Takt Time vs. Cycle Time vs. Lead Time – Manufacturing KPIs Defined

The terms Cycle Time, Lead Time and Takt Time are often interchangeably used in manufacturing.

However, there are clear differences in what each of these measure and how they are calculated. Understanding how each of these is used can optimize the workflow, resources and work time on the shop floor.

Cycle Time, Lead Time and Takt Time are all approaches to lean manufacturing, a way to measure the efficiency and quality of products and reducing unnecessary disruptions and processes.

What is Cycle Time?

Cycle Time Definition

Cycle Time is the amount of time a team spends actually working on producing an item, up until the product is ready for shipment. It is the time it takes to complete one task. This includes time spent producing the item and the wait stages (amount of time the task is left ‘waiting’ on the board) between active work times.

Cycle time is what most people conventionally think of when they mistakenly use “lead time” and “takt time” interchangeably.

Cycle Time is one of the key KPIs in manufacturing. ERP and MES systems use cycle time to schedule, purchase and budget production.

How to Calculate Cycle Time

Cycle Time is also an important part of calculating the OEE (Overall Equipment Effectiveness). Therefore, understanding Cycle Time is the first step to accurately measuring how well a manufacturing operation is utilized.

You need two numbers to calculate Cycle Time. The total 𝑥 number of goods produced, and the total time it took to produce the 𝑥 number of goods.

Cycle Time Formula

The formula for calculating the Cycle Time Formula is as follows:

Cycle Time Example

Suppose your team works 40 hours a week, producing a total of 160 units.

The key to keeping a good production system is to maintain the Takt Time just below Cycle Time. If your Takt time is more than 15 minutes, you may have difficulties meeting the customer demand. Reducing Cycle Time is one of many ways to keep the shop floor on a steady, manageable schedule.

What is Lead Time?

Lead Time Definition

Lead time is the time measured from the moment a client puts in an order to when the final product gets delivered. 

This can be easily understood by thinking of the total time it takes for the client to receive the product from the moment they put in the order to the moment they receive the shipment.

Lead Time is Cycle Time plus the additional amount of time it takes for production to begin and the time it takes to deliver the finished product.  

How to Calculate Lead Time

To calculate the Lead Time, you only need to know the time/date the order was received and the time/date the client received the requested order. It is the time from order to dispatch.

Lead Time Formula

Lead Time Example

Suppose your client has put in an order on June 1st and you delivered the final product on July 1st. 

All the time spent in between these 30 days — order processing, manufacturing, labeling, and shipping — is included when calculating the Lead Time. Therefore, both cycle time and other processing times need to be cut down to shorten lead time.

What is Takt Time?

Takt Time Definition

Takt Time in German means rhythm. It is the steady ‘beat’ to which production must follow to satisfy the demands of the customer.

Takt time is the rate at which manufacturing processes and systems need to complete the production in order to meet the customer request. Therefore, this is less of measuring the total time it takes to complete a segment or the entirety of the production.

Takt time measures the pace at which work must be done to deliver what has been promised.

How to Calculate Takt Time

Takt Time can be calculated with the amount of time available until product delivery and the required number of production quotas the customer has requested.

Takt Time Formula

Takt Time Example

Suppose you have 30 weekdays available for production, and the customer has requested 120 units. Assuming that production runs 8 hours a day:

This calculation shows that you have to produce one unit every 2 hours to meet the demands of your customer.

Cycle Time vs Lead Time (vs Takt Time)

Benefits of Calculating Each of the Production Measures

Cycle Time Lead Time Takt Time
  • Calculates the Production Rate
  • Can be used to make adjustments to the production time to meet customer demand
  • Provides meaningful data to adjust lead time
  • The full overview of the production process
  • Can be used to improve not only the production rate but also the additional processing rates such as production logistics and shipment
  • Takt Time can be compared against Cycle Time to understand the current status of production capabilities
  • Avoid over/ underproduction
  • Used to improve or restructure production timelines

Difference Between Cycle Time and Lead Time

The easiest way to understanding the differences between Cycle and Lead Time is that Cycle Time is a part of the total Lead Time. Cycle Time only measures the production rate of the manufacturing process, while Lead Time includes all operational processes leading up to and after the manufacturing stage.

Lead Time is measured from the customer’s perspective whereas Cycle Time is measured from the internal process point of view. 

Difference Between Cycle Time and Takt Time

Cycle Time is what the manufacturing ‘can do’, whereas Takt Time is what it ‘needs to do’. These two numbers can be used to understand whether production can meet the demands of the customer, given that additional processing times during Lead Time will remain constant for all Cycle Time rates.

Customer demand cannot be met with the current production schedule. Lead Time will most likely be longer than what was requested.
Customer demand can be just met. Lead Time will most likely match the requested order-to-delivery time desired by the customer.
Customer demand can be met well under the production schedule. This can also lead to a shorter total Lead Time than requested.