Cycle Time vs. Lead Time: Everything You Should Know

December 21, 2021 - 10 min read

Maria Waida

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.

To summarize:

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.

Maria Waida

Maria is a freelance content writer who specializes in blogging and other marketing materials for enterprise software businesses.

#Productivity Advice #Project Managers #Project Management Concepts

Project Management 10 min read

What is a SIPOC Diagram & How is It Used?

At first, creating a new business process seems simple. But even if you’ve identified a complete, linear path from your suppliers to your customers, you may start to notice complications. Wrangling a list of departments that need to get involved. Figuring out how to transfer a product from one department to another. Finding a way to simply codify it all so you don’t end up with 40 versions of the same basic business process document. To solve the problem of complexity, many companies turn to the SIPOC diagram. Working from a SIPOC template helps create a “blueprint” for any new business process you want to create. Done right, you’ll gain a clear understanding of what needs to happen to launch a new product or service, down to the smallest details. But it won’t work until you know how to mold that SIPOC diagram into a rock-solid plan. What does SIPOC stand for? SIPOC stands for Supplies, Inputs, Processes, Outputs, and Customers. It refers to an A-to-Z approach to the entire business process. This is useful for high-level management because it helps you document any new business process from a bird’s-eye view. You might have also heard COPIS, which is the entire process in reverse. Why start with “Customer” at the beginning? Some companies want to emphasize the customer’s experience and reverse-engineer their business process around that. For others, SIPOC’s chronological order makes more sense. Without supplies and inputs, there are no outputs and customer-facing products or services. Think of SIPOC as an essential way to distill the business process down to its core steps, from A to Z. What is a SIPOC diagram? A SIPOC diagram is a workflow chart that illustrates every stage of your SIPOC. This brings the SIPOC meaning in your business from an abstract acronym into a visualization of workflow. According to some statistics, visualization like this can boost performance by as much as 89%. In other words, SIPOC diagrams help you see a new business process before you implement it. A SIPOC process can be as comprehensive or as simple as you like. But at the very least, it will need to include a component part of each of the following: Supplies: What are the tools, products, services, or raw materials that need to be a part of the business process to create an end result for your customer? List them all here. Inputs: Are there data inputs that need to go into the process at this stage? What do you need to add or modify to the existing supplies? Processes: Here’s where you’ll list the essential functions of your business as you carry out the new directive. What processes can be automated? Which ones will be manual? Will you have to hire new workers to handle the processes and inputs? Answer those questions here. Outputs: This is where you should think about maintaining standards, as well as installing processes for quality control. Any testing you do with your products/services before they go to market will take place here. Customers: This stage doesn’t simply refer to the point of purchase. Think about the entire customer experience. In fact, you might even want to consider doing a few COPIS exercises just to get a sense of what you want the end result to look like before you build the process around it. SIPOC diagram example We’ve put together a step-by-step illustration of a SIPOC diagram below: Keep in mind that a SIPOC can be as big or as small as you need it. This is just a high-level diagram dividing the key components into five steps. But under every step, you can list all sorts of essential variables to create the comprehensive results you’re looking for. If that’s too abstract, let’s take a simple but specific example. Let’s say your business process is going to the grocery store. Here’s what that could look like: Supplies: Fully stocked grocery store, address of the grocery store, car to drive you there, money to purchase groceries. Inputs: List of ingredients. Scheduling a time to visit the store. Process: Purchase groceries, return home, put groceries away. Outputs: List of recipes. Food preparation. Customers: Happy, well-fed family. It might not translate to something as complex as a 500-employee business. But a trip to the grocery store helps solidify exactly what a SIPOC diagram is: a blueprint for getting things done. What are the benefits of SIPOC diagrams? Dwight D. Eisenhower once said that plans are worthless, but planning is essential. The idea? You may need to adapt your plans when the rubber meets the road, but the act of preparing plans is what prepares you to handle any obstacles. The SIPOC diagram forces your business to do the essential work of planning. By creating a SIPOC diagram, you see the entire workflow from beginning to end. Along the way, you can fish out