Lead time and cycle time are often confused with one another. Both cycle and lead time are important time metrics in manufacturing, but they’re also important strategic tools for project management. Project managers and team leaders need to fully understand their differences and similarities to harness their power.
In this article, we’ll go over cycle time vs. lead time and what they do. We’ll also share some tips on managing both cycle time and lead time in your project management solution to achieve better results.
An introduction to cycle time vs. lead time
In a nutshell, cycle time measures the time it takes for a team to make a product, while lead time measures the time between the customer order and order fulfillment. Lead time is always longer than cycle time because cycle time fits into the timeline of lead time. In Scrum methodologies, cycle times are equivalent to a sprint.
Here, we’ll discuss the differences and similarities between the two metrics. Keep reading to discover the answers to your most common questions about cycle time vs. lead time.
What are the differences between lead time and cycle time?
The cycle time is the time it takes for a developer or a team to finish a project. It is typically the time between when the work item is in progress and when it has been completed. The cycle time officially starts when an item is moved to “In Progress” and ends when it is marked “Done” in whatever project management solution you’re using.
For example, when a marketing manager builds a social media campaign for Twitter, the cycle time begins when the team starts preparing the content.
The lead time is the time it takes for a single unit of product to be created and added to the backlog when it is shipped. This is typically the time it takes for one project to be completed and sent to the customer. If you’re using a Kanban board, the lead time will begin once the item is added to the “To Do” list column.
In the marketing example scenario above, the lead time will end once all the content is published on the platform.
By measuring cycle time, you can identify areas of concern that need to be addressed to improve the efficiency of your team. But by measuring lead time, you can determine how many items are flowing into your queue and how long it takes for your team to check them off.
And when it comes to testing the system's efficiency, focus on the lead time, not on the overall development process.
In simpler terms, lead time refers to the time that has already passed, while cycle time refers to the time it would take. They are not easily compared side by side for this reason.
What are the similarities between lead time and cycle time?
First and foremost, lead time and cycle time both measure the minutes, hours, days, weeks, or months it takes a product to get from a starting point to an ending point. Those points are different for each, but they do represent a quantifiable period of time.
If those measurements are consistent, then teams can achieve business continuity. If they aren’t, they may need to adjust in order to better plan and execute projects.
Because of this, both lead time and cycle time offer insight into the efficiency of teams and their processes. These values examined simultaneously create an accurate picture of how a company uses its time when properly monitored and measured. From there, project managers and team leads can create realistic benchmarks. They can easily make the necessary adjustments, calculate these values again, and weigh the results side by side to see if any progress has been made.
Lead time and cycle time are also values that represent effort versus output. After all, not all effort resolves in progress and not all output leads to outcomes you’re looking for. What does it really take to create this product? And what does it take to create this product once our team makes it? What about our customer orders — do those match up with our fulfillment plans?
All of these questions and more can be answered with the help of these two tools.
What do both lead time and cycle time metrics miss?
Lead time and cycle time metrics miss the human element of project management. Although there are ideal turnaround times for a product or service, there may be interferences that you simply can’t account for in a mathematical model. For example, unexpected supply chain hiccups or sudden team shakeups from the Great Resignation may create longer than average cycle or lead times.
Also, they may be great for predicting issues, but they’re not useful for diagnosing them. Only a holistic project management software can give you the full picture of what’s going on. Even if you know you need to make a change, simply relying on lead time and cycle time to determine your course of action may negatively impact other areas of your business if not used wisely.
Cycle time vs. lead time vs. takt time
The cycle time, lead time, and takt time are the three key factors that determine the average time it takes to produce a product. To better understand what they are and how they compare, let’s take a look at how to calculate each one:
- Cycle time: When the team begins to fill one customer order/ number of units in one customer order
- Lead time: When the incoming work request is received — the time it takes to deliver the end product
- Takt time: Total number of work hours available/ total number of products needed to meet total customer demand
As you look at these equations, it’s easy to spot the differences. Cycle time and lead time refer to a singular order, whereas takt time refers to overall customer demand. This means that cycle time and lead time are smaller values within takt time.
Lead time is useful for setting customer expectations of delivery times. The lag time between when the order is placed and the cycle time begins can sometimes take longer than the time it takes to create the product itself. This means that it’s important to incorporate the entire lead time in with delivery estimates. If you only use the cycle time to set expectations, customers may feel disappointed when their product takes longer to get to them than they were originally told.
- Cycle time measures the time it takes your team to complete an order. Lead time measures the time it takes between order input and fulfillment.
- Lead time measures how long it takes to fulfill one order. Takt time measures the total number of hours you have available and how many average orders you can fulfill within that time frame.
How to manage time metrics with Wrike
Understanding both cycle time and lead time metrics will help you keep track of your team’s progress. It will also provide insight into how to pick up the pace and ensure that your customers are satisfied. There are plenty of tools available to help you determine cycle and lead time, but understanding how they're calculated can be helpful in planning releases. Project management solutions like Wrike add context to your metrics and make it possible to plan, monitor, and measure different strategies to improve them.
One of the biggest obstacles to accurately measuring both cycle time and lead time is updating progress statuses. From order input to order fulfillment, there are quite a few different phases a request can go through. If even one status update is missed, the entire team can lose track of where they are in the fulfillment cycle.
Wrike offers a few different features to help keep track of the statuses of all your projects, orders, and tasks. First, there are detailed task views which allow users to choose from a customizable menu of status updates.
Then, once the task is marked as ready for review or ready for the next phase, Wrike will automatically trigger a notification to the next responsible party, saving time on individual updates and eliminating the opportunity for team members to miss the change on their own.
Wrike also has time tracking, a must-have data feature for measuring cycle time and lead time. Time tracking is automatically recorded and measured so that project leaders can measure progress. This information helps laser focus on which phases or team members are responsible for higher than expected numbers. And with Wrike’s reporting capabilities, it’s easy to turn those insights into actionable adjustments.
Now that you understand the nuances of cycle time vs. lead time, you’re ready to apply what you’ve learned with Wrike. Improve productivity, manage resources more efficiently, and better understand which processes are or not working with Wrike’s two-week free trial.