If you’re familiar with agile methods, then you’ve probably heard of lead time and cycle time. They are common time-tracking metrics that can easily be confused.
Project managers use these metrics to monitor and improve the productivity and efficiency of their teams and processes. While the lead and cycle time have a lot in common, you’ll soon discover that they represent different things.
Stick around to find out how these metrics can help you improve team efficiency. We’ll also pin lead time vs cycle time head-to-head to show you their similarities and differences.
Here’s what you’re going to learn
- What is lead time?
- What is cycle time?
- Lead time vs cycle time: similarities and differences
- How to calculate lead time and cycle time
Let’s get started.
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What is Lead Time?
Lead time refers to the time a task takes from when it enters your workflow to when you finish it. In simple terms, it shows how long it takes for an order to go through your entire production process to when it’s shipped.
If you were to represent lead time in a Kanban board view (and compare it to cycle time), this is how it would look.
To paint you a clear picture, imagine ordering takeout at your local KFC. The time it takes from when you’ve made your order to when you receive your order is the lead time. That means if you made your order at 1 pm and got your food at 1:15 pm, the lead time here would be 15 minutes. Makes sense?
In Kanban, you start measuring the lead time once the order has been made or a request arrives. That means before the order goes through your production process or when it’s in the “To Do” column.
What is Cycle Time?
Cycle time refers to how long it takes a team member to work on a given task. The timer starts when a team member begins working on the task, i.e., when the task status changes from “To Do” to “In Progress.” The timer will continue until the task is finished and shipped.
Continuing with the KFC analogy above, lead time starts depending on customer demand. While the actual cycle time starts when the chef starts to work on said order.
Let’s say there was a 2-minute delay before your chef started working on the order, i.e., they started at 1:02 pm. Then that means you’ll calculate the cycle time from 1:02 pm. Therefore, your actual cycle time would be 13 minutes.
The focus of your cycle time should be measuring the time spent on work in progress(WIP). And it’s measured in time per unit.
If you haven’t already guessed by now, the cycle time falls within the lead time. That also means your lead time will always be higher than your cycle time. Using scrum methodology as a reference, you can think of your cycle times as active sprints.
In the next section, you’ll learn the main similarities and differences between the two.
Lead Time vs. Cycle Time: Similarities and Differences
While lead time and cycle time have a lot in common, they also have so many differences. Here are the main similarities and differences between the two.
When comparing lead time vs cycle time, the first and most apparent similarity is time. They both are measurements of how long it takes you to get from the starting line to the finish line. The time here can range from seconds, minutes, or hours to days, weeks, and so on.
While the starting point for each differs, you can still use them to represent a specific duration of time. So why is this important?
Well, if the values you get are constant, you can use them to determine business continuity. However, if they are random, you might have to make some changes to be more productive and efficient in delivery times. Here’s why.
Measuring lead time and cycle time gives you an overview of how efficient your team and process times are. By comparing your lead time vs cycle time, you’ll get a clear picture of how well your business uses its time. For example, it can tell you how quickly your team can start working on new requests.
You can also use your lead and cycle time to create a benchmark for your business.
But perhaps the biggest benefit of calculating the two is when monitoring whether your process optimization efforts are paying off. Using these values, you can make changes and see how effective those changes are.
For example, you may introduce new tools or workflows to reduce the time between when a new request comes in, and a team member starts working on it. You’ll only know if the new tools/workflows are working if you can accurately track both lead and cycle times.
Another thing lead time and cycle time have in common is the relationship between effort and result. You need to remember that not all effort directly translates to output. And the values of your lead and cycle times are accurate representations of the amount of effort your team puts in vs the output they get.
So while being busy is good, productivity is even better. This means that the best way of measuring effectiveness and success is productivity, not effort.
The starting point is one of the noticeable differences when comparing lead time vs cycle time. You start measuring lead time from when an order first enters your workflow or system until you finish or deliver it. While with cycle time, you start the timer when one of your staff begins working on it or when the status changes to “In Progress.”
The other major difference between cycle and lead time is the information you get. Lead time gives you a picture of your entire customer demand fulfillment process. Meanwhile, cycle time gives you an overview of the production process times of adding value to a product or request.
Another difference is that lead times will help you offer your customers realistic time targets or expectations. Moreover, if you get a stable lead time, you can better predict your product delivery lead times. While cycle time helps you identify areas of idle time in your production process or progress limits.
Lead time helps you identify how many tasks are in the queue and how much time you need to clear them. While cycle time helps you narrow down areas that can maximize efficiency.
What’s more, if you want to find how efficient your systems are, then you should focus on lead time. That’s because lead time refers to the duration that’s already passed. While cycle time is about the time it takes.
How to Calculate Lead Time vs Cycle Time in Kanban
With product management software like Tara, it’s very easy to calculate and compare lead time vs cycle time. That’s because these tools already track most of the tasks for you. So you can dig deeper into the insights to understand how much time your team takes to complete and ship new releases.
One of the best tools for calculating lead and cycle times is the Cumulative Flow Diagram (CFD). Basically, a CFD is a chart that helps you map the progress of project items onto a graph (featured below).
Work-in-progress items are on the Y-axis, while the X-axis shows the time. You’ll also find many CFD sections representative of a single column in a Kanban board.
Three of the most basic board columns are “To Do,” “In-progress,” and “Done.” Of course, you can add as many columns as your workflow demands.
So how do you calculate lead and cycle time?
- Calculating lead time. Translate historical data from the starting point to the endpoint. That is, after an item enters your systems until its delivered. The time spent from historical data is the accurate lead time.
- Calculating cycle time. To measure cycle time, you need to adjust the CFD to become a cycle time chart, i.e., to measure tasks in progress. What’s more, cycle time is calculated in time per single unit.
With the Cumulate Flow Diagram (CFD), it’s easy to calculate the average lead time vs cycle time for a specific duration. After getting this information, it’ll be much easier to understand and track workflow changes.
A general rule of thumb is to reduce lead and cycle time to beat your competitors. That involves cutting costs and improving inefficient processes and productivity.
By now, you should have a pretty good idea of what lead and cycle times are. To recap: lead time refers to the average time frame from when a customer makes an order to when you deliver. While cycle time refers to the time when one of your staff members begins to add value to a product or request until its completion.
The two time measurement metrics have a lot in common, but they’re used for different reasons. If you want to improve your business, then comparing lead time vs cycle time will help you find the necessary gaps that you need to fill. And if you want to beat the competition and keep your customers happy, you’ll need to shrink the entire lead time.