Cycle time, on the other hand, is a bit fuzzy. Perceptive managers intuitively realize that reducing cycle time is a good thing. But since it doesn’t show up as a line item in the income statement or balance sheet cycle time is not a compelling metric. When trying to explain the value of monitoring cycle time it is not long before people start checking their Blackberries.

Before going further, we need to better define cycle time. Granted, it is an overworked term since it has specific meaning in different applications. But for now, let’s take the broad view that cycle time is the total elapsed time between authorization of an activity and delivering the outcome.

A useful attribute of cycle time is that it can be used to measure the output of a complex set of interrelated processes or applied to bite-sized pieces at a functional level. Using manufacturing company as an example we can talk about the order to cash cycle time, or the work order to ship cycle time, or the time required for final assembly. As long as there are defined starting and stopping points the ability to measure cycle time provides great insight into performance.

The criticism that cycle time cannot be directly translated into a financial number is valid. (True, there are some Lean Accounting techniques that apply, but so far there is limited acceptance of these for financial reporting.) However, the fact remains that cycle time is a powerful and comprehensive metric since achieving cycle time reduction drives improvement in so many areas.

Just consider what must go right to achieve low cycle time:

• Wait times must be eliminated - and wait is often just another way to measure inventory
• Quality conformance times (such as required inspections) must be minimized
• Quality non-conformance times (such as defects and rework) must be eliminated
• Work must be performed in the most efficient manner possible
• Set-up times must optimized
• Move time must be eliminated
• Batch sizes must be reduced with the ultimate objective of one piece flow
• Downtime due to equipment availability, faulty scheduling or just poor planning must be eliminated

While the list goes on, it is apparent that reducing cycle time drives high performance in every area. In fact, reducing cycle times and, just as importantly, monitoring and maintaining the improvement is one of the most powerful ways to achieve and hold Lean Six Sigma benefits.

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