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Compress cycle times, compete far better

Dr. R. V. Gopalakrishnan & R. Sundaram

TODAY, tens of thousands of companies are struggling to become ``time-based competitors', inspired by such corporations as Motorola, General Electric, Citicorp, Federal Express, Ford, Milliken, Honda, Deere, Toyota, Wal-Mart, Harley-Davidson, to name but a few which cut production times by half or even more. Paradoxically, as Peter Senge, the management guru, stated, ``to speed up, you have to slow down''. Fast cycle time is not achieved by working faster but by aligning the organisation's purpose, strategy and structure.

Time-based companies offer a greater variety of products and services at lower costs with quicker delivery time compared to their pedestrian competitors. Take Dell Computers, for example. It beat IBM and Compaq by delivering cheaper computers at the customer's doorstep on orders received at their website, achieving a negative credit period for their accounts receivable.

Costs do not increase when lead times are reduced. They decline. Costs do not increase with greater investment in quality. They decrease. Costs do not go up when product variety is increased and response time is reduced. Actual studies have disproved the commonly held belief that increasing product variety brings only marginal increase in customer demand. In fact, there is an explosion of demand for the products and services of such variety from time-sensitive companies catapulting them into the most profitable segments and niches.

Time-based competition _ competing through shortening organisational cycle times _ is also fast closing in on quality in the Indian scene. Although a few organisations saw the cycle time gains in the mid-1980s (Bharat Heavy Plates and Vessels reduced their order-to-delivery times of their products substantially), they were solitary swallows not yet heralding the advent of summer for the consumer.

However, from the early 1990s, companies such as Thermax and Premier Instruments and Controls stepped up the pace by slashing delivery and product development times drastically. Siemens India transformed its hi-tech electronics factory at Nashik to become time-based. With sharper focus on time, its cycle times got reduced by 50 per cent and more.

In the coming decade, Quicker Response will become a core competency among the Indian industries for competing better. Winning companies will proclaim that tackling process cycle times is the most gainful high-leverage approach, as it is holistic and multi-dimensional. Moreover, everyone in the organisation understands cycle time easily and in the same way and can be involved. Compressing cycle times invariably drives simultaneous improvements in quality and productivity, and hence, in value and cost.

To be able to compress cycle times, everyone in the enterprise should regard time as a valuable resource and as the most precious competitive asset. Streamlining process flows can lead to quantum jumps in quicker response, and so in customer satisfaction as well as in organisational cost-competitiveness.

The emerging commandments for the Quicker Response Organisations (QR0s) of the next decade are:

1. ``Perceive the urgency to become a QRO in the next few years; revitalise your people through constant sharing of your vision with them.''

This is a top management leadership requirement for transformation to a QRO. They need to broadcast their commitment to fast cycle time, as they see it to be the best opportunity for satisfying their customers better and, thereby, for their own organisational survival and growth.

2. ``Set bold long-term goals for all cycle times; facilitate progressive gains through short-term goals.''

SMART (specific, measurable, attainable, related and time-bound) `stretch' goals beget extraordinary efforts to achieve them. ABB-Sweden, for example, set its `T-50' goals in 1990 `to cut cycle time for everything it produces by 50 per cent in three years, viz. by end-1993'. They went on to achieve them _ with multiple gains in customer satisfaction and bottom-line results.

3. ``Restructure your organisation for speed; activate multifunctional teams on your key-processes.''

The functional silos limit fast-working, where ``over the wall'' transactions absorb cycle time `like sponges'. While multifunctional managers can gainfully `own' processes, multifunctional teams have emerged effective `on the fast track' in reducing cycle times in key-processes, such as product development and order-to-delivery process.

4. ``Develop systems thinking to balance the system; utilise info-tech enablers, as needed, to smoothen process flows.''

Systemic thinking _ aggregating `pieces' into a balanced `whole' _ shifts focus into process-orientation. For example. Toyota could manufacture a car in two days by the late-1970s; but it took them 18 days, on average, to close the sale and deliver the car. This delay, caused by inadequate info-processing in order-entry, was corrected, improving the entire system responsiveness to an average of eight days, in all.

5. ``Slash product development time through `immersion' in all pertinent `all at once'; accelerate decision making in setting specifications.''

The `speedos' activate co-located teams, with members working together in a `learning laboratory' and in parallel, through quality function deployment, concurrent engineering, computer aided design, rapid prototyping and so on. They understand their customer-needs better, `swim' in real-time information and consider a bunch of options `all at once'. This integrated behaviour makes them work smarter & faster, avoiding rework due to `late changes'.

6. ``Pursue process development jointly with product development; reduce number of parts and, thus, assembly time.''

Japan's leverage on speed, credited to its better pursuit of process development, is now `history'. Indian enterprises can gain enormously by streamlining process flows through process design/ redesign/ reengineering. Design for manufacturability and assembly (DFMA) can be of great help in reducing the number of parts. Lucas-TVS, for example, applied DFMA on its new product and reduced parts in one sub-assembly by 56 per cent.

7. ``Resort to more outsourcing; establish close partnerships with fewer number of suppliers of modules and systems.''

Outsourcing has globally emerged cost-and time-effective for several processes, such as maintenance, info-tech, logistics, customer support and design. The trend in the coming decade will also be in larger and steady-flow transactions with fewer Tier I suppliers of modules & systems. Illustratively, Delphi Automotive Systems in the US delivers 12 completed cockpit modules _ each assembled from 145 parts _ to the Mercedes Benz assembly-line every 30 minutes.

8. ``De-mystify process value analysis across the organisation; excite your people to improve value added ratios.''

Involving employees in quicker response, individually and in teams, can be highly rewarding. Training people to think and `map' their process `as IS' and to assess their actual value-adding to the end-customers will beget their suggestions for reducing `waste'/non-value-adding activities.

9. ``Track progress of cycle time reductions visibly; celebrate short-term successes, through an enlarged `basket of values', to recognise the achievers.''

By displaying visibility charts on cycle times and updating them constantly, the people involved in the process get their quick feed-back as well as instant recognition; it will spur them on to strive for further gains. Whirlpool India, for example, developed a culture to recognise and reward successes through multiple ways, such as recognition cards, get-togethers and awards.

10. ``Sustain holistic fast cycle time initiatives `all in sync' in becoming a QRO; Accelerate organisational learning through more learning cycles.''

As the saying goes: ``The more we do, the more we can do.'' As enterprises gain competence and confidence in effecting a 50 per cent cycle time reduction in all their processes, on average, during the first three years, they will get impelled to work for 80 per cent reduction and go on to 90 per cent and more reduction in the next five years or so. Their learning cycles will proclaim that there is no end to improvements; with their assimilation of organisational learning, they will take on Fast Cycle Time as a way of life and compete far better !

(Hindu Business Line 8th September 1999.)