blind spots, brainstorm new ideas, and reduce red tape that isn’t necessary to create the end results you want. But the act of sitting down and planning isn’t the only benefit of SIPOC diagrams. Here are a few more to consider: Cost savings: There’s a reason you don’t build a house until you have blueprints in place. When you make a mistake in the blueprints, you can erase them and not lose thousands of dollars in labor and costs. Think of SIPOC as your blueprint for business processes and you’ll understand why you want such a clear picture of a business process before you begin. You’ll identify many of the potential bugs before they have the potential to cost you serious money. Beginning the process: With SIPOC diagrams, you’re already beginning the planning stages of developing your business. You’re already brainstorming suppliers, considering which departments need input, and thinking about the key people who will be part of the process. When you’ve effectively built out a SIPOC diagram, your end result will be a blueprint that’s ready for feedback and adjustment. Making strategic decisions: Along the way, a SIPOC forces you to see business processes as a result of cause and effect. Some data suggests it helps you identify patterns as well. This puts you in the position of making strategic decisions at the outset. How will the supplies you acquire affect which customer segments you target? Will you need to hire people to provide key inputs that you don’t already have at your company? What challenges should I be aware of with SIPOC analysis? A SIPOC analysis is low-cost and high-benefit — it only takes advanced planning. But it doesn’t mean there won’t be challenges along the way. One key challenge: untangling knots. With a SIPOC diagram, you have to answer cause-and-effect questions. And sometimes, it can be difficult to handle these without the ability to experiment in action and see which solutions work best. The temptation is to skip the SIPOC analysis and get straight to taking action, but this can lead to its own problems. The best way is to complete the SIPOC as much as possible. You might also refer to a Gantt chart to help supplement this issue. Another key challenge is communication. You have to keep key decision-makers in the loop with SIPOC diagrams, and if you make business process decisions without their input, it can not only introduce complications but friction. Visualizing data has a way of making communication effective — after all, a picture is worth a thousand words. Harvard Business Review refers to data visualizing as “visualizations that really work.” How is SIPOC used in project management? You’re probably already getting a grasp of how a SIPOC diagram can help make project management more streamlined, efficient, and stress-free. But, there are a few more things to keep in mind to reap the benefits for your projects. Use specifics: Don’t say, “we will need enough graphite to put in our pencils.” Get specific about how much graphite you need if you’re building pencils. A good template for handling the Supplies and Inputs variables is to use formulaic statements. For example: “We will build X-quantity of Y-material into Z-units before moving to the next stage of the process.” Don’t leave the work of estimating quantities to the future. That’s what SIPOC is here for: to create your blueprint. Document the types of customers you have and what they need: Project management without an emphasis on the customers’ experience is ultimately an internal-facing process. But it’s not completely SIPOC unless you include customer considerations. Make sure you know who your target customer is. What are their concerns? What problems are you solving? Knowing these questions and feeding them into the rest of the process will help you innovate in ways that wouldn’t be apparent if you were solely focused on the first four stages. Record your progress: Even if you don’t nail a SIPOC analysis on the first try, record your progress every time you and your team sit down to discuss the details. Remember to think of your SIPOC diagram as a blueprint. You wouldn’t get halfway through sketching the plans for a house and then say “we’ll remember this when we sit down again.” Document every step you’ve specified, including any key numbers and people you’ve identified as part of the new process. Gather feedback: Once you have a SIPOC ready to go, it’s time to involve any key decision-makers who might have a say, even if they’re not going to make key decisions in the process itself. Take a scientific approach. Your goal is to poke holes in the process and come up with solutions before implementation. Once you have a thoroughly vetted SIPOC diagram in hand, you’ve defined your new business process in full. This isn’t to say it will go perfectly smoothly when you launch. But when something does go wrong, you’ll have a much clearer picture of what needs to be done to get back on track. Rather than making your processes rigid, the end result of a SIPOC diagram is that you make yourself more flexible and adaptable. You’ll build a business that can adjust on the fly. You might throw out old plans once in a while. But if you approach it the right way, the simple process of planning can take you anywhere.

