What Is Lead & Cycle Time? Why Is It Important?
Lead Time and Cycle Time are important and excessively used terms in the world of Scrum and Agile. Both Lead and Cycle Time will prove to be an aid in building the efficiency of a team. These terms are also responsible for improving a team's product delivering ability. All in all, Lead Time and Cycle Time in Scrum boost a Scrum Teams' capability.
These two terms are simple to understand but people tend to get dazzled while trying to understand the difference between the two. This article is your go-to guide to understand these two terms clearly, and the use of Lead Time and Cycle Time in Agile and Scrum.
Understanding Lead Time
In a business organization, customer needs are given top priority and their demands are produced constantly. These demands reach the company as work requests. To define Lead Time, it is the interval amongst a new work's onset in your workflow and its ultimate exodus from the system. Lead Time is the total time from the moment a Stakeholder puts money to the moment when the order is delivered.
Nonetheless, the Lead Time is smarter to be estimated when a colleague is focused on the new work request. This way, the normal Lead Time will be more exact. In the absence of Lead Time, new work can go through months in a holding up line before someone can begin them and the Lead Time increases drastically. Lead Time can also be described as Cycle Time with the additional time taken for the production to start and the time taken to deliver the item.
To calculate Lead Time, the necessary information to be known is the date/time at which the order was received by the company and the date/time at which the Stakeholder got their order. The formula being:
Lead Time = Order received - Order delivered
Understanding Cycle Time
When a new task shows up on your list, it as a rule should be investigated and examined before it goes to the team for execution. Normally, the new work request invests some energy in a waiting line before a colleague gains the ability to begin dealing with it. Talking about the definition of Cycle Time, it starts as soon as the new task enters the "waiting queue" or the "in progress" stage.
Educator John Little (Institute Professor at MIT) proposed a theory after different research that the more work we have in the waiting queue, the better the framework process duration.
The condition got renowned as Little's law, and the process duration formula is:
Cycle Time = Work in Progress/Throughput
So, to sum it up, Cycle Time is the total time spent by the team members working on developing a product, until it gets ready to get shipped. Cycle Time is the time taken to fulfill one assignment. It involves the production time as well as the time when the product was left on the waiting stage. Keeping the Cycle Time reduced is the key to maintaining a manageable business.
Lead and Cycle Time in Agile & Scrum
- Working Agile means adopting Scrum as your framework and distributing your work into Sprints. This way the adequately mapped task can be done with Sprint Planning, Sprint Reviews, Sprint Retrospectives, and Daily Scrums. The first step to calculating Lead Time is to map out your value stream. This will help you in identifying the development sites which keep you up. By measuring the Lead Time, you can do a good job at improving that development area. About the Cycle Time, the quicker your Cycle Time, the faster you can bring up new characteristics to your clients and customers. Lead and Cycle Time in Agile are important and should be followed by the teams.
- These are not formal practices or recommendations in the Scrum Framework but the concepts can be borrowed. The main concern for the Scrum Teams working should be the adequate delivery of the value to the Consumers. Lead and Cycle Time are measures that will ensure and improve the delivery of value. Cycle Time is seen as an identifier of teams' performance. Measuring it will analyze the process followed by the teams and bring forward the issues that might persist. The stability of the teams' flow is also determined using Cycle Time.
Importance of Lead and Cycle Time
Lead Time:
- When the measuring of Lead Time is compared with a set standard level, the business organization can recognize the issues and identify areas where they are lacking.
- Reduced Lead Times will help a business to give a boost to good results and organize operations.
- By keeping a check on its Lead Time, a company can earn an upper hand over its competitors.
- Because measuring Lead Time improves productivity, it will automatically enhance customer satisfaction.
- Good calculation and reduced Lead Time will save the cost and maintain the working capital.
- Decreased Lead Time will provide good with lower shelf-life.
- Because customers want products quickly and without putting enough effort, measuring Lead Time will meet their needs.
- To keep a check on the inventory, teams must measure the Lead Time. It will help in maintaining an organized inventory.
Cycle Time:
- A reduced Cycle Time means reduced Lead Time to the market. Therefore, the company can release the item in the market early. To state an example, if there is a demand for smartphones with new features, there will be a release of new models every week. This means the Cycle Time of the production is decreased. This shows the importance of Cycle Time on the sale of goods.
- When your organization has a reduced Cycle Time than your rivals, this shows your upper hand on them that bags you more customers.
- A lower Cycle Time shows greater efficiency, decreased cost, and it shows that the time spent is less. All of it increases productivity and ROI.
- A common advantage of both, Lead and Cycle Time is the agenda of customer satisfaction. Because the delivery of products will be quick, the customers will be satisfied with your service.
- A reduced Cycle Time will give a boost to your productivity, also giving a push to the employee's morale.
- The lowering of Cycle Time can be gained by cutting the time wasted on non-beneficial activities and by simplifying the process, which means reducing the operation cost.
- Another benefit of Cycle Time is the improved understanding and handling of the corporate cost structure.
- A reduced or lowered Cycle Time gives companies creative solutions and early release dates.
How to reduce the gap between Lead and Cycle Time?
At times, work can invest a great deal of energy in the waiting section before a team member can begin chipping away at it. This causes a more prominent void between Lead Time and Cycle Time. Therefore, tasks arrive at the end-stage slowly.
To discover where this issue comes from, you can utilize two of the most important insightful instruments: Cycle Time scatter plot and Heat map.
- The first gives you point-by-point data regarding all tasks' Cycle Time for a foreordained time frame. Using this, you can find tasks that took a lot of time and effort to be finished.
- The next one shows you information for the aggregate sum of time that tasks spent in your work process's various stages. It assists you with understanding where errands invest the most energy while guiding you through your work process.
The two devices will assist you with finding problematic pieces of your work interaction and make a move to remove them. You need to keep in mind that work is a continuous cycle, and it changes from time to time.
How is Lead and Cycle Time measured?
You get numerous opportunities to look at and analyze your Lead and Cycle Times.
A conventional way is to utilize the collective flow graph. Lead Time can be calculated by drawing (and assessing) a horizontal line across the "Complete" and "In waiting for queue" phases. The width of the "in waiting queue" phase will determine the Cycle Time. To make the lead and Cycle Time simple to calculate, other diagram types can also be put into use. For example, distribution graphs that map the total number of cards vertically and the Lead and/or Cycle Time horizontally.
Or on the other hand, a scatter plot that shows the Cycle Time of individual cards in a particular period. The cards are plotted evenly depending on their finish date, and in a vertical direction for the number of days it took to finish them.
This way you can correctly measure lead and Cycle Time.
Final Verdict
Since the inception of Lead Time and Cycle Time, it has helped many fields of work in improving their workflow and made it much more efficient. It is very beneficial for the consumer or the Stakeholder as well because these metrics encouraged efficiency due to which consumers get an early delivery of their order.
Reference
- https://www.digite.com/agile/lead-time-cycle-time/
- https://www.referenceforbusiness.com/encyclopedia/Cos-Des/Cycle-Time.html
- https://efinancemanagement.com/costing-terms/lead-time
- https://www.Scrum.org/forum/Scrum-forum/6411/cycle-time-lead-time-Scrum
- https://kanbanize.com/kanban-resources/kanban-software/kanban-lead-cycle-time
