Chapter 5 Managing the lead-time frontier

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Chapter 5Managing the lead-time frontier
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Content
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The role of time in competitive advantage

• Key issues

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The role of time in competitive advantage

• Definition and concepts

cost
quality
business advantage
time
Time-based competing The timely response to
customer needs
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The role of time in competitive advantage

• Traditional opinion

Fast delivery
High quality
Low cost
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The role of time in competitive advantage
prevention

• Quality movement of 1980s showed that good
  quality actually reduces costs by such measures
  as
• designing the process so that defects cannot
  occur
• designing the products so that they are easy to
  make and distribute
• Training personnel so that they understand the
  process and its limitations.

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The role of time in competitive advantage
Improving quality
Cost increasing
Reducing lead time
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The role of time in competitive advantage

• Time-based initiatives

Finding sources and causes of breakdowns
Time reduction
Cost reduction
Quality improving
Finding sources and causes of delays
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The role of time in competitive advantage

• Time-based opportunities to add value
• Increased responsiveness to customer needs
• Managing increased variety

Reducing overall lead-time
Production with more frequency and smaller batches
Increased variety of products
Reducing product complexity
Reducing process set-up time
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The role of time in competitive advantage

• Time-based opportunities to add value
• Increased product innovation
• Reducing new product development lead time ?
  Innovation through product design faster than
  competitors ? Competitive advantage
• Improved return on new products
• Putting new product earlier to market can
• Extend the sales life of the product
• Charge a higher price
• Won new customers
• Build a high market share through building on the
  initial leader

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The role of time in competitive advantage

• Time-based opportunities to add value
• Improved return on new products

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The role of time in competitive advantage

• Time-based opportunities to add value
• Reducing risk by relying less on forecasts

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The role of time in competitive advantage

• Time-based opportunities to reduce cost
• Reducing working capital
• Eliminate unnecessary steps and wasted time
• Focus inventory (raw materials, work-in-process
  goods and finished goods)
• Reducing plant and equipment capital
• Remove the equipment not employed in activities
• Focus racking and pallets formerly used to store
  inventory

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The role of time in competitive advantage

• Time-based opportunities to reduce cost
• Reducing development costs
• Elimination of rework and reduction of
  distracting superfluous projects
• Reducing quality costs
• Reducing lead time so as to accelerate feedback
  and hence reduce time between error being made
  and problem being detected.

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The role of time in competitive advantage

• Limitations to time-based approaches
• Limitation to the need for speed
• Not all operating environments require speed.
• Not all customers value speed.
• Limitation to degree of speed required
• Time-based approaches are not about managing
  exceptions but managing for speed reliably.

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Content
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PD ratios and differences

• Key issues

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PD ratios and differences

• Using time as performance measure
• Time elasticity of price (Stalk and Hout, 1990)
• The price that customers are prepared to pay is
  often related to the delivery speed.
• Performance can be measured by time
• Do we meet the target the customer has set for
  us?
• How good are we compared with the competitors?
• Is our performance getting better or worse?

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PD ratios and differences

• Using time to measure supply chain performance
• P-time (Production time)
• The time it takes to pass a product or service
  through supply chain
• including the time needed to procure the longest
  lead time parts and the total manufacturing time

P-time customer raises order
deliver product to customer
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PD ratios and differences

• Using time to measure supply chain performance
• D-time (Demand time)
• The time for which a customer is willing to wait
  to have their demand fulfilled
• Manufacturers with short D-times face increased
  supply chain challenges compared with those who
  have long D-times.

