Definition: Throughput time is the time that it takes for a product to be manufactured. This duration includes the time required for the production process as well as the other time periods associated with converting raw materials into finished goods. Throughput time is also referred to as manufacturing throughput time.
What does Throughput Time mean?
Manufacturing companies monitor throughput time in their effort to increase efficiencies and profits. The entire process can be broken up into the following activities: ⇨ Processing time: The actual time to manufacture the product. At this stage, raw materials are converted into finished goods. ⇨ Inspection time: Finished goods are inspected to verify that they meet quality norms. Remember that there may be a need to conduct inspections during various stages of the manufacturing process as well. ⇨ Move time: Materials and work-in-process need to be moved within the production area. Finished goods have to be shifted to the storage area. ⇨ Queue time: The time spent in waiting for the next stage of the process. A bottleneck at one step could lead to an increase in the queue time. Throughput time is the sum of the four stages listed above. Throughput time = Processing time + Inspection time + Move time + Queue time
Example of Throughput Time
Veslec Inc., a manufacturer of portable power generators, conducts a review of its manufacturing processes. The study that it carries out reveals that the throughput time for producing a generator at its plant is: Processing time: 8 hours Inspection time: 2 hours Move time: 1 hour Queue time: 8 hours As the queue time is as long as the processing time, an investigation is conducted to determine the reason for this. The company finds that a particular stage of the manufacturing operation is holding up the entire line. It decides to install additional machinery to resolve this problem.
An analysis of throughput time can help a manufacturer to identify the stages of the manufacturing process that result in delays. The company can then take corrective action. This could result in greater efficiencies as well as reduced costs.