Inventory Cycle Times: What They Are & Why They Matter

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This article was updated in March 2023 to reflect current industry definitions and new information.

Inventory cycle times are an important component in manufacturing operations, production scheduling and inventory control. Cycle times represent the speed by which your organisation delivers its goods or services to the market.

The cycle time of your inventory can be defined as the total time taken from the start to the finish of manufacturing activities. It includes the process time taken for the output of inventory stock and any delays where units of work wait to undergo the next step or action required in that work process.

What are inventory cycle times?

Cycle time is the fastest repeatable time in which you can produce a stock item and it can be measured as a time per part or unit. Simply stated, inventory cycle time is:

Production time + Waiting time / Through Put = Cycle time

While it is possible to measure production time based on the length of time taken to manufacture a single item, waiting time does not factor in unforeseen events such as staff absences, breakdowns or defects. As manufacturing productivity increases your inventory cycle time decreases.

Why are inventory cycle times important to track?

The faster a business can establish its inventory cycle time, the quicker they can get their products to market. If your cycle time is lower than your competitors, you will have a competitive advantage particularly if you are producing inventory stock that is quickly superseded by rapidly changing features and functionality such as electronics or smartphone devices.

A reduction in cycle time indicates that your organisation is operating at greater efficiency, it helps to keep costs lower and reduces the time spent getting your goods to market. This, in turn, increases profitability, ROI and customer satisfaction.

inventory cycle time

Improving inventory cycle time leads to greater brand reputation and faster fulfilment.

5 effective ways to reduce inventory cycle time

Cycle time reduction is achieved by simplifying and streamlining manufacturing processes and by reducing the time spent on activities that don’t value-add. Organisations can reduce inventory cycle times by:

1. Reduce wait time

The most direct and easiest way to reduce cycle time is by reducing the waiting time occurrences within the production processes. This can be achieved by ensuring production schedules can be meet, materials necessary for the production process are on-hand and employees are adequately skilled or trained in their roles.

2. Perform tasks in parallel

Often there are multiple tasks involved in the various production processes, by breaking down the work structure you can identify processes that can be undertaken in parallel to further reduce cycle times.

3. Process re-engineering

Process re-engineering identifies the best way to perform an activity by changing the sequence of tasks or eliminating some tasks to improve cycle time.

4. Improved scheduling

By identifying potential issues and bottlenecks in production activities you can optimise operations to reduce downtime. Revisiting the task schedule can also detect areas for improving the time management of employees and production processes.

5. Employee contribution

Employees are an obvious choice to provide input around those areas of the operation where improvement opportunities exist. You can achieve greater buy-in and will yield better results when staff working in the core process have been involved in generating ideas for improvements in cycle time reduction.

Finally, it is important to ensure when taking steps to reduce inventory cycle times you also take care that those steps taken do not deteriorate the quality of your product or service. A reduced cycle time while maintaining the quality of your inventory stock drives greater customer satisfaction, which in turn will improve revenues and profitability for your organisation.

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Melanie - Unleashed Software

Article by Melanie Chan in collaboration with our team of Unleashed Software inventory and business specialists. Melanie has been writing about inventory management for the past three years. When not writing about inventory management, you can find her eating her way through Auckland.

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