Imagine that your customer just sent you an urgent request. They need a specific deliverable as soon as possible and ask how long it will take to get it done. Knowing they need it urgently, you want to deliver as quickly as possible. You believe your team can turn around the customer’s request within the next two weeks, so you set a strict deadline, promising to meet your customer’s expectations.
With the customer communication handled, you quickly reach out to your team to inform them of the request and urgent work. To your surprise, your team feels frustrated, annoyed, and bothered by the fact that you’ve promised such a quick turnaround — because it’s going to be nearly impossible for them to do the work in that short period.
You thought a specific task would take 40 hours to produce from start to finish, but your team says it will take at least 80 hours to complete that task. The work has been scoped inaccurately, the customer has been promised a deliverable they may not receive, and your team’s morale plummets as they work extra hours to try and deliver on the guarantee you committed to.
You and your team are knee-deep in a mess, and you wish you would have known more accurately how long the work would take to complete. You want to prevent this from happening again in the future to ensure both your team members and your customers stay satisfied and happy. That’s where the cycle time equation comes in.
We’ve rounded up the fundamentals of cycle time, its benefits, two other formulas it works alongside, how it should be calculated, and how to track it. With a solid understanding of the cycle time formula, you can avoid ending up in these types of scrambles and deliver high-quality work in a timeframe that’s reasonable for both your customer and your team.
What is cycle time?
Cycle time is a calculation that comes from the world of lean manufacturing. The cycle time is the amount of time it takes to complete a specific task from start to finish. You can think of it as the time it takes to produce one unit or item from beginning to end. In our example from earlier, it’s the actual amount of time (80 hours) your team told you it would take to get the work done.
The cycle time formula is all about revealing the speed of delivery. It’s a crucial metric that allows you to measure how long it takes to complete a product or deliver a service. It can also be considered part of continuous improvement efforts since it can expose areas of inefficiencies that you and your team could address. It’s also a valuable metric when it comes to measuring productivity and efficiency within a business.
Cycle time can be applied across a broad range of industries and types of work. In software engineering, it refers to how long it takes to deploy code, or in supply chain management, it can explain how long it takes to fulfill a product order.
But, industry aside, it also applies when managing projects of any size. Even if you aren’t working with physical product development, calculating cycle time can help you understand how long it takes to get work done — from beginning to end.
What are the benefits of calculating cycle time?
Calculating cycle time can be a huge benefit to your business. Here are some of the key benefits of calculating cycle time and why you should be using the cycle time formula if you aren’t already:
- Increased profitability from cost savings. With the speed of delivery top of mind, when you maximize cycle time, you reduce costs and increase your profitability. Having a clear understanding of how and where time is being spent is a quick way to understand where you can cut back. In one case study, an organization’s pretax profits increased from 2% to 13%, in part due to an in-depth understanding of cycle time alongside other lean principles.
- More consistent production. When you have an in-depth understanding of your production flow, you can implement processes and tools to ensure consistent production rates. By honing in on your production rate to standardize it, you’ll eliminate the chances of under and overproducing.
- Highly-satisfied customers. Have you ever been in a situation similar to the one in the introduction? Where you promised a customer a deliverable within a timeframe you weren’t able to meet? It happens all the time when we don’t have a clear understanding of how long it takes to complete specific tasks. When you calculate cycle time, you can figure out your production rate and provide more realistic timelines that you can stick to.
- More efficiencies within your team’s working structure. When reviewing and assessing your cycle time, the data offers an opportunity to address inefficiencies. For example, maybe your cycle time indicates that you can’t deliver quickly enough and provide the turnaround times that you’d like. In that case, you can determine whether you can increase your production batch to deliver more quickly. You can use cycle time as a major player when it comes to identifying process improvements.
- Improved project scoping. If you lack a clear understanding of how long it takes for your team to complete specific tasks in their work, it’s challenging to scope work accurately with your customers. This leads to frustration on your team when they realize a project is way more than they bargained for, as well as with your customers when they realize you need to push out your deadline. Cycle time will give you a more accurate project scope than simply taking an educated guess.
- Outpace your competitors. Want to beat your competitors and retain loyal customers? Outpace your competition by being the partner who delivers within the quickest production time. You can use the real-time data and visibility provided by your cycle time to stay ahead of the market. Calculating cycle time will help ensure you’re putting your business at a competitive advantage and blowing your competition out of the water.
