chapter 5 managing the lead-time frontier

Chapter 5Managing the lead-time

frontier

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


Key issues

1111What is time-based competition?

2222How does time-based competition link to other initiatives?

3333What is the purpose of time-based competition?


Definition and conceptsDefinition and concepts

business advantagebusiness advantage

quality cost

timeTime-based competingThe timely response to customer needs


Traditional opinion

High quality

Fast delivery

Low cost


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.

prevention


Improving quality

Reducing lead time

Cost increasing


Time-based initiativesTime-based initiatives

Finding sources and causes of breakdowns

Finding sources and causes of delays

Time reduction Cost reduction Quality improving


Time-based opportunities to add valueTime-based opportunities to add value Increased responsiveness to customer needs

Managing increased variety

deliver a product or service on time

deal with customer queries and

complaints on time

High level of responsiveness to

customer

Customer royalty

Reducing overall lead-time

Reducing product complexity

Reducing process set-up time

Production with more frequency and

smaller batches

Increased variety of products


Time-based opportunities to add valueTime-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


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

Time

Cost or revenueSales revenue

Total cost

Break-even point

Product life end

Product life shrinking

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



Time-based opportunities to reduce costTime-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


Time-based opportunities to reduce costTime-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.


Limitations to time-based approachesLimitations 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.

Content







Key issues

1111What are P- and D-times?

2222Why are P- and D-times important to logistics strategy?


Using time as performance measureUsing 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?


Using time to measure supply chain Using time to measure supply chain performanceperformance 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


Using time to measure supply chain Using time to measure supply chain performanceperformance 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 ]


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

Source Make Deliver

Customer’s order cycle

Order fulfillment: D-time

Logistics lead time: P-time

P-time － D-time

Assembly and test

Content







Key issue

1111How do you go about measuring time in a supply chain?


Stage Stage 1: create a task force1: create a task force

Stage 2: select the process to Stage 2: select the process to mapmap

Stage 3: collect dataStage 3: collect data

Stage 6: construct the time-based process mapStage 6: construct the time-based process map

Stage Stage 5: distinguishing between value-adding 5: distinguishing between value-adding and non-value-adding timeand non-value-adding time

Stage 4: flow chart the processStage 4: flow chart the process

Stage 7: solution generationStage 7: solution generation


Electro-Coatings caseElectro-Coatings case

Goods in

Book job in

Job set-up

Degrease Etch Plate

Dispatch PackBook out

Inspect PolishHeat treat

Track the process ( initial map, 12 steps)Track the process ( initial map, 12 steps)


Electro-Coatings caseElectro-Coatings caseGoods inGoods inTake goods off lorryPut job on goods-in counterSign for goodsWrite out route cardMove goods to inspection

Book job inBook job inGive job a job cardPut route card into progress rackMove job to ‘awaiting processing’ shelf

Job set-upJob set-upPlan who will do the jobMove job on to shopfloorSign off job card Go to jig storeCheck jigging Clean jigging

DegreaseDegreaseWash all 300 componentsPlace in ‘tric’ vatWait to coolRinse Put 50 on to barWet blast RinsePut 10 on to blasting jigWet blast RinseMove on to plating jigPut into oven to dry

EtchEtchConnect etching anodePlace jig in HCTI bathDip rinseHand rinseRemove etching anode


Electro-Coatings caseElectro-Coatings casePlatePlateConnect plating anodeStrike and plateDrag outRinseRemove plating anodeCheck chrome thicknessWait until near end of shiftRemove stainingHot water rinseAir blast dry

Heat treatHeat treatWait for oven to become availableDe-embrittle job in ovenRemove job from ovenWait to cool down

PolishPolishWait for polishPolishLoad on pegboard

InspectionInspectionTake to inspectionWait for inspectionMicrometer and visual inspection

Book outBook outPackPackNote packaging jobWait for packagerPack

DispatchDispatchWeigh packagingFill in TNT documentationPlace package on TNT palletEnter TNT No. in systemTNT collects at 5pm


Electro-Coatings caseElectro-Coatings caseTotal 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


Electro-Coatings caseElectro-Coatings case

1

2

3

4

People?People?

Machines?Machines?

Materials?Materials?

Methods?Methods?

Content







Key issues

1111When P-time is greater than D-time?

2222What time-based strategies and practices can help to improve competitiveness


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

Short term•Make-to-order•Make-to-stock

Strategy when P-time > D-time

Long term•Marketing•Product development•Process improvement


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

•Control

•Simplify

•Compress

•Integrate

•Coordinate

•Automate

Optimizing throughput and improving process capability

Untangling process flows and reducing product complexity

straightening process flows and reducing batch sizes

Improving communications and implementing teams

Adding customer-specific parts as late as possible

Using robots and IT systems

Content







Key issue

1111How can time-based practices be implemented?


Understand need to change

Importance of supply responsiveness to customer

D-time target that customer set

Total P-time

Understand process

Map whole processFind out activity time/wasted timeCompare the P-time and D-timeCompare total activity time and D-time

Identify unnecessary process steps and large amounts of wasted time

Identify steps that do not add value to customer

Identify large amounts of wasted time

Understand the causes of waste

Identify the causes of unnecessary process steps and wasted time

Change the process

Choose solutions that will make the process more responsive

Review changesEvaluation

Adjustment

Feedback

SuppliersRetailers orSales Comp.

CustomersWholesalers orRegional Wareh. Suppliers Customers

DC

Picking Packing

Transport Planning

Receiving Storing

Order handling Lot Sizing

Place Production Orders Delivery Control

Customer

Local WarehouseProduction unit/Factory Warehouse

OrderInvoice

Payment

Transport



Picking Packing

Transport Planning

Receiving Storing

Order

Invoice

Payment

Transport

Administrative Activities Administrative Activities

Physical Activities Physical Activities

Sales Company

Picking Packing

Transport Planning

Receiving Storing



Production unit/Factory Warehouse

Administrative Activities

Physical Activities

1-2 days 2-3 h

3-45 days

10-25 h1-4 days

1 day35 days 13-26 days 16 days

Total Lead Time = 70-130 days

Best Practice= 28 days

F

•

F = Factory without stock DC = Distribution Centre

FF

F

FCW

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

N

R

N

N

N

NN

N

N

N

NF

R

N

N

•

•

N

N

F

RR

R

CW

US

ASIA

chapter 5 managing the lead-time frontier

Documents

preventionthe role of

forecaststhe role of

inventorythe role of

new productsthe role

differencesusing time

customer needsthe role

initial leaderthe role

product design