If you are a big fan of cricket, then can you tell me which is the crucial number that the chasing team would always be looking into? Can you guess – is it the target score? Is it the overs remaining? Is it wickets on hand?
If your answer is something other than what is mentioned above, then probably you are right!
Yes, run rate it is.
The chasing team always looks for the required run rate and plan their batting strategy – whether to go behind the bowlers with big hits or to keep things calm and rotate the strike!
Even businesses have “run rate” that they should maintain to win the race. Now, what do we mean by it. Well, there is a customer demand for your products and services and your company should be able to produce and deliver at certain rate.
This is technically called as “TAKT TIME” – Now don’t get scared by the name – all it means is “Customer Demand Rate” or “run rate” at which we should produce to meet customer demand.
Example – If a customer demands Product ‘A’ 600 units per day and if your manufacturing facility works for 10 hours a day, then the takt time is 10 hours (600 minutes) divided by 600 units (demand) which is 1 min per product. It means, your company should be capable of producing 1 product well within 1 minute in order to meet the customer demand.
So, what is the required run rate for your business? Curious, go ahead and calculate and see!!!
– Arun G