How to Calculate Throughput Time

A simple calculation is all that is required to calculate throughput time.

One strategy to increase efficiency in any company or organization is to calculate the throughput, or cycle, time. Companies need to know how much time is taken to produce goods, from manufacturing until products leave for the stores. Throughput time will consist of many components, like process time, inspection time, move time and queue time. The cycle will vary with each industry, along with the components and time taken, but can be calculated by almost anyone.

Things You'll Need

• Calculator

Instructions

1. Measure the process time. Process time is the time taken to manufacture the goods. For example, if you are manufacturing toys, and it takes an employee one hour to assemble and package the toy, this would be your process time.

2. Measure the inspection time. Inspection time is the period where the goods are inspected by the quality assurance staff to see whether they adhere to the specified quality. The length of time required for inspections depends on the complexity of the product being produced.

3. Calculate the move time. The move time is the time taken for the finished product to be moved from the place of manufacture to the retail storefront, or to the customer in the case of direct sales. Move time is typically measured in a period of days, which can vary depending on the shipping method used and the priority of the package.

4. Measure the queue time. Queue time is the time the product sits idle in the storefront before being purchased. The time it waits to get inspected or before getting packed and shipped, along with any other "waiting" time, is factored into the queue time. The queue time may be measured in a period of days to months, depending on the product.

5. Perform the calculation to estimate the throughput time. Add each of the time categories together: Throughput Time = Process time + Inspection time + Move time + Queue time.

Tips & Warnings

• Throughput time calculation can be done manually. However, depending upon the industry, it can also be done using special equipment or even with software which can be downloaded from the Internet.

References

• Accounting for Management: Balanced Scorecard: Throughput Time
• Reliasoft: Calculate Throughput