Definition: Cycle time, also called throughput time, is the amount of time required to produce a product or service. This time includes all production processes including value added time and non-value added time.
What Does Cycle Time Mean?
The cycle time formula is calculated by adding the total process time, inspection time, move time, wait time, and any other time used during the production process. Basically, the equation sums all of the time from which a product is started to when it is shipped to the customer.
Example
The process time includes all steps in the manufacturing and assembly process that actually build the product. This value added time consists of machining, design, assembly, and other processes to make a product or service. This is the only step in the cycle time that actually adds value to the product. The next three steps are necessary but don’t physically build anything.
Inspection time is the number of hours spent checking partially and fully finished products for defects. Most manufacturers have multiple inspection points in the manufacturing process to ensure goods are free of defects.
Move time is the time in which raw materials and work in process inventory is moved from one part of the factory to another.
Wait time consists of the number of hours a piece sits idle while the next stage of manufacturing is ready. For instance, a machine might be down, so materials have to wait for a day before being put into production. Another example is capacity problems. Machines might be running 24 hours a day and can’t keep up with demands, so materials have to wait at each stage until the machining process is free.
Managers and cost accountants use the cycle time to compute the cycle efficiency, analyze the overall production processes, and improve the way they produce products to lower overall costs.
