These three terms trip people up constantly, because in everyday speech they overlap. In VSM they mean specific things.
Definitions
- Lead time: time from a customer request to a customer receipt. End to end, including all wait time.
- Cycle time: time for one unit to move through a specific stage (or the whole process, if unqualified).
- Throughput: units completed per unit time. The inverse of average cycle time in steady state.
Little's Law
The one equation that ties them together: Work in Process = Throughput x Lead Time. Reduce WIP without changing throughput, and lead time drops proportionally. This is why work-in-progress limits are the single most powerful lever in Lean.