component usually associated with Takt Time and Cycle Time. Namely, as Lead Time encompasses the time from product order to product delivery, it also includes Cycle Time as a vital sub-component (Cycle Time = processing time).

Takt Time + Cycle Time + Lead Time Calculator — You can use this calculator to calculate your Takt Time, Cycle Time, and Lead Time, all in one place, and then make conclusions about the processes associated with your product. Is your Cycle Time too long? Is your Takt Time realistic? Is your Lead Time short enough to satisfy your customers’ expectations? Find out in a couple of clicks.

🔽 Click here to Download Takt Time + Cycle Time + Lead Time calculator

How to measure Lead Time (supply chain management)

Now, Lead Time in supply management is the time needed to procure supplies that are vital for the production processes.

Mathematically speaking, Lead Time (supply chain management) is the sum of the supply delay and the reordering delay that may occur from the moment you order the supplies, to the moment you receive them from the supplier.

Supply delay involves the amount of time it takes to have your supplies replenished by the suppliers. In order to minimize supply delay, you’ll need to anticipate the amount of supplies that will be consumed in the production process between today and your next replenishment.

Reordering delay is the time that needs to elapse before you’re able to place a reorder of supplies (this may happen because the supplier accepts supply reorders only once a week or month).

And here is the formula:

Lead Time (supply chain management) = Supply Delay + Reordering Delay

Supply chain management Lead Time example

Let’s say you manage a restaurant, and you need fresh exotic fruit delivered regularly. Now, you can only make reorders for exotic fruits from your supplier on the 1st of each month.

Each new shipment of fruits takes 5 days to arrive — this is your supply delay.

Each new order you make needs to last for 30 or 31 days. Let’s say that it’s January and that you’re looking at 31 days before the next reordering — 31 days is your reordering delay.

Supply delay = 5 days

Reordering day = 31 days

Lead Time (supply chain management) = Supply Delay + Reordering Delay  

          Lead Time (supply chain management) = 5 days + 31 days = 36 days

That’s 36 days of Lead Time that make sure you have available fresh exotic fruits for your restaurant at all times.

Depending on your supplier’s efficiency and reordering policy (some suppliers may allow reordering every day, at a specific time), you may also count supply and reordering delay in hours.

How to measure Lead Time (Project management)

In order to finish a project, you’ll likely need to handle sets of related tasks.

Sometimes, the start of Task 2 will depend on and won’t be able to occur before the completion of Task 1.

In other cases, however, the start of Task 2 will happen before the end of Task 1, as they both need to end at the same time, and we’ll see an overlap between the two tasks — the time when the two tasks overlap is the Lead Time in project management.

Lead Time (project management) = Time for Task 1 – Time for Task 2

Project management Lead Time example

Let’s say that you want to do the electrical work (Task 1, expected to last for 5 days) and paint the walls (Task 2, expected to last for 2 days) for the two bedrooms in your house.

You carry out the electrical work in one bedroom and finish it in 2 days.

As you move to the second bedroom to carry out the electrical work, you start painting the walls in the first room.

The time you spend carrying out electrical work in the second room and painting the walls in the first room represents the overlap between the two activities and is your Lead Time.

Task 1 = 5 days

Task 2 =  2 days

Lead Time (project management) =  Time for Task 1 – Time for Task 2 

          Lead Time (project management) = 5 days – 2 days = 3 days

Depending on the general time you need to carry out the tasks in your projects, you may also count time for your tasks in minutes or hours.

Differences between the three Lead Times

Now, although the Lead Time in manufacturing is usually the one directly associated with Takt Time and Cycle Time, common sense implies that you’ll need to reorder supplies (perhaps the fabric for your raggedy dolls) to keep the production process moving. Moreover, certain production tasks will likely overlap. This means that Lead Time in manufacturing, supply chain management, and project management are all intertwined, at least to an extent.

Optimize your production process — with Clockify

Takt time is the rate at which you must produce your product. 

Suppose you have takt time goals in place. In this case, the next step is identifying patterns and trends by analyzing data of hours you tracked.

Introducing Clockify — a digital time tracking system that lets you see how everyone on your team contributes to takt time goals.

With Clockify, you can easily visualize performance in the Assignments report, including:

• Scheduled work hours,
• Tracked work hours, and
• Difference between the two.

So, if some of your team members clocked in less than expected of them, their takt time will get messed up.

Apart from comparing scheduled versus tracked hours, you can use Clockify to make adjustments and identify inefficiencies on time. Because, if you fail to do so timely, you could have to face angry clients who aren’t satisfied with the rate at which you produce the products you promised.

On a similar note, you can benefit from Clockify by forecasting your takt time in the near future. 

With this powerful feature, you can predict how long future tasks will take based on scheduled assignments. 

As a bonus, you can use all these metrics and methods to help you with:

• Cycle time (the time it takes to complete the production process from start to finish), and
• Lead time (the delay between the start and completion of a production process).

In the end: What you want to do is remove bottlenecks because bottlenecks often cause delays. 

So, go for the Clockify plan with features that’ll go well with your workflow, and instantly remove bottlenecks and improve workload allocation.