Lead time and cycle time are widely used terms in the world of Kanban and essential strategic metrics for project management. However, project leaders often get confused when trying to understand the difference between them and their importance. By the end of this reading, you will:
- distinguish the metrics easily and use them properly;
- learn why the difference between lead time and cycle time matters;
- understand how to measure both metrics.
Defining Cycle Time and Lead Time
Cycle time and lead time are two essential metrics in the Lean philosophy. Measuring the cycle and lead times of a process can help you better understand how work progresses over time. The analysis can uncover where problems lie in the process and how to improve it to ensure timely delivery of products/services to the end customer.
What Is Lead Time?
Lead Time Definition:
Lead time is the amount of time that passes from the point a new work item is requested to the point it is completed.
In Kanban, it’s recommended to measure lead time once a team member has committed to a new work request (in other words, the request has exited the backlog and is on a commitment point in the process).
Visualization of lead time on a Kanban board
This way, the average lead time in a Kanban system will be much more accurate. Otherwise, you can have hundreds of new work items that can spend months in a waiting queue before somebody has the capacity to start them. As a result, lead times will increase dramatically.
What Is Cycle Time?
Cycle Time Definition:
Cycle Time is the amount of time a team/ person spends actually working on a work item up until it is ready for delivery.
While lead time measures the whole process since the arrival of new demand, cycle time analyzes those areas of the process where teams are actively adding value to the work at hand. In other words, on a Kanban board, the cycle time metric usually collects data whenever the work item moves to "in progress".
Visualization of cycle time on a Kanban board
To keep a stable cycle time, you need to keep an eye on your overall WIP. Regarding that, professor John Little (Institute Professor at MIT) concluded after various types of research that the more work we have in progress, the greater the system's cycle time.
The equation became famous as Little’s law, and the cycle time formula looks like this:
Cycle Time = Work in Progress / Throughput*
*In the formula above, throughput is the total number of work items that pass through the process over a certain period of time. Work in progress (WIP), on the other hand, looks at how much active work lives in the system on average.
Lead Time vs. Cycle Time: Differences and Similarities
While both metrics give you insights into how quickly you deliver value to your customers, let’s summarize the differences in the table below:
| Cycle Time |
Lead Time |
| Cycle time starts when new work enters the “in progress” area of a work process, and somebody is doing actual work on it. |
Lead time measures the period between the appearance of a new work request in a workflow and its final departure from the system. |
| Provides information about the team’s value-adding production rate. |
Provides information about the overall value delivery process. |
| With the help of cycle time, you can gain insights into the areas of the process where work remains idle for a long time so that you can uncover bottlenecks. |
Tracking lead time will help you communicate realistic service level agreements with your customers. Furthermore, working toward making your lead times more stable will result in the improvement of your overall delivery predictability.
|
How Can You Measure Kanban Lead and Cycle Time?
To make the most of this valuable information, you will need Kanban software to collect historical data for your workflow automatically. For example, Businessmap is a powerful software solution equipped with a powerful analytics panel that can offer you all this information.
Cumulative flow diagram
One of the most convenient tools for measuring lead time and cycle time is the Cumulative flow diagram. This chart tracks the total amount of your work items that enter your workflow and accumulates completed tasks over time.
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To measure lead time, you need to customize your CFD to measure the data from the moment when new work enters a “Requested” column (waiting column).
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To measure cycle time, you need to customize your CFD to measure the data from the moment when new work enters an “In Progress” column (activity column).
The cumulative flow diagram allows you to quickly overview the average Lead time and Cycle time for a predetermined period.
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How to Shorten the Gap Between Lead Time and Cycle Time?
Sometimes, a work item can take a lot of time in a waiting column before a teammate has the capacity to start working on it. This causes a greater gap between lead time and cycle time. Thus, assignments reach the completion stage slower.
To find where this problem comes from, you can use two of the most relevant Cycle time charts for that purpose (both part of the analytics panel of our software platform): Cycle time scatter plot and Heat map.
The Cycle Time Heatmap gives you detailed information about all work items’ cycle time for a predetermined period of time. This way, you can locate work that took more time to complete.
The Cycle Time scatter plot shows you data for the total amount of time that work spent in your workflow's different stages. It helps you understand how predictable your process is once a team member starts working on a new job.
Cycle Time Scatterplot
Both tools will help you locate problematic parts of your work process and take action to eliminate them. You need to remember that work is an ongoing process, and it changes constantly.
Therefore, you have to monitor your workflow regularly and use the appropriate analytic tools. They help you to adjust your workflow and improve team efficiency.
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In Summary
Lead time and Cycle time are powerful statistics that:
- Provide you with valuable information about your workflow.
- Help you to identify bottlenecks in your workflow.
- Can help for a better understanding of your team’s work capacity.
Visualization of lead time on a Kanban board 
Visualization of cycle time on a Kanban board 
Cumulative flow diagram
Cycle Time Scatterplot