- A better understanding of business spend. Based on the cycle time of any given task, you can determine the worth or value of individual processes. Having an understanding of cycle time and how many resources are being paid to complete production tasks within a specific period can give you a clearer understanding of business spend. In turn, you can focus on optimizing the processes that create the most value and bang for your buck.
All about the cycle time formula
To best understand the cycle time formula, we need to talk about how cycle time works in relation to a couple of its closest formula counterparts: takt time and lead time.
First, it’s essential to understand that cycle time, takt time, and lead time are different. In particular, cycle time and lead time are necessary metrics in the Kanban project management method. These metrics often get confused for one another, and while they’re related, they differ and are used to measure productivity in different ways. Let’s take a quick look at each metric.
1. Cycle time
As we previously mentioned, cycle time represents the amount of time it takes to complete one task, production, service, or process from start to finish. It’s the amount of time required to produce a product or service or complete an entire cycle. We’ll get into the specifics of the cycle time formula later, but keep in mind that the formula is calculated by examining net production time (NPT) and the number of units produced within that production time.
2. Takt time
In contrast, takt time is the speed at which a product needs to be manufactured to satisfy customer demand. It’s similar to cycle time but emphasizes production speed in relation to how many customers are demanding your product or service.
In a perfect world, cycle time would match takt time. It makes sense, right? The rate at which your team produces a product, project, or deliverable matches the customer demand you’re up against. If your cycle time exceeds your takt time, your customers will be dissatisfied because you can’t keep up with the demand. And vice versa; if your cycle time is less than your takt time, there may be opportunities to improve your processes and work more efficiently. Your process might be too complex, or you might have too many staff members for the amount of demand you need to deliver on.
3. Lead time
The third formula we need to understand is lead time. Lead time is the amount of time it takes to run through the entire production cycle from the order stage to the final payment stage. This metric reveals the time that elapses between order and delivery and gives insight into how long your process takes from the customer’s perspective.
In a nutshell, taking a look at these formulas together can provide insight into how efficiently your business is operating as a whole. The cycle time formula, takt time, and lead time allow you to understand your business processes from the inside out. When you use these formulas together, you’ll experience higher overall customer satisfaction because you’ll be able to provide accurate estimates on how long production will take. It’s a win-win scenario for you, your team, and your customers.
So, how exactly can you use the cycle time formula to get a grasp on how long it takes to get specific tasks done? Let’s run through how to calculate cycle time and a few examples to help you get started.
How do you calculate cycle time?
How exactly is cycle time calculated? The calculation itself is a relatively straightforward division equation that goes as follows:
Cycle Time = Net production time (NPT) / Number of units produced
That’s pretty simple, right? Not so fast! When calculating cycle time, it’s essential to understand that the net production time shouldn’t take into account any breaks or waiting time that affect the production process. This number strictly measures the time it takes to complete the task or produce the product, minus the extra fluff and downtime.
Let’s take a look at a few examples.
Cycle time in professional services
First, let’s look at a project-based example that applies to the professional services industries. Suppose you work at an organization and lead the internal marketing team. This year, you want your team to focus on building out your overall content strategy, which includes producing more online content and boosting your SEO rankings. With this in mind, one of the strategies you’re implementing is producing more blog content.
You need to understand how many blogs your team members can produce before determining how the blog content will fit into the overarching content strategy.
Let’s say you have five content writers. Each content writer averages approximately two and half hours of production time for a 1,500-word blog post. You want to understand the cycle time to generate 20 blog posts total because you’d like to publish 20 blogs per month. Using these numbers, we can calculate the cycle time for the entire team as follows:
Cycle Time = 2.5 hours / 1 blog post totaling 1,500 words
The cycle time is 2.5 hours, and if we multiply this by the total number of blog posts we want to generate, we can see that it will take 50 hours for the team to complete 20 blog posts.
2.5 hours x 20 blog posts = 50 hours
Using this information, you can now build in the total number of hours needed to generate blog content into your team’s schedule and do a more effective job building out your content strategy.
Cycle time in delivery services
Here’s another example. Let’s walk through how cycle time applies in terms of a service delivery task. Suppose you work for the postal service and run the regular mail delivery routes. You run the same route every week, so you’re relatively quick at navigating the neighborhood.
You’re working a 12-hour shift with a one-hour lunch break and an additional 30-minute break. In this example, we want to eliminate the breaks, otherwise known as downtime, to ensure we are strictly calculating the production time only. So your net production time is 12 - 1.5 = 10.5 hours.
You manage to deliver bundles of mail to 300 addresses during your 10.5 hour production time.
