The time confusion - Cycle Time, TAKT Time, Lead Time Part 1
What are the differences between these 4 commonly-used terms? Find out all you need to know with this article that aims to sort out the confusion.
A lot of practitioners tend to confuse Cycle Time with Lead Time. Some people say Cycle time is the time between two successive deliveries, while others believe it is the time between initiation and delivery.
In simple terms, Cycle time is the time from when the Operation begins to the point-of-time at which the operation ends. Then what is Lead Time?
Let me explain this with a simple example.
A customer requests their product on November 6. The company receives the order instantly, and delivers the product on November 10. He actually starts working on the product only from the 8.
Therefore, the Lead Time here is 4 days, while the Cycle Time is 2 days. Lead time is representative of the ime that is expended - but not the effort. You could have a Lead Time is 25 days and yet spend only 2 hours working to solve the problem at hand. At first glance, Cycle Time may appear to represent effort, but it represents time, too.
Thus, cutting cycle time should be the most-important mantra for any Continuous Improvement project.
Note: Apart from Cycle Time, one should also consider Waiting time, which is the time before the Cycle Time is reckoned,
Note 2: Another important point to remember is that that Lead Time can never be less than Cycle Time. For optimal operations, at best, Lead Time = Cycle Time.
Lead Time is further categorized into Procurement Lead Time and Production Lead Time.
[Related reading: Quality Management in Project Management]
In German, TAKT stands for 'Takzeit', meaning Music or Rhythm of Music.
What is TAKT Time?
It 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 in order to satisfy the needs of the customer.
In formulaic terms, TAKT Time = (Net Time Available for Production)/(Customer's Daily Demand).
A Service Example
An example from the Service Industry will help you better understand the concept of TAKT time. Consider the case of Accounting Files being read by a company’s staff and returned to the customer.
The company has a 9 hour work-day for its employees, of which 1 hour is the allocated break and other idel times.
Available production time = 8 hours & 480 minutes
Assume that the customer sends in 20 accounting forms to be read.
TAKT Time = 480/24 = 20 minutes/form.
This means that the staff would have to work at a speed of 20 minutes per form in order to meet the customer’s needs or demands. This calculation makes several implicit assumptions, so let’s deal with these first.
- The above calculation doesn’t factor in work done in parallel. To illustrate: Employee 1 does step A of the work in 10 minutes and Employee B does step B of the work in 5 minutes and in paralell. Employee C reconciles the two pieces in 2 minutes. The TAKT Time per form in terms of delivery is 12 minutes.
- TAKT Time is assuming a constant daily demand during the day. If the demand fluctuates during the day, TAKT Time needs to be adjusted.
How to Work Out TAKT Time?
Assume that the accounting process now has 4 steps, with actual cycle times indicated.
Step A = 4 minutes
Step B = 5 minutes
Step C = 5 minutes
Reconciliation = 6 minutes
Add these up and you’d find that on an average the company staff spends 20 minutes to complete a form. Bingo --- The company is on target! If the staff is able to maintain this rate of work consistently, they’d never fail to meet the customer’s needs.
If it really was and is so simple, why is there such a hue and cry about TAKT Time?
This is because TAKT Time is used to calculate a host of other parameters, too, like Batch Size.
Let us assume adding up all the cycle times we had in the previous stage, we got a Total Cycle Time of 20 minutes. The TAKT Time is 20 minutes. Now:
Total Cycle Time/TAKT Time = 1
Thus, you would now need 1 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.
TAKT is not a concept. It is a measurement and a discipline based on known and existing production principles and practices. Understanding Cycle Time and TAKT Time is actually the first step for individuals and Lean practitioners to move one step closer to improve the efficiencies of their operations.
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