Project Management 10 min read

The Definitive Guide to Aggregate Planning

Aggregate planning is the process of balancing capacity with customer demand. Learn more about the best aggregate planning strategies with Wrike.

Project Management 10 min read

Everything You Need to Know About Rough Order of Magnitude (ROM) Estimates

A rough order of magnitude estimate, also known as ROM, is an estimation of a project’s level of effort and cost to complete. ROM estimates take place early in a project life cycle and guide strategy and planning choices. In this article, you’ll learn more about ROM estimates and how they are used in project management. Plus, keep reading to discover examples and how Wrike could be used to assist in creating a template for your own rough order of magnitude. What is the rough order of magnitude? A rough order of magnitude estimate is a general estimate of a project's level of effort and cost. It's usually performed during the selection and approval stage of a project. Generally, it’s used for estimating a project budget that doesn’t have a lot of detail. Project estimating is a vital aspect of project management because it helps determine the total budget for the project and whether or not it’s feasible companywide. It also helps keep track of the project's milestones and budget at the very beginning (more on that later). A rough order of magnitude is most commonly used for project screening. ROM is typically meant to be given to executives who need a high-level overview of how much work might cost. This is especially helpful when they don’t yet have the mandate to do a deep dive into the scope and requirements of the work. Comparing the ROMs of different projects helps identify which projects should be prioritized and which ones should be shelved. It can also help uncover and prevent scope creep later on. This tool also helps decision-makers at other levels of the organization make informed choices regarding the project's complexity and costs. That information is critical for proper scope planning before project kickoff. It’s important to know that a ROM estimate is often used for information purposes at the beginning of a project and it’s suitable for use for the lifetime of the project. How to make a rough order of magnitude estimate Estimating a ROM is often thought of as an art. They are quick to make, but the trick is learning how to make them well. Those who are more experienced in coming up with these estimates may have their own way of executing this process. Regardless of how well you understand the rough order of magnitude, it is important to consider the various factors involved in developing one. These include: A guesstimate range of what resources the project will require based on the information you have on hand Opinions from experts and/or higher-ups who hold a stake in the project A variance of at least -25% to +75% Keep in mind that, when calculating ROM, the goal is to provide a rough estimate that is largely accurate even if it’s not necessarily convenient for your plans. By this, we mean you may find it tempting to choose figures on the more conservative side in order to achieve a more desirable outcome. Unfortunately, using inaccurate stats defeats the entire point of creating the estimation in the first place. Great research can help illuminate areas of your rough order of magnitude estimate where it may be tempting to let bias enter into the equation. All that being said, a ROM estimate's variance is not significant enough to deter you from creating one. A ROM estimate provides a starting point for moving forward in much the same way a budget estimate is also used to determine your base. For example, instead of just presenting single-point estimates, managers should present budgets as a range. Remember: the estimate is derived from the available information. If information is missing, you’ll have to make do with what you do know for sure and move forward from there. In fact, you can expect to improve the estimate as the project moves forward. During the planning and implementation phases, the requirements and information will be refined. As you go along, you’ll learn through trial and error what the reality of the project actually is. Rough order of magnitude techniques One technique for creating a rough order of magnitude estimate is known as a definitive estimate. A definitive estimate is a technique that involves estimating an individual project phase or task's level of effort. Planning with this information upfront makes it easier to plot out workloads on visual charts while keeping your team on the same page. This step typically takes a number of hours to complete, but it is a successful way to get an accurate idea of the time and cost of any project. Other popular techniques and procedures for estimating costs include PERT time estimation, COCOMO, and function point analysis. Program Evaluation Review Technique (PERT) PERT charts are used to plan out tasks that will take a certain amount of time to complete. They can also be used to coordinate team members. Constructive Cost Model (COCOMO)COCOMO is a regression model that can be used for estimating the various factors involved in tech and software project management. It is typically used for estimating the size, effort, cost, and quality of a project. Function