Calculating Takt Time with Varying Demand

Published on May 1, 2013

Filed under: Business Processes

Calculating Takt Time with Varying Demand

This article is an excerpt from our “Ask the Expert Colum” featured in our May2013 newsletter 

Q:  In my business, customer demand is very erratic. It’s rare for us to have any repeatable pattern. Demand can vary every day, which makes calculating takt time next to impossible. I want to start designing my flow, but without being able to calculate takt, what should I do?

A:  As you indicated, when customer demand is truly variable, takt can be difficult to determine. We don’t want to proceed with designing the rest of our flow without first determining our takt, so here is what we can do when faced with a situation where we have erratic customer demand.

First, however, it’s important to make sure that the variation you are experiencing is not somehow being caused by internal factors. In an office environment, for example, demand could be erratic because an employee is batching work and only releasing it once the entire batch has been completed. An example of this might be because Sales is batching orders and only entering them on Fridays, or because there is a rush of order entry during the final week of each month in order to meet target metrics. In cases like these, we would want to eliminate or reduce these internal causes of variation to see if we can achieve more regularity in our demand.

If customer demand is truly erratic and not internally-caused, though, we will be unable to calculate takt. But even though we don’t know what the customer is going to request from us on any given day, we should still be able to determine how much we can produce within a given time period.

This number is what we would call our takt capability, which considers what we are capable of producing within a given amount of time in terms of both volume and mix.

Factoring in the mix is critical to takt capability. If we tell a customer that we can complete fifty quotes, we need be more specific and determine how many of those fifty quotes can be complex and highly technical and how many can be relatively easy quotes. If we don’t do this and the customer sends us a request where forty out of the fifty quotes are complex and highly technical, then we won’t be able to meet our takt capability and stay on time to what the customer wants.

It’s likely that we will need to develop more than one takt capability. The first takt capability we develop should satisfy 80% of daily demand conditions, but we might need other takt capabilities to handle increases in demand beyond the initial 80%.

Once we know the volume and mix of the work we can complete within a given timeframe, we can then proceed with designing the rest of our flow.