You might be a little confused as to what is the correct method used to calculate cycle time. In this article, we will explain what is involved with cycle time, how to calculate cycle time and interpret it as it applies to the production process.
Cycle time also referred to as throughput time, is the amount of time that is required to manufacture or produce a product, brand or service.
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It is essentially the total sum of time that the designated team has spent in the production cycle of a particular item. You also include the value added time as well as non-value added time with the cycle time.
What is value added time versus non-value added time?
Value Added Time
Activities that alter the form or function of a service or a product. Value added time includes the assembly, the order of any raw materials, prep time, the decision-making process and so forth. Any activities or processes for which a customer should be willing to pay.
Non-Value Added Time
Amount of the cycle time that is not involved in actively manufacturing the item. Non-value added time refers to move time, wait time and inspection time. These are those values for which a customer would not be willing to be billed on their invoice.
How does cycle time differ from lead time?
While cycle time is the overall amount of time used to manufacture an item, “lead time” is the amount of time from which the order was first requested by the customer till the customer has received it.
How is cycle time calculated?
Cycle time is calculated by adding the total process time, move time, wait time and inspection time, as well as any other measure of time that involves the overall manufacturing process. It is the total of all of the various measures of time from which a product is started and ends once the customer has received the product or the service has been delivered.been performed.
Cycle Time Formula
Cycle Time = Process time + Move Time + Wait Time + Inspection Time
Involves all of the steps in the production, manufacturing and assembly processes that are required to build the item. It is a value added time and consists of designing, manufacturing, assembly and any of the other steps required in the actual production of the producing. Process Time is the only step of the cycle time that is considered a value-added time.
is that amount of time in which the raw materials and WIP (work-in-progress) inventory is transported from one part of the facility to another. It accounts for any transportation time during the actual production process from one part of the facility to another. It accounts for any transportation time during the actual production process.
Number of hours that a product is idle while it is awaiting the next stage of the manufacturing process.
Total number of hours that have been spent on the inspection of either a partially or finished product. As a general rule, most manufacturers inspect their product at multiple points of the production process to ensure that the product is completely free from any and all damages and defects. defects.
How can cycle time be interpreted?
Cycle time can be used to determine many factors. Managers and accountants in the manufacturing industry often use cycle time to analyze the overall manufacturing process, calculate the cycle efficiency, and look for ways to improve the manufacturing process to improve the quality of their product or service and lower overall manufacturing costs.
Cycle Efficiency, or CE, is the ratio that is used to measure the overall effectiveness and productivity of the manufacturing process by comparing the total production time with the value added time. The cycle efficiency ratio is determined by dividing the value added time by the total cycle time. Managers can then analyze the amount of time was idle or wasted in the overall manufacturing process as well as how much time was spent in active labor.
Cycle time may also be used to determine the following factors:
- Daily operating time for each person and piece of equipment
- Average production rate/output per period
- Amount of time required for each step of the process
- The amount of material/workstations/people that are needed for the manufacturing process.
A lot of manufacturing companies uses cycle time as an indicator of their overall production. The goal of most of these businesses is to decrease their overall cycle time to reduce total manufacturing costs and improve their production rate. As well, they will be able to gain insight into how to improve profits from cost savings, gain a better understanding of the corporate cost structure and how to get their products to on the market soon rather than later.
Cycle time reduction is beneficial for the company as it can increase both profits and overall productivity. It will be a process to implement the necessary changes and improvements, but a reduction in cycle time can give your business that added competitive edge you will need to succeed in areas such a pricing, quality, meeting deadlines on or ahead of schedule and lead time.