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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Throughput time Q&A
Throughput time, also known as cycle time, in a production or service system is calculated as the total time taken from the initiation of the process to its completion. In other words, it is the length of time from when materials are first input into a process until the finished product is output. To calculate it, you sum up all the time periods involved in the process including process time, inspection time, move time, and queue time.
Throughput time is comprised of four elements:
- Process Time: This is the actual time taken to perform the work on a product or service.
- Inspection Time: This is the time taken to inspect the product or service to ensure it meets the necessary quality standards.
- Move Time: This is the time taken to move materials or information from one process or location to another.
- Queue Time: This is the waiting time, when the product, service, or information is waiting to be moved or processed.
An example of throughput time in manufacturing could be the production of a car on an assembly line. The throughput time would begin when the raw materials (like steel and plastic) first enter the production line and end when the finished car rolls off the line. This would include the time taken to weld the chassis, install the engine, paint the body, fit the interior, and perform final quality checks, as well as the time taken to move the car between these different stages and any time spent waiting in queues.
Throughput time and takt time are related but distinct concepts in lean manufacturing. As mentioned, throughput time is the total time from the start to the completion of a process. Takt time, on the other hand, is a measure of the maximum allowable time to produce a product in order to meet customer demand. Takt time is calculated by dividing the available production time by the customer demand. In a perfectly balanced system, the throughput time would be equal to the takt time, but in reality this is often not the case due to inefficiencies and variations in the process.
