Lead Time vs Cycle Time

Delivering products and services as fast as expected by clients is crucial. Both clients and providers value speed and predictability in delivery times. So, to optimize processes and improve efficiency, it’s essential to understand two key metrics: lead time and cycle time.

What is Lead Time?

Considering a process, the lead time is the duration from the beginning till the end.

For example, the lead time measures the entire duration from when a customer orders until they receive the final product or service. It includes all process steps, such as:

• Waiting times
• Processing times
• Potential delays or bottlenecks

The lead time offers a comprehensive view of the end-to-end process according to the scope we consider. By analyzing lead time, organizations can identify areas for improvement and prioritize efforts to reduce overall delivery times.

What is Cycle Time?

Cycle time focuses on the duration of a specific recurring process. It measures the time from the start of one cycle to the beginning of the next. In production, cycle time refers to the period from initiating one product’s creation to starting the following product.

Cycle time typically includes:

• Active work time
• Any waiting periods between cycles

By examining cycle time, teams can spot inefficiencies in their recurring processes and optimize them for better performance.

Here, we consider “order to delivery” as an example. It helps understand and clarify the concepts. You can consider lead time for any process. The same goes for the cycle time for any recurring process.

Key Differences Between Lead Time and Cycle Time

1. Scope
   • Lead time covers the entire process, from order to delivery.
   • Cycle time focuses on recurring activities within a process.
2. Starting point
   • Lead time starts when the customer places an order.
   • Cycle time begins at the start of a specific production cycle.
3. Ending point
   • Lead time ends when the customer receives the product or service.
   • Cycle time concludes when the next cycle begins.
4. Included activities
   • Lead time includes all steps and waiting periods.
   • Cycle time may exclude some waiting periods between cycles.

Why Both Metrics Matter

Understanding and optimizing both lead time and cycle time can significantly improve an organization’s ability to:

1. Meet client expectations
2. Boost operational performance
3. Identify different areas for process improvement

More specifically, by focusing on these metrics, businesses can:

• Reduce overall delivery times
• Improve resource allocation
• Enhance predictability in their processes

Example

Imagine a tech team working on a new mobile app feature. A lead time starts when the product owner adds the feature request to the backlog. It includes initial planning, waiting for the development sprint to begin, coding, testing, and deployment to the app store. It ends at the deployment completion. This entire process might take 45 days.

One cycle time, however, focuses on the active work period. It begins when a developer starts coding a user story and ends when he begins the following user story. It might last four days, covering coding, internal testing, preparing for deployment, and the time to start the following coding.
Indeed, cycle time typically ends when the developer starts the next task, not when he completes the current one. This definition aligns with the concept of cycle time, which is the time between the start of one cycle and the start of the next.

By tracking both metrics, the tech team can identify bottlenecks. Long lead times might reveal complex coding challenges or testing issues while implementing backlog items. Extended cycle times could indicate delays in picking new items from the backlog.
This example illustrates how lead time and cycle time apply in a digital context, showing their distinct scopes and the insights they provide.

Lead time and cycle time provide unique insights into different aspects of the delivery process. By mastering these concepts and continuously working to optimize them, organizations can improve their service, operational efficiency, and ultimately, customer satisfaction.