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Delivery Cycle TimeA Measure of Internal Business Process Performance:

Delivery cycle time is an important measure of internal business process performance. Performance measures are found on the balanced scorecards of the companies. Examples of the some performance measures can be found on characteristics of balanced scorecard page. Most of the performance measures are self explanatory. However, three are not - delivery cycle time, throughput time, and manufacturing cycle efficiency (MCE). On this page, deliver cycle time is defined, explained and calculated.

Definition and Explanation:

The amount of time from when an order is received from a customer to when the completed order is shipped is called delivery cycle time. This time is clearly a key concern to many customers, who would like the delivery cycle time to be as short as possible. Cutting the delivery cycle time may give a company a key competitive advantage - and may be necessary for survival. Consequently, many companies would include this performance measure on their balanced scorecard.

Delivery Cycle Time and Throughput (Manufacturing Cycle) Time

Formula:

 Delivery Cycle Time = Wait time + Throughput time

ExampleCalculation of Delivery Cycle Time:

Novex Company keeps careful track of the time relating to orders and their production. During the most recent quarter, the following average times were recorded for each unit or order:

 Wait time 17 Inspection time 0.4 Process time 2 Move time 0.6 Queue time 5

Goods are shipped as soon as production is completed.

Required:

Calculate the delivery cycle time.

Solution:

Delivery Cycle Efficiency = Wait time + Through

= 17.0 days + 8.0 days*

= 25.0 days

*Throughput time = Process time + Inspection time + move time + Queue time

2.0 days + 0.4 days + 0.6 days + 5.0 days

= 8.0 days

Relevant Articles:

 » Definition and Explanation of Balanced Scorecard » Characteristics of Balanced Scorecard » Delivery Cycle Time » Throughput (Manufacturing Cycle) Time »

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