Lead time: how long it really takes for the product to reach the customer
Lead time is the total time that passes from the moment raw material (or the order) comes in until the product goes out. It is not cycle time: most of the lead time is usually waiting, and that is where the improvements are.
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In one line
Lead time is the total time it takes to complete a process, from start to finish, including the waits; cycle time is how long an operation, or the slowest workstation, takes to deliver one unit.
What it is
The UNGS book calls it the total circulation time (TC): the sum of the times each activity in the process takes, measured from the moment the raw materials come in (t0) until the product goes out (tf). In its words, TC equals tf minus t0, and it notes that this time is also known as the response time to the customer's order, or lead time. It also warns that it must be distinguished from cycle time, "which is conceptually very different": cycle time is the cadence at which a unit comes out; circulation time is how long a unit spends inside the system.
An example to fix the difference: on a line of 4 workstations of 6 minutes each, one unit comes out every 6 minutes (cycle time), but each unit takes 24 minutes to go through the line (lead time), even with no waiting. If each part also waits 2 hours on a pallet before entering, the lead time is more than 2 hours and the cycle time is still 6 minutes.
What it is for
The Universidad Icesi article connects lead time with inventory: excess inventory anywhere in the process brings long delivery times. Since every part goes through the queue before each operation, cutting lead time means cutting work-in-process inventory and waits, which are pure muda. That is why lead time is one of the central indicators of Lean, along with takt time and the value stream map, which separates value-added time from waiting time.
How it is measured
- Choose where the process you want to measure starts (customer order, raw material intake) and where it ends (delivery, shipping).
- Follow one real unit, or several, with an in time and an out time at each stage: this is the most reliable way.
- Separate the time spent working on the unit from the time it waits in a queue or in transit.
- Repeat with several units and average, because lead time tends to vary a lot.
Real example
The case of the gear and chain line in Ciudad Juárez used lead time as one of its four indicators. Measured over 25 units, the initial lead time was 26.07 seconds per part, with a dispersion of 1.89. Three changes were tested and each was compared against that baseline: with poka-yokes, 23.87 seconds; with fixtures, 25.64 (no statistical difference); and with a rebalancing of the stations, 20.73. The solution that was implemented brought lead time down to 17 seconds, a 35% reduction. In that study the value is very close to the sum of the times of the four stations for one part, so "improving lead time" meant leveling out the workstations and removing times that added no value. The full case is in the article on Lean Six Sigma.
Template to use
| Stage | In time | Out time | Time working | Time waiting |
|---|---|---|---|---|
| (stage 1) | ||||
| (stage 2) | ||||
| Total | Lead time = final out time − initial in time | Sum of work | Sum of waiting | |
Once the table is filled in, the most uncomfortable finding usually shows up: the "time working" part is a small fraction of the total.
So you don't have to build it by hand, there is a lead time and value stream spreadsheet in Excel with the formulas already in place: it separates working time from waiting time at each stage and calculates what share of the lead time is work. The values it comes with are examples and must be deleted.
Benefits
- It measures the process from the customer's point of view: how long it takes to receive what they ordered.
- It makes waiting visible, which does not show up if you only look at cycle time.
- It is useful for comparing before and after each improvement.
Limitations to keep in mind
- The term is used in different ways depending on the source and the company: it is best to always define where the measurement starts and where it ends, as the UNGS definition does (t0 to tf).
- It varies with the product mix and the workload: an average of a few units can be misleading.
- Reducing it without looking at quality can make other indicators worse.
In summary
Lead time is the time a unit lives inside the system, and it is almost always dominated by waiting, not by work. Measuring it forces you to look at the whole flow, and bringing it down generally means removing inventory and bottlenecks.
More on Work Study and Processes
Fatigue and rest breaks
A standard time has to include the rest the task requires. How much depends on energy expenditure, posture, force and environment, and on differences between people (age, body size, sex) that are worth understanding in order to design workstations that serve many people, and not to judge anyone by an average.
Flow process chart: the 5 symbols to map any process
The flow process chart (cursograma in Spanish) records everything that happens to a part or a person using just 5 symbols: not only what gets produced, but also every transport, delay, inspection and storage that nobody counts today.
Learning curves
When a task is repeated, each unit gets made faster, and that improvement follows a predictable pattern: every time the cumulative quantity doubles, the time per unit drops by a fixed percentage. It is useful for setting standards for new workers and for small batches.