Demystifying Lead Time and Cycle Time

Clients highly value the speed at which they receive their requested products or services. That speed is a concern that is equally important to us as providers. Indeed, predictable delivery times are crucial, enabling us to plan, allocate resources effectively, and fulfill our commitments.

Therefore, mastering the nuances of lead time and cycle time is vital. These measures, crucial to any delivery process, provide unique insights for improving our service and operational efficiency.

Understanding and optimizing both can significantly improve our ability to meet client expectations and boost our performance. The distinction between lead and cycle times, each offering a different approach to shortening delivery times, is critical to achieving these improvements.

Lead Time: the time from the beginning till the end

The Lead time represents the entire duration from when a customer requests or orders until the final product or service is delivered. It encompasses every process step, including waiting times, processing times, and potential delays or bottlenecks.

Lead time provides a comprehensive view of the end-to-end process, allowing organizations to identify areas for improvement and prioritize efforts to reduce overall lead times.

Cycle Time: the iteration duration

A cycle is a series of actions that recur in an unchanging order without discontinuity. To consider a cycle, we refer to the start of those actions till the next start. Thus, the cycle time is the duration from the beginning of one cycle to the start of the next.

In the context of a production cycle for a product or service, cycle time refers to the period starting from the initiation of one product’s creation to the commencement of production for the subsequent product.

Cycle time and Lead Time: distinct leverages for improvement

Based on the previous example, the cycle time includes the time to create the product. Still, it may include any additional waiting time before the start of production for the following product. However, lead time is the period from the beginning to the completion of a product’s production. It does not account for any delays before starting the following product’s production.

Let’s focus on one specific working step, one of the several required steps to create the product. We call it the “testing” step. Cycle time in this context begins when testing starts for one product and ends as testing commences for the following product. In this scenario, cycle time provides an opportunity to identify any delay—from the end of testing for one product to the start of testing for the following product. On the other hand, lead time begins when testing starts for a product and concludes upon the completion of testing for that exact product.

Defining lead time or cycle time leads to different improvement leverages. It also requires clarity on the scope we consider.

Example 1: Implementing User Stories

Imagine Alex, a software developer, working through a backlog of user stories. The project is about improving an e-commerce platform. Each user story requests a new feature or improvement. Alex implements them one after another, focusing on ensuring the required quality.

Lead Time: Start to Finish

To implement one user story, let’s assume Alex uses the following process immediately after pickup: initial research, system design, coding, testing, and deployment.

The lead time to implement one user story begins at pickup and ends when Alex completes the feature deployment for the live environment. For example, when Alex picks up a user story to add a new payment gateway integration, the lead time includes all working and waiting times from the initial research until the end of deployment.

Cycle Time: From one start to the next

From an iterative viewpoint, cycle time focuses on Alex’s development of user stories, one after another. Each iteration moves from one user story to the next. When Alex picks up the user story to start coding the payment integration, cycle time kicks off. This phase covers research, system design, coding, testing, and deployment. However, it only concludes when Alex picks up the following user story to start another implementation. Let’s say, for example, implementing a recommendation engine.

The cycle also captures active development and any interim pauses. Still, it may include waiting at the end before the start of the next cycle.

For Alex and the team, concentrating on cycle time versus lead time offers different opportunities for improvement.

For instance, differing cycle times between user stories could signal unpredictable waiting periods from completing the implementation of one user story to starting another. Subsequent improvement actions will ensure a smoother transition from one development task to the next. Ultimately, they will speed up the delivery of valuable features to users.
For instance, extended lead times might reveal that unit testing takes longer due to irrelevant libraries.

Example 2: A Bakery’s Journey

Imagine a bakery gets an order for a set of traditional loaves of fresh bread. This bread is baked individually, with each loaf receiving the baker’s attention from start to finish.

A lead time begins when the customer orders and ends when the bread is delivered. This lead time includes waiting for ingredients, mixing the dough, proofing, baking, cooling, packaging, and providing the bread to the customer.

For the same scope, a cycle time also encompasses mixing the dough, proofing, baking, cooling, packaging, and providing the bread to the customer. But it ends only when the next customer orders. It may include any waiting time between the previous delivery and the next customer order.

For instance, if one bread cooking cycle time is significantly longer than the lead time, it may indicate excessive waiting times at the end of each delivery. It could be inefficiencies in getting orders in, prompting the bakery to address this area for improvement.

In conclusion, it is essential to recognize the distinction between lead time and cycle time. Lead time provides a holistic view of the entire process, while cycle time focuses on activity cycles. Organizations can improve efficiency, reduce waste, and deliver superior customer value by learning to optimize both metrics.