What is Flow Time?
Flow time describes the full interval between the beginning and end of a particular process. The most common context is manufacturing where flow time would begin with the first stage of the assembly line and conclude with packaging or transit. However, the term can be used in any business context to discuss the time required to “make something from scratch.”
The Benefits of Flow Time
It’s an essential metric in lean manufacturing strategy and is usually one of the first things that companies should audit and improve. Leaders need to understand and appreciate flow time if they want to leverage the right strategy for their business. Careful study of individual processes is recommended before making specific cuts or changes.
How to Calculate Flow Time
Flow time is directly related to two other variables: works in progress (WIP) and average completion rate (ACR). WIP describes the number of units that are “in the pipeline” at any given time, which includes units in any incomplete stage of production. ACR describes the rate of unit completion, which is usually represented in a number per day.
The equation can be represented in several ways, including:
Flow Time = WIP / ACR
Example: If a company completes an average of 50 units a day and has an average of 200 units currently in progress, then their flow time would be 200 divided by 50 equaling 4 days.
What is Cycle Time?
When businesses talk about cycle time, they are referring to the average time it takes to produce units. This metric is often more relevant in an immediate or short-term context, particularly in environments with high throughput or turnover.
The Benefits of Cycle Time
Knowing cycle time lets you answer a crucial question: “When will the next one be ready?” Companies examine cycle time when they are considering scaling volume upwards or cutting down individual service times. Shaving even a few seconds off of average cycle time can mean a big difference in capacity and productivity over the course of a year.
How to Calculate Cycle Time
Cycle time is directly related to flow time and is also dependent on the average completion rate (ACR) variable. Mathematically, cycle time is the result of inverting the ACR, which is achieved by dividing 1 by the ACR.
Cycle Time = 1 / ACR
Example: If a company produces an average of 50 units a day, then the cycle time is 1 divided by 50, which equals 0.02 days.
Flow Time vs Cycle Time: What’s the Difference?
Flow time and cycle time are really two sides of the same coin, so the only difference is in perspective. Both concepts revolve around the time it takes to complete a particular process. Flow time focuses on the path an individual unit takes through the production process. Cycle time describes the total capacity and capability of the process as a whole.
They can be represented together in an equation to clarify their relationship. In this representation, flow time is equal to cycle time multiplied by total works in progress (WIP).
Flow Time = WIP x Cycle Time
Example: A company produces 50 units a day and has 200 works in progress throughout all stages of development. This means the ACR is 50 and WIP is 200. Cycle time is 1 divided by 50 or 0.02. Multiplying 0.02 by 200 yields a flow time of 4 days.
Flow Time vs Cycle Time: Who would use Flow Time and Cycle Time?
Any company engaging in lean management strategy should be using these terms to discuss and understand their internal processes. These two concepts both revolve around examination of fundamental value-adding workplace policies, activities and processes. These metrics can be a solid baseline benchmark to gauge production efficiency as well as a way to identify areas with the most potential for improvement.
Choosing Between Flow Time and Cycle Time: Real World Scenarios
The differences between all these terms can be confusing, especially in situations outside of conventional manufacturing. When in doubt, you can simply plug the numbers into the equation and use both metrics in the analysis. Just make sure you know the difference between flow, cycle, lead and process times.
Whether a company should focus on flow time or cycle time depends on their angle. Cycle time is more customer oriented. It’s about meeting demand, improving capacity or reaching the next goalpost. Flow time is more unit and process oriented, which means it’s a great perspective when looking for non-value-added (NVA) delays in development stages.
Time for Efficiency
Lean management is all about efficiency and efficiency is all about timing. Flow and cycle times are core concepts in six sigma programs for a good reason. Every business leader who is serious about fostering growth through sound management practices should get familiar with these terms and understand how to leverage them when making key decisions.