Lead time vs cycle time: what your customers actually feel

Key takeaways

Lead time vs cycle time is the difference between how long the customer waits and how long the work takes once someone starts it. Customers feel lead time. In most office processes, lead time is several times cycle time because work waits before anyone picks it up. Shortening that wait is usually the fastest efficiency gain available.

• Lead time: request received to result delivered.
• Cycle time: work started to work finished.
• Touch time: the minutes someone is actually working on it.
• Most of the lead time in office work is waiting, not working.

What is the difference between lead time and cycle time?

Lead time runs from the moment a customer asks to the moment they get the result. Cycle time runs from the moment someone starts work on it to the moment it is finished. The gap between them is queue time: the request sitting in an inbox or on a list. Touch time sits inside cycle time and counts only active work.

Definitions vary between textbooks, so write down the start and end points you are using and keep them the same each time you measure.

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Why do customers feel lead time, not cycle time?

Customers only see the whole wait. A quote that takes 40 minutes to prepare but arrives on day four feels slow, however quickly it was written. Businesses tend to measure cycle time because it is under their control, which hides the queue. Customer satisfaction follows lead time, and so do lost sales when a competitor answers first.

• Quote turnaround time: how fast should you send a quote?
• Slow response to enquiries: what it costs and the fix

How do you measure both?

Take ten recent items in one process. For each, record when the request arrived, when work started, when it finished and when the customer received it. Lead time is arrival to receipt. Cycle time is start to finish. The average gap tells you how much of the wait is queue.

• 1. Pick one process with a clear request and result.
• 2. Record four timestamps for ten recent items.
• 3. Calculate average lead time and cycle time.
• 4. Note where items waited longest and why.

• Process cycle efficiency: how much of the wait is work?
• Work ageing report: find the jobs that have been waiting

What does the gap look like in numbers?

In an illustrative example, new client onboarding has a lead time of eight working days but a cycle time of two days and a touch time of about three hours. Six days are spent waiting for someone to start, mostly because the person who sets up accounts also handles client calls. Moving the setup to a team that works the queue daily brings lead time to about three days. Example figures only.

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How do you shorten lead time?

Shorten lead time by attacking the queue first: give the work a daily owner, limit how much is started at once, remove approvals that add waiting, and process items as they arrive rather than in weekly batches. Only then look at making the work itself faster. Outsourcing helps when nobody in-house can work the queue every day.

• Approval bottlenecks: when sign-off holds up the work
• Batching admin tasks: when it helps and when it slows you
• Turnaround time: what to agree with an outsourced team

When is a long lead time acceptable?

A long lead time is acceptable when the customer expects it and the wait does not cost you the sale, such as a scheduled annual review. It is also unavoidable when you wait on a third party, such as a lender or a supplier. Measure your part separately so you know what you can change.

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What does this look like in practice?

A pattern we see: a firm proud of its fast turnaround measures from when work starts. Measuring from when the customer asked shows the real lead time is three times longer. The first fix is rarely about working faster. It is about who picks up new requests and when.

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• BPO Solutions for UK businesses

Lead time checklist

Use these checks on any customer-facing process.

• Define lead time from the customer's point of view.
• Record four timestamps for ten items.
• Find the longest wait and who it waits for.
• Give the queue a daily owner.
• Measure again after four weeks.

• Outsourcing efficiency KPIs: prove the work got faster

Next step

Send us the process where customers wait longest. We will help you split the wait into queue and work, and say what would shorten it most.