D-time expected minimum , expected
maximum
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PD ratios and differences

• Consequences when P-time is greater than D-time

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Content
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Time-based process mapping

• Key issue

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Time-based process mapping

• Stage 1 create a task force

• Stage 2 select the process to map

• Stage 3 collect data

• Stage 4 flow chart the process

• Stage 5 distinguishing between value-adding and
  non-value-adding time

• Stage 6 construct the time-based process map

• Stage 7 solution generation

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Time-based process mapping

• Electro-Coatings case

Track the process ( initial map, 12 steps)
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Time-based process mapping

• Electro-Coatings case

Degrease Wash all 300 components Place in tric
vat Wait to cool Rinse Put 50 on to
bar Wet blast Rinse Put 10 on to blasting
jig Wet blast Rinse Move on to plating jig Put
into oven to dry
Goods in Take goods off lorry Put job on goods-in
counter Sign for goods Write out route card Move
goods to inspection
Book job in Give job a job card Put route card
into progress rack Move job to awaiting
processing shelf
Etch Connect etching anode Place jig in HCTI
bath Dip rinse Hand rinse Remove etching anode
Job set-up Plan who will do the job Move job on
to shopfloor Sign off job card Go to
jig store Check jigging Clean
jigging
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Time-based process mapping

• Electro-Coatings case

Polish Wait for polish Polish Load on pegboard
Plate Connect plating anode Strike and plate Drag
out Rinse Remove plating anode Check chrome
thickness Wait until near end of shift Remove
staining Hot water rinse Air blast dry
Inspection Take to inspection Wait for
inspection Micrometer and visual inspection
Book out
Pack Note packaging job Wait for packager Pack
Heat treat Wait for oven to become
available De-embrittle job in oven Remove job
from oven Wait to cool down
Dispatch Weigh packaging Fill in TNT
documentation Place package on TNT pallet Enter
TNT No. in system TNT collects at 5pm
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Time-based process mapping

• Electro-Coatings case

Total time Wasted time Activity time
Goods in 0.00 3.91 0.41
Book job in 4.32 20.00 0.41
Job set-up 24.73 5.50 1.77
Degrease 32.00 1.00 0.60
Etch and plate 33.60 8.75 2.20
Heat treat 44.55 0.00 4.50
Polish 49.05 1.95 1.95
Inspect 52.95 9.50 1.00
Book out 63.45 0.00 0.40
Pack 63.85 4.00 0.85
Dispatch 68.70 0.00 0.40
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Time-based process mapping

• Electro-Coatings case

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Content
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Managing timeliness in the logistics pipeline

• Key issues

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Managing timeliness in the logistics pipeline

• Strategies to cope when P-time is greater than
  D-time

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Managing timeliness in the logistics pipeline

• Practices to cope when P-time is greater than
  D-time

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Content
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A method for implementing time-based practices

• Key issue

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A method for implementing time-based practices
Importance of supply responsiveness to customer
Understand need to change
D-time target that customer set
Total P-time
Map whole process
Understand process
Find out activity time/wasted time
Compare the P-time and D-time
Compare total activity time and D-time
Identify steps that do not add value to customer
Identify unnecessary process steps and large
amounts of wasted time
Identify large amounts of wasted time
Understand the causes of waste
Identify the causes of unnecessary process steps
and wasted time
Feedback
Change the process
Choose solutions that will make the process more
responsive
Evaluation
Review changes
Adjustment
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Local Warehouse
Production unit/Factory Warehouse
Sales Company
Order
Administrative Activities
Order
Administrative Activities
Order handling
Order handling
Invoice
Invoice
Lot Sizing
Lot Sizing
Place Production Orders
Place Production Orders
Payment
Payment
Delivery Control
Delivery Control
Customer
Physical Activities
Physical Activities
Receiving
Receiving
Transport
Transport
Picking
Picking
Storing
Packing
Packing
Storing
Transport Planning
Transport Planning
Production unit/Factory Warehouse
Administrative Activities
Order handling
Lot Sizing
Place Production Orders
Delivery Control
Physical Activities
Picking
Receiving
Packing
Storing
Transport Planning
Total Lead Time 70-130 days Best Practice
28 days
3-45 days
1 day
35 days
13-26 days
16 days
2-3 h
10-25 h
1-2 days
1-4 days
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