Throughput time is the total amount of time that it takes to run a process in its entirety from start to finish. In business operations it describes the amount of time taken to complete key processes, such as processing an order, manufacturing a product or providing a service.
The term throughput time comes from the measure of throughput - or the business process flow rate. Throughput is the measure of inputs and outputs within a process and is an important aspect of business process management.
In manufacturing throughput follows a basic formula:
Inventory = Throughput x Flow time
Where inventory is the total number of units in a business process, flow time is the time the unit spends in the business process from start to end and throughput is the flow rate of how many units go through the process at a given time unit, eg. units / hour.
Why is throughput time important?
Throughput time can be a valuable tool in process analysis and measuring performance of a business operation to key goals. Throughput important in operations management because it helps organizations understand their production cycle, identify areas for improvement, and manage resources more efficiently. Throughput time also helps organizations understand their customer service levels and identify any potential bottlenecks and delays that may occur. By understanding the average throughput time, organizations can better plan their production and customer service processes.
Throughput time vs lead time
Lead time is the amount of time it takes to complete a process for a customer. The term “Lead time” originates the Lean manufacturing management principles, where it is defined as the time elapsed between a customer placing an order and receiving the product ordered.
While throughput time and lead time measure performance in very similar ways you can picture them as the two sides of the same coin. Lead time takes the customer's perspective of process time while throughput time measures the business resource perspective.
Throughput time vs cycle time
Throughput time and cycle time are also related but different measures of process performance. Cycle time is the amount of actual work time needed to complete one task excluding any downtime. On the other hand, throughput time is a measure of time a unit spends within a process. As such, one key difference is that throughput time will include delays such as queuing time, while cycle time doesn't.
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