Cycle Time = 10.5 hours / 300 bundles of mail
In this scenario, it takes approximately 0.035 hours, or 2.1 minutes to deliver one bundle of mail. That’s a speedy delivery!
Cycle time in production settings
We can also calculate cycle time in a production line setting to determine how much to price an individual item. Let’s say you’re starting a small business and will be selling handmade t-shirts. You need to know how many t-shirts you can produce in a certain period of time to know how much you should charge. In your pricing model, you want to cover labor and materials and make a profit.
You’re working a 10-hour shift with a 30-minute break. So your net production time is 10 - 0.5 = 9.5 hours. You produced 50 handmade t-shirts today.
Cycle Time = 9.5 hours / 50 handmade t-shirts
It takes you just over 11 minutes (0.19 hours) to produce one t-shirt, so you can use this calculation to account for labor costs and add them to your material costs. Be sure to throw in a little extra to make sure you’re profiting off your small business and monitor your cycle time as you progress to adjust your rates as needed.
Who calculates cycle time?
Not sure who is responsible for calculating cycle time? Cycle time impacts the overall efficiencies and success of any business, which means many different industries and roles calculate cycle time.
Whether you’re a project manager, product manager, manager of software developers, production line head, process improvement manager, manufacturer, supplier, or any level in between, you can and should be calculating cycle time. If you’re completing any sort of product delivery, service, or project from start to finish, you can calculate the cycle time for that task or set of tasks.
The good news is that you don’t have to worry about calculating cycle time manually and get bogged down in the math. There are a variety of tools that make calculating and tracking cycle time easy for anyone responsible for doing so.
For example, you can calculate cycle time using a tool like a cycle time calculator. And to boost your productivity tracking even further, you can use a project management tool to help you understand your workflows and calculate cycle time thoroughly and comprehensively.
How to optimize your production workflows with Wrike
Wrike can help you optimize your production workflows and stay on top of your cycle time calculations with ease.
How does Wrike help track cycle time? Here are a few noteworthy features that can make your calculations simple, easy to understand, and easy to share.
1. Use cumulative flow diagrams
Cumulative flow diagrams are data visualizations that work well with Kanban project management, and Kanban boards tie in well with cycle time and lean principles. These diagrams allow you to view cycle time, throughput, and work in progress. You can build a Kanban board directly in Wrike and use it to gather insights into productivity using your team’s analytics.
2. Compare estimated time and actual time
You can enhance your team’s time tracking by comparing estimated time and actual time spent. Remember, you’ll need the actual production time to calculate cycle time, but it can be helpful to compare the production time against your team’s predictions on how long tasks will take them.
- To measure and report on the estimated time it will take to complete a task, you can set up a custom field and have your team members enter the estimated time for a task.
- Then, you can use the time tracker feature and have your team members calculate the actual amount of time they’re spending on each task.
- Run customizable reports to compare and contrast the estimated and actual time spent.
3. Streamline collaboration
Wrike integrates with over 400+ leading software providers, which means you can optimize your production workflows without having to leave behind the tools you already know and love.
Additionally, collaboration is a necessary component of optimized workflows, and Wrike has you covered. With the ability to collaborate directly within the software and share documents and reports instantly, you can easily visualize your team’s processes at every stage while communicating more effectively.
4. Rely on templates
Working on a complex project that may include multiple cycle times as your team works through each stage of the project lifecycle? Use the Complex Project with Phases Template in Wrike to track cycle times from the initiation phase through the launch phase. Each phase of the project management lifecycle has its own folder, making it simpler to track multiple tasks within one project at the same time.
Although cycle time is often tied back to Kanban methods, you can also use this metric as part of an Agile methodology framework. Agile encourages delivering high-quality products in short periods of time (see how that works nicely with cycle time?) Use the Agile Teamwork Template to start planning sprints and working in shorter iterations.
Understand (and maximize) your team’s time
Nobody likes that panicked, stomach-dropping feeling when they realize they’ve over-promised and are bound to under-deliver. Fortunately, tracking and understanding your team’s cycle time will not only help prevent overcommitments to your customers but will also help keep your team members happy and working efficiently.
Cycle time isn’t just a measure of how much you’re producing — it’s a metric that will help you deliver high-quality work and leave you with loyal, satisfied customers.
Whether you’re using cycle time for product delivery, a service, software development, or another type of project, the cycle time formula can help you improve your customer satisfaction levels and continuously improve the way you and your team get work done.
Are you ready to start tracking cycle time for your team? Sign up for a free trial of Wrike and start optimizing your workflows and boosting customer satisfaction today.