Takt Time: Where and When is it Applicable?
Takt time is a common lean concept, applicable and beneficial in a number of situations.
The idea, in a nutshell, is to produce product at the rate at which the customer requires it. If the customer demand averages one unit per production minute, produce the product at this rate (Takt time).
The math is simple: Divide the available production hours by the demand rate to determine the average time allowed to produce a product. If the customer wants 100 units/day. And, we’re planning to run one shift/day (less allowances) equals seven (7) production hours/day. We would need to produce one unit every (7 hrs * 60 minutes/hr)/100 units = 4.2 minutes. For this example: the unit takt time is 4.2 minutes.
While the benefits of producing at a rate, equal to customer demand, are obvious, there are additional questions that need to be answered regarding applicability of this concept in your specific situation:
How linear is the actual demand, i.e. how much does actual demand vary, period to period? How does the customer want to take delivery? Are there any shipping constraints? How large is the value-add work content?
Let’s take them one at a time: Takt time implies a reasonably level rate of demand. In some government contract businesses, this is indeed the case. However, in many industries, the actual demand varies significantly period to period.
Knowing that average demand is 100 units/day is of little value when actual customer demand regularly varies from zero/day to 300/day! If we were to produce at an average rate, while consistently meeting customer demand, we’d likely have to carry some finished goods inventory. This strategy has all of the typical “wastes” associated with inventory: Double handling, tracking, risk of obsolescence, hidden quality defects, tied up money and space, etc.
Another question: How does the customer want to take delivery?
Needless to say, producing at a nice linear rate, all month long, only to ship once/month, defeats much of the benefit of producing at a rate. All month long we’ll be building and storing inventory, double handling (put it into storage, then take it back out of storage to ship it), with all of the wastes associated with inventory.
One of the biggest benefits implied by being able to produce linearly, at Takt time, is the ability to produce essentially directly to the shipping process and to transfer the product immediately to the customer. I.e. we want to produce and ship at the takt time rate.
In the circumstance where the customer does NOT want daily linear deliveries, it often makes more sense to produce and ship JIT according to the customer’s shipping constraints. I.e. instead of producing linearly and accumulating the product to ship, it may make more sense to produce the shipping quantity, at a considerably higher production rate, and then immediately load and ship the product.
In our above example, assume that the average demand is 100/day, but the customer only wants delivery once/week. We might choose to produce at a takt time of 0.8 minutes/unit (500 shipping quantity, all produced in one day) and to pack and ship the shipment directly off the end of the production line.
If you have adequate dock doors, another alternative can alleviate some of the above issues. It involves a “drop off an empty, and pick up a full” transportation agreement. In this arrangement, you would produce at the “takt rate”, pack, and load the product directly into the trailer or rail car. The freight company, or your own drivers, then drop off a new empty trailer and pickup the full one for delivery to the customer.
Another typical extenuating circumstance is logistical. If the logistical costs of daily shipments are prohibitive, then some of the benefits of takt time are lost. We’d produce nice and linearly, but then have to accumulate and store the product waiting for an “efficient” transportation batch.
Another limitation to takt time usefulness is the amount of value-adding time required to produce the unit.
Let’s go back to our example, this time with no constraints on the shipping rate: i.e. the customer is willing to take daily delivery, and the transportation costs are not prohibitive.
Our computed takt time is 4.2 minutes/unit.
But what if the entire value-add time is less than 1 minute/unit? i.e. one production operator can produce a unit in less than 1 minute.
Does it make sense to spread out the work beyond 1 minute? Probably not!
Takt time applicability demands that the total value-add time is substantial enough to justify producing at a rate.
So what are some reasonable alternatives?
Where the above constraints are not an issue, go ahead and set up the line to produce at a rate. However, build in the flexibility, via overtime, flexible workforce, additional work stations, extra raw material, etc. to allow for the actual production rate to vary as required to meet, exactly, the customer demand.
It is imperative, for any world class operation, that we fulfill our customer commitments with religious precision. We have a simple mantra: “The day ends when the schedule is complete. Not the other way around.” World class companies consistently “Say what they’ll do, and do what they say.”
You can then work with your customer to identify, and reduce the reasons for any non-linearity of demand . All too often, these “reasons” are self imposed: column pricing (providing a unit price discount for the customer when he/she orders a large batch size), in-efficient supply chain (batched deliveries), false economies of production: “lot size optimization”, etc. We will address these issues in more detail in a future post.
The bottom-line message is this: Your lean tool kit contains a myriad of powerful techniques. Takt time is but one example.
What is critical, is that you and your people understand the basic philosophy and concepts of “lean” so as to utilize only those techniques, where and when they are appropriate, to your circumstances.
If you’d like to discuss your specific situation, write or call. We’ll attempt to be helpful, and there’s no charge.
Good luck on your lean journey.
PS: You may find our post “From Make to Stock to Make to Order” of interest. It addresses the changes needed to make “just what the customer wants, just when the customer wants it.”