Introduction
As a manufacturer, cycle time directly impacts your profitability. Overestimating your turnaround time or being blindsided by production delays will force you to either miss or pay extra expenses to meet deadlines, creating a stressful and unsustainable business environment. In this blog, we will review how to measure and maximize your cycle time.
What is Cycle Time?
Cycle time is the total amount of time it takes to produce products from raw materials to finished goods. Depending on your purpose, you can also define it as the time it takes to complete a single manufacturing operation on one or multiple units, but we will be using the first definition to look at cycle time more broadly.
Cycle Time Formula
Cycle time can be thought of as net production time, which includes non-productive hours like queue time (time spent waiting for a task to start).
Cycle Time Formula:
Productive hours + Non-productive hours = Cycle time
or
Process time + Inspection time + Movement time + Queue time = Cycle time
Productive Hours:
Process time: the time spent on the actual manufacturing process
Inspection time: the time spent on examining the product for defects to ensure its quality
Non-Productive Hours:
Move time: the load and unloading stage when materials and products are transported between the warehouse and workstations
Queue time: the waiting time before any task commences
Maximizing Cycle Time
As this formula shows, there are numerous factors that impact cycle time. Each of these factors naturally fluctuate, particularly when there is a shift at your organization like hiring more workers. Rather than having to manually calculate cycle time or attempt to track it in a spreadsheet, you can set up your ERP to automatically receive production data to accurately calculate cycle time. With an ERP, you can use this cycle time data to set realistic fulfillment estimates and decrease excess waste. In addition, the ability to compare real-time data allows you to see weak points in your production line that are causing unnecessary slowdowns. Making your cycle times faster increases efficiency, profits and customer satisfaction. With this data, you can also see valuable insights on business spending. After all, your business processes are meant to add value to your production process, but some paid individual processes don’t. By taking a critical look at the data, it is possible to recognize these ineffective systems to come up with cost-effective, value-based alternatives. If you want these cycle time benefits but don’t know how to achieve them with your current software, look to a consultant like Datix. As ERP experts with 25 years of experience supporting manufacturers, our team focuses on understanding your business processes and challenges in order to offer the best possible software solution. Learn more about our business-first approach.
Wrap Up
Cycle time is deeply instructive in understanding the efficiency of your business. An ERP makes calculating cycle time a simple process if the system has the necessary tools.
Read Why Manufacturers Should Invest in a Modern ERP
About Datix
With over two decades in the industry, Datix is the ERP consultant of choice for manufacturers and distributors. We believe in “being the best with the best” and look for partners who match our commitment to solving real issues and doing what it takes. Our in-depth analysis of our clients and their business needs allows us to maximize their software investments to the fullest.
