Lead Time & Cycle Time

Intermediate

difficulty

Stage 4

Agile IQ® Level

Metrics

Practices

Lean

Framework

Introduction

Transitioning from traditional Waterfall delivery to agile delivery involves many changes in the way we work. One fundamental change is the way we plan and forecast the completion of work. We shift from a heavy emphasis on work package-based, milestone-based estimations more towards capacity-based estimation underpinned by team velocity.

Even with the latter there is still a need to better understand time to complete work. Time matters to customers, workers and organisations even if we do not estimate work items in hours or days. [1] It helps us better understand our work and improve both quality and productivity.

WHAT IS CYCLE TIME?

Cycle Time is the time required to produce a part or complete a process, as timed by actual measurement. [2] A system of work to deliver value may comprise of many processes, each with their own cycle time.

Example: A waiter takes an order from a customer in a restaurant and passes the order on to the kitchen staff. The time to prepare the food involves one or more separate cycle times (different processes).

WHAT IS LEAD TIME?

In the strictest sense, Lead Time is the time required for a product to move from idea through to Done, all the way through a process or a value stream from start to finish. [2] It is the entire duration to deliver value.

Example: A customer orders books from an online website. The Lead Time is from when the order is placed to when the customer has the books in their hands.

WHY IT IS IMPORTANT

Productivity can be improved by removing waste from processes. Lead Time and Cycle Time analysis can provide us direction as to a) where to focus our attention for improvements, and b) where waste resides in an end-to-end process. By reducing waste in end-to-end delivery, costs can be reduced, customer experience can be enhanced, and it makes work more enjoyable for staff as common annoyances can be mitigated or eliminated.

For Product Owners

Lead Time is perfect for communicating to stakeholders and users how long it will take to deliver on a request.
Cycle Time is useful for communicating to internal stakeholders when they are likely to see an item Done when it starts in any given Sprint.

For team members

Cycle Time is useful for planning. If 90% of size “L” items are in-progress for 6 days before they reach Done, then work on any such Product Backlog item should not commence later than day 3 or 4.

VALUE STREAM MAPS

Value stream maps are diagrams of every step involved in the material and information flows needed to bring a product from order to delivery. [3] These can relate to production-related related processes or design-related processes (concept to launch). [4]

As a basic introduction to value stream maps, common elements captured are:

Processes (including a central control process)
Process data
Time lines
Information flows
Inventory (where applicable)

Value stream maps differ from traditional process diagrams in that they capture performance data for the processes. Within a process we may capture data related to:

Cycle time (e.g. time to complete the process)
Changeover time (e.g. switching between instances such as a new order or product)
Value Added time (e.g. time with the process when the product was transformed)
Uptime (e.g. time when systems or equipment were in an operational state)
Number of workers (e.g. how many people involved in completing the process)
Size (e.g. a metric related to the volume of work)
Defect rate (e.g. how often the process encounters quality issues)
Time between processes (the time between when one processes finishes and the next process starts)

Applying Lead Time and Cycle Time to Forecasting

Having a greater level of quantitative information related to delivery times does not mean that we should stop using relative estimation methods. These insights will assist in providing more reliable estimates:

A better understanding of how work and valued is delivered
A better understanding of risks, delays and bottlenecks
Observed delivery times rather than estimates or best guesses
Process optimisation (opportunities), reducing variance

Things to watch out for

There may be a temptation to revert from relative estimates to time estimates.
Value stream maps are not an appropriate tool for unstable or unpredictable processes.
Value stream maps as used in the manufacturing sector may not be appropriate for audiences in other sectors. Consider modifying the diagrams from the “classical method” to suit your audience without losing the value and intent of the tool.
Analysing processes may be time consuming and require the attentive time of many staff members (e.g. disruptive to daily work).

Actions to try

Identify ways to automate the collection process data.
Pick a process to measure. Start with the basic metrics flow [5] before moving onto more deeper analysis.
Do not simply analyse processes. Look for optimisation opportunities and implement them.

References

1. Shook, J. (2020) Time to Make Time. https://www.lean.org/LeanPost/Posting.cfm?LeanPostId=1112

2. Lean Lexicon – Cycle Time. https://www.lean.org/lexicon/cycle-time

3. Lean Lexicon – Value Stream Mapping. https://www.lean.org/lexicon/value-stream-mapping

4. Rother, M. & Shook, J. (1999) Learning to See: Value Stream Mapping to Create Value and Eliminate Muda

5. Vacanti, D., Yeret, Y. & Scrum.org (2021) The Kanban Guide for Scrum Teams. https://www.scrum.org/resources/kanban-guide-scrum-teams

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