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					     Chapter 5
Managing 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
The role of time in competitive advantage


Key issues
              What is time-based
         1    competition?


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

              What is the purpose of
         3    time-based competition?
  The role of time in competitive
            advantage
Definition and concepts


        quality                   cost

              business advantage



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

 Traditional opinion
               Fast delivery




High quality                   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.
 The role of time in competitive
           advantage




Improving quality


                      Cost increasing


Reducing lead time
  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
        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           High level of
                                                     Customer
                                 responsiveness to
      deal with customer                              royalty
                                     customer
         queries and
      complaints on time

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

Time-based opportunities to add value
   Reducing risk by relying less on forecasts
  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
  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.
  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.
               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
    P:D ratios and differences


Key issues

              What are P- and D-times?
       1


              Why are P- and D-times
       2      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?
        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        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.
    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

                                 Customer’s order cycle

                                    Order fulfillment: D-time
     P-time - D-time
               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
  Time-based process mapping



Key issue

             How do you go about
       1     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
        Time-based process mapping

 Electro-Coatings case

Goods         Book       Job
                                 Degrease     Etch      Plate
  in          job in    set-up



                         Book                           Heat
Dispatch       Pack                Inspect    Polish
                          out                           treat



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

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

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


Electro-Coatings case
               1



                   People?

                                             2


    Methods?                     Machines?
4




               Materials?
                             3
               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
Managing timeliness in the logistics
            pipeline

Key issues

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



           What time-based strategies
       2   and practices can help to
           improve competitiveness
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                     •Marketing
 •Make-to-stock                     •Product development
                                    •Process improvement
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
               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
   A method for implementing
      time-based practices

Key issue



             How can time-based
       1     practices be implemented?
       A method for implementing
          time-based practices
                            Importance of supply responsiveness to customer
       Understand
                            D-time target that customer set
      need to change        Total P-time
                                  Map whole process
           Understand             Find out activity time/wasted time
             process              Compare the P-time and D-time
                                  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 the            Identify the causes of unnecessary
                  causes of waste           process steps and wasted time


Feedback                  Change the              Choose solutions that will make
                           process                the process more responsive


                                                        Evaluation
                             Review changes
                                                        Adjustment
          Wholesalers or
          Regional Wareh.             Customers                    Customers
                                                  Suppliers
                         Retailers or
Suppliers                Sales Comp.




                                                              DC
 Production unit/Factory Warehouse              Local Warehouse                   Sales Company
     Administrative Activities Order          Administrative Activities       Order
        Order handling                            Order handling
          Lot Sizing           Invoice              Lot Sizing               Invoice
    Place Production Orders Payment            Place Production Orders      Payment
        Delivery Control                          Delivery Control
         Physical Activities               Physical Activities                         Customer
  Receiving      Picking     Transport Receiving      Picking      Transport
   Storing       Packing                Storing      Packing
           Transport Planning                    Transport Planning



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

                                                                                             Total Lead Time
                                                                                              = 70-130 days
3-45 days       35 days              1 day             13-26 days                  16 days
        1-2 days          1-4 days           10-25 h                2-3 h                     Best Practice
                                                                                               = 28 days
F = Factory warehouse
CW = Central warehouse                         F = Factory without stock
N = National warehouse                         DC = Distribution Centre
R = Regional warehouse
                                       F
                               R
                                      F N
                                        •
                     N         F    F     CW
                                                                    F
                             CW     N
                               •
                              F
                                R
                     F
                         N
                 N   R
             N
                 N   N                                         •
                         R
                              R
                 N   N
                                    N
                                               US
                               N
                                                                           ASIA
     N   N

				
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posted:6/5/2010
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