Knowing your cycle time is a critical component of perfecting your overall equipment effectiveness (OEE), something we specialize in here at OEEsystems. However, it is also valuable in its own right. Knowing how long a manufacturing process takes from start to finish lets you calculate lead time, manage raw materials better, and provide clients with estimates for how long their order is going to take.
For instance, suppose a customer gets in touch with you and wants to know how long it will take to deliver a particular product. Being able to calculate cycle time accurately gives you a working estimate of the time it will take to deliver the final product, including queue time. It also provides quality data on how much time your team will need to dedicate to the project, given current cycle productivity.
Cycle time definitions
Being able to measure your cycle time at a customer’s request is critical. However, many manufacturers don’t know how to do it correctly.
There are two standard approaches which can be adopted: Effective Cycle Time and Equipment Cycle Time. Effective Cycle Time measures how long it takes to complete a production process from start to finish (when work begins on the next workstation) while Equipment Cycle Time only considers the time spent working on the task. It doesn’t consider changeover time, or the time that it takes to get production up and running on the next station.
How you measure cycle time depends on the context and the specific nature of your business processes. Establishing one or both as KPIs can help managers keep track of how long an actual job takes, from beginning to end, instead of guessing.
Once you calculate cycle time, you can then compare your actual manufacturing cycle time to the ideal cycle time. This gives you a production time benchmark that managers can aim for. With a system like PerformOEE™ it becomes much easier to accurately measure your actual Cycle Time against your benchmark cycle time. The system itself has the ability to continuously monitor your cycle time in real-time thus identifying & indeed escalating any deviance from the benchmark to the relevant team or manager.
There are several alternative cycle time definitions you may encounter. We briefly run through them here:
- Non-value-added time: Sometimes called “non-value-creating time,” this refers to the time it takes to conduct cost-adding activities that don’t add value to a line item from the customer’s perspective.
- Operator cycle time: This metric refers specifically to the time it takes for an operator to complete all of the work elements for a particular process.
- Order lead time: Order lead time includes production cycle time plus the time it takes to ship it out to customers. This metric is helpful because it adds production delays to throughput time, allowing manufacturing businesses to give their clients more accurate estimates of when goods will arrive.
- Processing time: This metric refers to the time spent working on orders. It is generally a small part of the total production lead time and is good for measuring the firm’s ability to meet customer demand.
- Order to cash time: This metric captures the amount of time that elapses between a customer placing an order and the manufacturer receiving payment.
- Takt time: Takt time comes from the German word for “rhythm.” It has the same meaning as order lead time, measuring how long it takes for the manufacturer to deliver the promised goods.
You can be quite inventive with cycle time metrics and develop formulas bespoke to your operations. If you choose to use a specific KPI, just make sure that you understand its benefits and limitations. You may need to use several metrics to meet all your process improvement objectives.
What are the benefits of calculating cycle time?
Calculating cycle time and lead time is important for many reasons. These include:
More satisfied customers
Knowing your process time can help you improve customer satisfaction. Once you understand your cycle times, you can give accurate forecasts on how long it will take to deliver the finished product, giving you a competitive advantage and helping you avoid disappointed clients.
Improved employee relations
When you promise clients short turnarounds to win deals, it puts employees under immense pressure. In fact, the strain of achieving lower net production time can be so great that it damages labor relations. You may find turnover increasing, leaving you no better off.
Knowing your cycle time changes this dynamic. You have a more accurate picture of what your team can achieve, letting you make sensible, yet achievable demands of them.
Maximizing your cycle time also helps you reduce costs and improve productivity. By choosing a lean methodology, you may be able to reduce labor costs or perform multiple tasks in parallel, cutting down lead times. You can also make better use of your equipment over its serviceable life, improving capital investment yields.
Better project scoping abilities
Firms can find it challenging to figure out the time required to produce finished goods without first knowing cycle time. Once they have the right data, though, they can get better visibility over what they are producing on the shop floor, and the actual time it takes between receiving orders and getting goods out the door.
Improved competitive advantage
Companies that better understand cycle times are often able to improve their production rate considerably. They can convert raw materials into products faster than their rivals. Because most clients prefer rapid turnaround times, many make the switch, increasing revenues.
Examples of cycle time outside of manufacturing
We typically think of cycle time as being a manufacturing metric. However, you can apply them to any activity that involves the production of goods and services.
For instance, some professional service firms rely on the concept of cycle time. Digital marketing agencies, for example, might cite a cycle time of 2 hours for a 1,500-word blog on dog food. If a client asks for fifty such blogs, they would estimate a total work time of 50 hours.
Likewise, delivery services may also use cycle time. For instance, how many meals an operative can deliver within a 10-hour window.
How to calculate cycle time
How you calculate manufacturing cycle time depends on the specific metric you want to calculate.
The generic per-unit cycle time formula is:
Cycle time = Net production time / Number of units produced
You can use this to calculate the production time for, say, 1,000 units.
You need to be careful when calculating this metric, though. Net production time should not include any breaks or the need to swap out one set of tools and insert others. It does not include inspection time. It only takes the time it takes to manufacture the product.
Naturally, the cycle time you get per batch will be different from the cycle time per order. If you have changeover time between batches, you will need to factor these into your order time or takt time.
Cycle time loss
Cycle time loss refers to time lost due to equipment running at a lower intensity than specification.
Most equipment manufacturers will tell you their equipment’s maximum uptime. You can then use this as a benchmark to measure how close you are getting to this figure. The cycle loss time is the difference between the benchmark time and how long the machine actually runs during your production processes.
How can you reduce cycle times?
The more you can reduce manufacturing cycle times, the better. But how do you do this?
The answer is to use manufacturing performance software, such as PerformOEE™, that collects cycle times.
When doing this, you should make sure that the cycle times are accurate. This means that you should collect real-world data instead of inputting estimates.
In practice, this means going to the workshop floor with a stopwatch and starting the timer when the first process begins. You should then stop the timer once the process is complete (however you decide to measure it). For lead and takt times, you’ll want to keep a timer rolling somewhere that stops once you confirm the customer has received the delivery.
Software solutions let you play around with the data to provide your customers with more accurate waiting time estimates. Most differentiate between different types of cycle time, allowing you to track more KPIs for performance reasons.
Critically, bespoke solutions reduce your reliance on spreadsheets. Instead, you can generate statistics within the software through a simple interface, rather than using complex formulas.
Maximizing your team’s time
No production manager wants to find themselves in the position of over-promising and under-delivering. Such mistakes reduce the quality of client relationships and put staff under enormous pressure, increasing the risk of turnover
Fortunately, there are tools available to provide more accurate lead time estimates, helping you adjust to customer demand more quickly.
You should think of cycle time as more than just an efficiency metric. While equipment usage intensity is important, customer satisfaction is arguably more so. Once you get a handle on your manufacturing cycle time, you’ll have a much better understanding of how your enterprise functions, and avoid over-commitments to your customers.
If you are ready to start cycle time tracking with your team, get in touch with us today to find out the solutions we offer.