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Knowledge Base/Lean Metrics: The Relationship Between Lead Time, Cycle Time, and Throughput
Lean Production6 min read

Lean Metrics: The Relationship Between Lead Time, Cycle Time, and Throughput

This article clarifies why managers often prioritize inquiries about overall batch completion time over specific quality metrics like Cpk. It meticulously defines and differentiates "Lead Time" from "Cycle Time" and "Throughput," highlighting the importance of accurate understanding to avoid misreporting figures and effectively addressing managerial concerns.

CPK 1.08? Why is the Boss Asking "How Long Did That Batch Run" Again?

That morning, my PM rushed in and said: "Peter, that customer's shipment, we originally told them it would arrive by Friday, but now it's stuck at the Test station. I don't think we'll make it. Their boss is asking, how long did this batch take from start to finish? Why is it so much slower?"

Doesn't this scenario sound familiar to all of you? Especially when yields plummet or delivery dates are delayed, the first thing the boss or customer will ask is definitely not about your Cpk (even if you achieve Cpk 1.67, they won't care). They just want to know: "Where is my order? When will it be ready?" Simply put, what they care about is Lead Time.

What's the Problem? Clarifying Lead Time, Cycle Time, and Throughput

Let's be honest, often people confuse Lead Time and Cycle Time, thinking they're roughly the same, just different ways of saying "time." But the devil is in the details; if you get it wrong, the figures you report to the customer will be vastly different.

  1. Lead Time: Simply put, it's the total time "from when you place an order until you receive the goods." What does it include? It includes your order processing, scheduling, raw material waiting, actual manufacturing, and any intermediate waiting times, inspection times, and even shipping times. For the customer, they only look at this number. For example, if a customer gives you an order on Monday, and you say it will be delivered on Friday, then the Lead Time is 5 days.

  1. Cycle Time: This is what engineers most frequently observe, specifically referring to the time spent on "actual processing." Suppose a wafer moves from station A to station B, and the machine actually takes 30 minutes to process it, then this 30 minutes is the Cycle Time. However, if this wafer waited 2 hours before station A, and another 3 hours before station B, these waiting times are not counted in the Cycle Time.

  1. Throughput: This is easier to understand; it's "how many products are produced within a unit of time." For example, if you can produce 1000 wafers per day, then your Throughput is 1000 pcs/day. This number is closely related to your equipment utilization and efficiency.

In other words, Lead Time includes a lot of "non-value-added" waiting time, while Cycle Time is the actual processing time. When the boss asks "how long did the batch run," they are asking about the Lead Time.

How to Implement This in Practice?

How can we reduce Lead Time? The most direct approach is to start by "reducing waiting times."

Suppose your process has three stations: A, B, and C:

  • Station A Cycle Time: 10 minutes; Station B: 20 minutes; Station C: 15 minutes.
  • However, actual observation reveals that wafers wait an average of 3 hours from leaving Station A to arriving at Station B (because Station B is a bottleneck), and another 1 hour from Station B to Station C.
  • So, the total actual processing time (sum of Cycle Times) for one wafer is 10+20+15 = 45 minutes.
  • But its Lead Time is 45 minutes + 3 hours (A->B waiting) + 1 hour (B->C waiting) = 4 hours 45 minutes.

So, here's the point: to improve Lead Time, the first step is to identify where those "waiting times" are and why they occur. Often, these waiting times constitute the majority of the Lead Time.

The Most Common Pitfall: Only Looking at Cycle Time, Not Bottlenecks

When I was a new PE, to reduce Lead Time, I desperately argued with RD, saying: "Can this process be shortened from 20 minutes to 15 minutes?" The RD rolled their eyes and said: "Brother, this is already the fastest; any faster, and the yield will explode!"

Later, I realized that even if you reduce the Cycle Time of Station A from 10 minutes to 5 minutes, or even to 1 minute, if Station B remains a major bottleneck, requiring a 3-hour wait every time, your Lead Time won't significantly improve at all. It's like upgrading a sports car's engine to an F1-grade one, only to spend all day in traffic – what's the use?

Simply put, you must identify the bottleneck station in your process and then find ways to solve its waiting issues. This could involve adding more equipment, improving equipment stability, increasing equipment utilization, optimizing scheduling, and so on. When you increase the Throughput of the bottleneck station, the Throughput of the entire process will naturally increase, and only then can Lead Time truly be shortened.

One Thing You Can Do Today

Open your MES system, pick a random batch, and see how long it waited at each station.

Want to try it yourself?

Every tool mentioned in this article is available on InsightFab — just upload a CSV to analyze.

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