1. 1 A Fundamental Principle of TPS Produce to Demand 1.Make only what is needed when it is needed. 2.Base production and planning on Takt Time. 3.Develop flexible production lines. When demand changes, the line changes. Usually, labor changes to maintain labor efficiency.

2. 2 Produce to Demand…Takt Time 1.Takt Time is the pace at which the customer is buying a particular product. 2.Takt time is not how long it takes to perform a task. It is customer demand, not cycle time. 3.Takt time is calculated by taking the available time to work and dividing it by the demand for that period of time 4.Takt time cannot be reduced or increased except by a change in sales or the available time to work

3. 3 Takt Time Formula Productive Time Available per period Number of Required Units per period Time available per Shift (8 hours) Breaks (2 at 10 minutes each) Lunch Productive Time Available = 480 minutes -20 minutes 440 minutes or 26,400 seconds Example: Productive Time Available Calculation

4. 4 Takt Time Formula Productive Time Available per period Number of Required Units per period Units = 72,000 units ordered per month = 1,200 Units Required per Shift 60 shifts per month (3 shifts x 20 days) Example: Number of Required Units Calculation

5. 5 Takt Time Formula Productive Time Available per period Number of Required Units per period Takt Time = 26,400 seconds available per shift = 22 seconds / unit 1,200 units required per shift So…the line should make one unit every 22 seconds to meet customer demand. Example: Takt Time Calculation

6. 6 123 seconds = 5.59 or 6 operators required 22 seconds Example: Operators Required Calculation Number of Operators Required Formula Sum of Manual Cycle Time Takt Time

7. 7 Labor Efficiency Formula (Sum of Manual Cycle Time / 3600seconds per hour) x Demand per Shift x100 Current Manning x Available Hours per Shift Total manual time to make one unit Demand per shift Current Manning Available hours per shift 123 seconds 1,200 units 7 direct operators 7.3 hours (440 minutes) Example: Variables

8. 8 (123 seconds / 3600 seconds) x 1,200 units per shift x100 = 70% labor efficiency 7 operators x 7.3 hours per shift Example: Labor Efficiency Calculation Labor Efficiency Formula (Sum of Manual Cycle Time / 3600 seconds per hour) x Demand per Shift x100 Current Manning x Available Hours per Shift

9. 9 26,400 seconds per shift = 1,553 unit capacity per shift 17 second cycle time bottleneck station* Example: Capacity Calculation Line Capacity Formula Productive Time Available (seconds) Bottleneck Station Cycle Time* (seconds) *Bottleneck Station Cycle Time = Machine C/T + Manual Load / Unload C/T

10. 10 1,200 units per shift x 100 = 77% 1,553 units per shift Example: Performance to Capacity Calculation Performance to Capacity Formula Actual Line Output (units) x100 Line Capacity (units)

11. 11 Examples: Operational Availability Calculation Operational Availability (Formal TPS Definition) Actual Output (units) x100 Demand (units) 1,080 units per shift x100 = 90% 1,200 units per shift 1450 units per shift x100 = 120% 1200 units per shift under-productionover-production

12. 12 Examples: Rate of Operation Calculation Rate of Operation Formula Demand (units) x100 Capacity (units) 1,200 units per shift x100 = 77% 1,553 units per shift