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Top school in India

By:
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Chapter 5
Managing the lead-time
frontier
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Content

The role of time in competitive advantage


P:D ratios and differences

Time-based process mapping

Managing timeliness in the logistics pipeline

A method for implementing time-based practices

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The role of time in competitive advantage

Key issues
1

What is time-based
competition?

How does time-based


competition link to other
initiatives?

What is the purpose of


time-based competition?

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The role of time in competitive


advantage
Definition and concepts
quality

cost

business advantage

Time-based competing time


The timely response to customer
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needs

The role of time in competitive


advantage
Traditional opinion

Fast delivery

High quality
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Low cost

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
deliver a product
or service on time
deal with customer
queries and
complaints on time

High level of
responsiveness to
customer

Customer
royalty

Managing increased variety


Reducing overall lead-time
Reducing product complexity
Reducing process set-up time

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Production with
more frequency and
smaller batches

Increased
variety of
products

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
Cost or revenue

Sales revenue
Break-even point
Total cost

Product life shrinking

Time
Product life end

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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

The role of time in competitive advantage


P:D ratios and differences

Time-based process mapping

Managing timeliness in the logistics pipeline

A method for implementing time-based practices

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P:D ratios and differences

Key issues

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What are P- and D-times?

Why are P- and D-times


important to logistics
strategy?

P:D 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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P:D 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

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deliver product to customer

P:D 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
D-time

[ expected minimum , expected maximum ]

Manufacturers with short D-times face increased


supply chain challenges compared with those who
have long D-times.
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P:D ratios and differences

Consequences when P-time is greater


than D-time
Assembly and test

Source

Make

Deliver

Logistics lead time: P-time

Customers order cycle


Order fulfillment: D-time

P-time D-time
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Content

The role of time in competitive advantage


P:D ratios and differences

Time-based process mapping

Managing timeliness in the logistics pipeline

A method for implementing time-based practices

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Time-based process mapping

Key issue

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How do you go about


measuring time in a supply
chain?

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
Goods
in

Dispatch

Book
job in

Pack

Job
set-up

Degrease

Book
out

Inspect

Etch

Plate

Polish

Heat
treat

Track the process ( initial map, 12 steps)


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Time-based process mapping

Electro-Coatings case
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
Job set-up
Plan who will do the job
Move job on to shopfloor
Sign
off job card
Go to jig store
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Check jigging
Clean jigging

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

Etch
Connect etching anode
Place jig in HCTI bath
Dip rinse
Hand rinse
Remove etching anode

Time-based process mapping

Electro-Coatings case
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
Heat treat
Wait for oven to become available
De-embrittle job in oven
Remove job from oven
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Wait
to cool down

Polish
Wait for polish
Polish
Load on pegboard

Inspection
Take to inspection
Wait for inspection
Micrometer and visual inspection
Pack
Book out
Note packaging job
Wait for packager
Pack
Dispatch
Weigh packaging
Fill in TNT documentation
Place package on TNT pallet
Enter TNT No. in system
TNT collects at 5pm

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
1

People?
2

Methods?

Machines?

Materials?
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Content

The role of time in competitive advantage


P:D ratios and differences

Time-based process mapping

Managing timeliness in the logistics pipeline

A method for implementing time-based practices

school.edhole.com

Managing timeliness in the logistics


pipeline

Key issues
1

When P-time is greater than


D-time?

What time-based strategies


and practices can help to
improve competitiveness

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Managing timeliness in the logistics


pipeline
Strategies to cope when P-time is
greater than D-time
Strategy when
P-time > D-time

Short term

Long term

Make-to-order
Make-to-stock

Marketing
Product development
Process improvement

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Managing timeliness in the logistics


pipeline
Practices to cope when P-time is
greater than D-time
Control

Optimizing throughput and improving process capability

Simplify

Untangling process flows and reducing product complexity

Compress

straightening process flows and reducing batch sizes

Integrate

Improving communications and implementing teams

Coordinate

Adding customer-specific parts as late as possible

Automate

Using robots and IT systems

school.edhole.com

Content

The role of time in competitive advantage


P:D ratios and differences

Time-based process mapping

Managing timeliness in the logistics pipeline

A method for implementing time-based practices

school.edhole.com

A method for implementing


time-based practices

Key issue

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How can time-based


practices be implemented?

A method for implementing


time-based practices
Importance of supply responsiveness to customer
D-time target that customer set
Total P-time
Map whole process
Understand
Find out activity time/wasted time
Compare the P-time and D-time
process
Compare total activity time and D-time
Identify steps that do not
Identify unnecessary process steps
add value to customer
and large amounts of wasted time
Identify large amounts
of wasted time

Understand
need to change

Understand the
causes of waste
Feedback

Identify the causes of unnecessary


process steps and wasted time

Change the
process

Choose solutions that will make


the process more responsive
Evaluation

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Review changes
Adjustment

Wholesalers or
Customers
Regional Wareh.
Retailers or
Suppliers
Sales Comp.

Customers

Suppliers

DC

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Production unit/Factory Warehouse


Administrative Activities Order
Order handling
Invoice
Lot Sizing
Place Production Orders Payment
Delivery Control

Local Warehouse

Sales Company

Administrative Activities
Order handling
Lot Sizing
Place Production Orders
Delivery Control

Order
Invoice
Payment

Physical Activities
Physical Activities
Receiving
Picking
Transport Receiving
Transport
Picking
Storing
Packing
Packing
Storing
Transport Planning
Transport Planning

Customer

Production unit/Factory Warehouse


Administrative Activities
Order handling
Lot Sizing
Place Production Orders
Delivery Control
Physical Activities
Picking
Receiving
Storing
Packing
Transport Planning

3-45 days

35 days

1-4 days
1-2 days
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1 day

13-26 days
10-25 h

16 days
2-3 h

Total Lead Time


= 70-130 days
Best Practice
= 28 days

F = Factory warehouse
CW = Central warehouse
N = National warehouse
R = Regional warehouse

F = Factory without stock


DC = Distribution Centre
F
F N

CW
F
N

R
N

F
CW

F
R

N
N

N
N

R
N

US

ASIA
N

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