Point Analysis (FPA)Function Point Analysis is a method of estimating a company's clear business significance. It helps in the evaluation, management, and control of software development. When estimating ROM, it is best to try and estimate in buckets of time and costs. Doing so helps minimize the number of, well, numbers that are required to provide a complete and accurate estimate. Rough order of magnitude examples There are two ways to think about estimating ROM. You can create effort ranges or buckets with approximate figures that any task can fit into. Alternatively, you can use historical data to guide decision-making. Here are some hypothetical rough order of magnitude examples: Creating buckets In this example, a project manager will define effort ranges such as small, medium, and large. Within each range is a total number of hours, personnel, and/or budget needed for tasks that fall in that category. For example, a small bucket may indicate that a task will take two to four hours and is relatively simple or affordable to complete. It all depends on the specific project. Here is a very simple example. Let's say you're considering eating a sandwich for lunch. You know that tasks such as spreading peanut butter and jelly onto two slices of bread would fall into the small category — low effort, low time, and perhaps even a single knife instead of two. However, if you noticed that you're currently out of bread and you know it would take 20 minutes to drive to the store, that task would fall into the medium category because it would take considerably more resources to complete when compared to the spreading task. Historical data Historical data means pulling information from past projects. These projects may have similar tasks, goals, or outlines. This information is good to have on hand in your project management solution. You can use data from projects that didn't go as well as you'd hoped in order to refrain from repeating his mistakes. You can also use data from projects that went above expectations to see where you can replicate those choices here. Let’s continue with our sandwich example. You may have found that in the past when you were craving peanut butter and jelly, it was worth it to you to make the drive. In fact, it also allowed you to run several other errands (a.k.a. projects) at the grocery store. Based on this historical data, you may find that, despite the effort involved, the payoff was worth it in the end. So choosing this path again will be profitable. First-hand experience First-hand experience refers to how experienced the person creating the rough order of magnitude is in this particular field, project type, or as a project manager in general. An expert who understands project management will likely come up with a more accurate ROM than someone on their first day of work. First-hand experience is valuable because you have plenty of anecdotal evidence to back up your estimations from other related projects. It's also helpful because it allows planners to be intuitive about the process and consider the people involved. For example, you may find that a particular supplier often experiences delays. Although the supplier representative promises otherwise, you've seen it happen time and time again. Knowing this, you can factor that into your rough order of magnitude. Now we’ve come full circle with our peanut butter and jelly project. You may have learned from first-hand experience that, despite your intense craving for it, these sandwiches aren't actually worth it for you. You may even have regretted eating them right after you finished and wished you’d opted for a turkey sandwich instead. Knowing this, you may draft an estimate that confirms the amount of resources and effort needed will not have the ROI expected and it would be better to not move forward with it after all. This information isn’t something you can necessarily track with a report. It’s simply a memory of what you’ve experienced in the past. Using this knowledge will help you make better, more informed decisions in your ROM with information you can’t find elsewhere. How to use ROM in project management Project estimation techniques help managers identify the most critical elements of a project and provide them with accurate estimates. These techniques can also be used to plan for resource allocation. It is important that you have an estimate in place before you start a project. Without an estimate, you may not know how long it will take or what resources will be needed. Cost is often one of the most challenging constraints in project management. Having enough money to complete the project is one of the most critical factors in managing it. Creating a ROM will help you understand whether or not it’s financially viable before you even begin. Another key component of a project is time. Having the ability to determine the duration of the work and when specific tasks will take place is very important to project planning. By estimating your project schedule, you can arrange for the people and resources that you need when they are needed. It also allows you to set expectations for the clients. You can create a rough order of magnitude for any project. But there are several project management situations in which it may be necessary to come up with a ballpark idea of what resources will be