- June 01, 1995, Davis, Arthur G.
A recent survey of American companies found practically all of them put time-based competition strategy, as the new approach is called, at the top of their priority lists. Reason: speed beats the competition cold.
Market share grows because customers appreciate getting their orders now. Inventories of finished goods shrink because they aren't necessary to ensure quick delivery The fastest manufacturers can make and ship an order the day its received. For this and other reasons, costs fall. In turn, employees become more satisfied because they are working for a more responsive, more successful company and because speeding up operations means more flexibility and responsibility on their part.
Even quality improves. By placing speed at the heart of the improvement strategy, a company can make products at lower costs than its competition. Speed forces you to produce products right the first time. Unnecessary, nonvalue-added operations are reduced or eliminated outright, thereby reducing the opportunity for defects to occur.
A company can find countless ways to speed operations, but experts emphasize a few major tactics to follow:
* Start from scratch. Nearly everyone agrees that the worst way to speed up a company is by trying to make it do things just as it does, only faster. This is disastrous, as machinery and employees will simply burn out. A better way is for executives to announce a profoundly ambitious goal and then link it to a specific tactic or methodology for achieving it. This could be as simple as declaring that the finn will cut six months out of its overall business cycle time. Then, go ahead, set up a task force team and do the analysis and brainstorming that will allow you to do it.
Another approach is to include cycle time reduction as part of the firm's overall or Total Quality Management (TQM) process. This process permits the use of a systematic approach toward evaluating customer-supplier requirements and then performing only those tasks that satisfy these requirements.
A good TQM process involves defining the process for producing products or services, using mapping or flow-charting techniques to identify nonvalue-added tasks. These tasks are improved or eliminated.
* Eliminate the approval process. Management should look hard at the number of times a product or service requires internal approval before reaching the customer. My experience working with many firms over the years indicates that the production or manufacturing operation takes only 10% to 15% of the overall business cycle time.
Overall business cycle time can be defined as the total time between receiving an order and getting the product to market; the rest of the time is administrative. It's truly remarkable how many business people don't know how their company works.
The best way to get around this is to construct a flow diagram to show what's going on in the organization.
* Stick to the schedule. Managers must make it clear that nothing short of a disaster is a valid excuse for delays. Recently Motorola designed a new electronic pager and an automated factory to build it in an unheard of 18 months versus the usual three years. The company's key step in achieving that goal was setting clear deadlines. After that came discipline. The director of manufacturing claims that holding to the schedule took on a religious zeal.
* Use teamwork. Most all of the successful fast companies use multidepartmental teams to focus on cycle time reduction efforts. Form cross-functional teams of six to 12 people that would typically include engineers, operations and sales with the authority to make decisions on how the product and/or process should work, look, be made and cost. These teams are effective because they eliminate the serial/sequential communication and decision-making steps found in the traditionally run organization, which adds cycle time.
Often making suppliers and yes, customers part of the team pays dividends in developmental time saved. Suppliers of components or other services are frequently a useful resource in suggesting ideas to reduce costs and time, based upon their more specialized knowledge, when exposed to the big picture.
* Distribution is a key element. The world's fastest plant won't offer much competitive advantage if everything it produces gets caught in the distribution chain. An excellent example is Benetton, an Italian sportswear company based in Italy. Benetton found that the fastest way to run a distribution system is to create an electronic loop linking sales rep, factory and warehouse. If a salesperson in Chicago starts to run out of a specialty item, she calls one of the company's sales agents, who enters the order into his personal computer, which sends it to a mainframe in Italy.
Because this item was originally produced on a computer-aided design system, the mainframe has all of the measurements on hand in digital code, which is sent to a knitting machine.
In turn the machine manufactures the item, which workers then box with a bar code label containing the address of the Chicago store, and the box goes to the warehouse. There is only one warehouse, which serves Benetton's 5,000 stores in 60 countries worldwide.
This system cost $30 million to build; however, it requires only eight people to operate and moves 230,000 pieces of clothing per day. A robot in the warehouse scans the bar codes and selects the right box and any other boxes being shipped to that Chicago store, picks them up, and loads them onto a truck. The overall cycle time, from order to store, is four weeks. If the item is in stock, one week.
* Speed requires a culture change. Honda Motors fosters this by having its engineers and others participate in Formula One auto racing. By circulating people through the Formula One team, Honda teaches its people the racing spirit, which means thinking about minutes not hours.
The advantages of speed are undisputed. Time is money - far more than most executives understand.