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# Throughput (Manufacturing Cycle) TimeA Measure of Internal Business Process Performance:

Throughput time or manufacturing 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, Throughput time or manufacturing cycle time is defined, explained and calculated.

## Definition and Explanation:

The amount of time required to turn raw materials into completed product is called throughput time, or Manufacturing cycle time. The relation between the delivery cycle time and the throughput time is illustrated below:

Exhibit 1-1: Delivery Cycle Time and Throughput (Manufacturing Cycle) Time

The throughput time or manufacturing cycle time is made up of process time, inspection time, move time, and queue time. Process time is the amount of time work is actually done on the product. Inspection time is he amount of time spent ensuring that the product is not defective. Move time is the time required to move materials or partially completed products from workstation to workstation. Queue time is the amount of time a product spends waiting to be worked on, to be moved, to be inspected or to be shipped.

As shown at the bottom of exhibit 1-1, only one of these four activities adds value to the product - process time. The other three activities - inspecting, moving, and queuing - add no value to the product and should be eliminated as much as possible.

## Formula:

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

## ExampleCalculation of Throughput Time or Manufacturing 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 throughput time or manufacturing cycle time.

### Solution:

*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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