needed: Larger than normal projects where you will need to provide more detailed information about the project Projects that involve teams across different countries where there may be varying costs and exchange rates Projects that are customized to the client or unique to your team where the product or service is innovative and the scope of the project is being managed through Agile project management methods Even if your project doesn’t fall into one of these categories, a ROM can be used to determine whether or not it’s viable. This is helpful when you’ve got limited resources and more than one project to choose between. Using Wrike to create a rough order of magnitude template Wrike is a project management tool that streamlines the process of organizing, creating, and coordinating a rough order of magnitude. First, start by checking for any historical data from relevant projects you’ve successfully completed. All Wrike users have access to their own detailed project reports. If you have historical data, you can go straight to a more detailed cost figure. It will give you a more accurate and detailed estimate. If you don’t, continue creating your ROM. Then, start breaking the big components of the project down into smaller pieces. Some planners use the top-down approach or the bottom-up approach, both of which can be accomplished with the help of Wrike. A top-down estimating technique breaks down a project into discrete phases and tasks. This method works by estimating the overall time for the project, as well as the phases and work tasks that will be completed within that time frame. If a client tells you that the project has to be done in six months, a top-up approach allows you to estimate how much time you can dedicate to each activity within the project. A bottom-up estimate is a technique that works by estimating multiple tasks and aspects of a project. This step-by-step process combines the various estimates into one final project estimate. In project management, orders of magnitude are typically referred to as broad-brush categorizations of sizes. So use a range when adding in timelines for individual phases and expenses. Tip: don’t forget about project costs spent preparing the ROM and the project management itself. This will take up about 20% of your estimated total time allotted to the project. Next, go above and beyond by using Wrike to calculate risk. Project risk is a set of events that could significantly affect the quality or schedule of a project. It can be triggered by various factors such as unforeseen delays, budget cuts, and legal issues. By estimating the risks involved in a project, you can plan for how those risks will affect the project and develop a risk management strategy later on if you feel that the ROM is convincing enough to adopt the project. Tip: If you’re stuck, talk to your finance department to see if they can help you get a better idea of what things cost. Finally, consider what project planning may look like. Project planning for Agile projects is usually done in phases, with estimates being created initially before the beginning of the sprint. These estimates are then updated during the sprint. Estimation can also happen during a sprint retrospective, where you update the backlog based on the outcomes of the previous sprints. It can also be done during the sprint planning session. The project team is responsible for estimating projects and managing the estimates. They are also involved in the development of the project's documents and databases. Having one central hub for all project estimates makes it easier to organize and communicate your vision and ROM results. As you progress through the project, you should start to produce smaller ranges for accuracy. Over time you will reach a cap for each category that is both realistic and attainable. As the project details become more detailed, the accuracy of the ROM estimates decreases until they are no longer accurate. In conclusion The more data you have about your project, the better it is to draft current project estimates. A project estimation tool can help you build up estimates and track against actuals. It can also help you improve your estimates by recording errors and lessons learned. Discover how Wrike can help you improve your planning and execution with our free trial.

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Cycle Time vs. Lead Time: Everything You Should Know

An introduction to cycle time vs. lead time

What are the differences between lead time and cycle time?

What are the similarities between lead time and cycle time?

What do both lead time and cycle time metrics miss?

Cycle time vs. lead time vs. takt time

How to manage time metrics with Wrike

Maria Waida

Cycle Time vs. Lead Time: Everything You Should Know

An introduction to cycle time vs. lead time

What are the differences between lead time and cycle time?

What are the similarities between lead time and cycle time?

What do both lead time and cycle time metrics miss?

Cycle time vs. lead time vs. takt time

How to manage time metrics with Wrike

Maria Waida

Related articles

What is a SIPOC Diagram & How is It Used?

The Definitive Guide to Aggregate Planning

Everything You Need to Know About Rough Order of Magnitude (ROM) Estimates

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