What is throughput time?
Throughput time is the total elapsed time from the first step of a case to its last — including every queue, weekend and rework pass, not just the time somebody was working on it.
Also called cycle time, lead time.
Throughput time in plain words
It is measured on the clock, not on the timesheet. If an invoice arrives on the 2nd and is paid on the 27th, its throughput time is 25 days regardless of the forty minutes of actual work inside it.
How is throughput time calculated?
throughput time = timestamp of last activity − timestamp of first activity
Report the median as well as the mean. One case stuck for a year moves the mean and tells you nothing about the typical case.
Throughput time: a worked example
The same invoice, measured three ways.
- Effort recorded on it
- about 40 minutes
- Time in the final approval step
- 2 days
- First stamp to last stamp
- 2 Apr to 27 May
- Throughput time
- 55 days
Only the third measure tells you how long the cash was unavailable, which is the only one working capital responds to.
Why does throughput time matter?
Working capital is throughput time wearing a currency sign. Every day a case is open is a day the cash behind it is unavailable.
Which statistic should you report?
| Statistic | What it is for |
|---|---|
| Median | The typical case. Report this as the headline |
| P80 | The tail you are actually exposed to. Report it beside the median |
| Mean | Almost never. One abandoned case moves it and it hides the shape |
| Spread between median and P80 | How predictable the process is, which is often the real problem |
A median of 23 days with a P80 of 41 is a different process from a median of 23 with a P80 of 26, and only the second one can be planned around.
Where does throughput time mislead?
Throughput time says nothing about where the time went. A 25-day invoice with one 23-day queue and a 25-day invoice with five 5-day queues need completely different fixes, and the headline number cannot tell them apart.
What do people get wrong about throughput time?
- Excluding weekends and holidays
- Cash does not take weekends off. A working-day figure flatters the process by roughly 40% and does not match the interest you pay.
- Reading the headline without the shape
- A 25-day process with one 23-day queue and a 25-day process with five 5-day queues need completely different fixes. The total cannot tell them apart.
How does Crestline measure throughput time?
Crestline reports the median and the P80 for every step and for the process end to end, and shows the wait between steps separately from the steps themselves.