Competing with Time Leeds School of Business University of Colorado Boulder, CO Competing with Time Leeds School of Business University of Colorado Boulder, CO Professor Stephen Lawrence

Sources of Competitive Advantage Low wage rates Scale economies Focused production Flexible production Increased Variety Increased innovation Fast Response Time COST- BASED MGMT TIME- FLEX MGMT Blackburn, “Time-based competition,’’ in Strategic Manufacturing, Moody (ed), Dow Jones-Irwin, Homewood IL, 1990.

Some Thoughts on Time Our production cycle is about eighty- one hours from the mine to finished machine in the freight car, or three days and fourteen hours instead of the fourteen days we used to think was record breaking. Henry Ford on Model T production, 1926

Some Thoughts on Time Time -- as both a commodity and a competitive weapon -- is an emerging issue that business people can’t ignore if they expect to survive in this increasingly competitive world. We will see the demise of marginal firms who do not adopt time-based strategies. And the longer they wait, the faster they will fall. In short, where everything else is equal, time-based strategies become a key factor in widening the gap between those who adopt them and those who do not. Fred Smith, Founder and CEO, FedEx Fred Smith, Founder and CEO, Federal Express, 12/88

Some Thoughts on Time After pulling Flextronics out of its nosedive, Michael Marks began to execute a growth strategy that included improved productivity. Marks recalls that when he ran a Flextronics plant in 1989, it took 13 days to go from raw material to product. Today, he says, "in all our facilities around the world, with the exception of products that have to be burned in"--tested in heat chambers--"nothing takes longer than a day to build. Today, the whole world is about speed. Just build it, and move it right out." Fortune, March 20, 2000

Examples of Time Competition Overnight package delivery Web-based information retrieval Online shopping, banking, and ecommerce Self-checkout at grocery Airline and rental car check-in Lift ticket scanners Fast food, ready-to-heat meals

Lead Time and Time Competition Speed often is measured in terms of: –Quickness—measured by the mean –Reliability—measured in terms of range and shape of the lead time distribution Lead time – important determinate of “speed” Lead time means several things –important to define exactly

Lead Time Strategies Engineer to Order –designed to customer specification Make to Order –standard design, produced only upon order Assemble to Order –subassemblies produced, assembled upon order Make to Stock –finished product made prior to order

Comparative Lead Times Customer LeadtimeInternal Leadtime

Professor Stephen Lawrence Just In Time & Lean Systems

Just-in-Time The “Just In Time” -- a Swedish country music band

Lean Concepts Lean Systems –produce only what is needed only when it is needed! Goal of Lean Systems: SIMPLIFY! –Reduce inventories; –Reduce setup times; –Reduce information flows; –Fewer, more reliable suppliers; –Design products for manufacturability Reduce WASTE of all types!

Ch Sources of Waste 1.Overproduction 2.Waiting time 3.Transportation 4.Unnecessary processes 5.Inventory 6.Motion and activity 7.Defects © 2000 by Prentice-Hall Inc, Russell/Taylor Operations Management 3/e

Basic Elements of Lean Systems Flexible resources Cellular layouts Pull production system Kanban control Small-lot production Quick setups Uniform production Quality at the source Total productive maint. Supplier networks © 2000 by Prentice-Hall Inc, Russell/Taylor Operations Management 3/e

Flexible Resources Multifunctional, cross-trained workers General purpose machines Study operators & improve operations © 2000 by Prentice-Hall Inc, Russell/Taylor Operations Management 3/e

Ch Standard Operating Routine © 2000 by Prentice-Hall Inc, Russell/Taylor Operations Management 3/e

Ch Cellular Layouts Group dissimilar machines into a manufacturing cell to produce family of parts Work flows in one direction through cell Cycle time adjusted by changing worker paths © 2000 by Prentice-Hall Inc, Russell/Taylor Operations Management 3/e

Ch Mfg Cell With Worker Routes Enter Worker 1 Worker 2 Worker 3 Exit Key: Product route Worker route Machines © 2000 by Prentice-Hall Inc, Russell/Taylor Operations Management 3/e

Ch Kanban Production Control Kanban card indicates standard quantity of production Derived from two-bin inventory system Kanban maintains discipline of pull production Production kanban authorizes production Withdrawal kanban authorizes movement of goods © 2000 by Prentice-Hall Inc, Russell/Taylor Operations Management 3/e

Ch Kanban Squares XX X X X X Flow of work Flow of information © 2000 by Prentice-Hall Inc, Russell/Taylor Operations Management 3/e

Ch Reducing Setup Time Preset desired settings Use quick fasteners Use locator pins Prevent misalignments Eliminate tools Make movements easier © 2000 by Prentice-Hall Inc, Russell/Taylor Operations Management 3/e

Ch Small-Lot Production Requires less space & capital investment Moves processes closer together Makes quality problems easier to detect Makes processes more dependent on each other © 2000 by Prentice-Hall Inc, Russell/Taylor Operations Management 3/e

Ch Inventory Hides Problems Poor Quality Unreliable Supplier Machine Breakdown Inefficient Layout Bad Design Lengthy Setups © 2000 by Prentice-Hall Inc, Russell/Taylor Operations Management 3/e

Ch Lower Levels Of Inventory To Expose Problems Poor Quality Unreliable Supplier Machine Breakdown Inefficient Layout Bad Design Lengthy Setups © 2000 by Prentice-Hall Inc, Russell/Taylor Operations Management 3/e

Ch Uniform Production Results from smoothing production requirements Kanban systems can handle +/- 10% demand changes Smooths demand across planning horizon Mixed-model assembly steadies component production © 2000 by Prentice-Hall Inc, Russell/Taylor Operations Management 3/e

Ch Kaizen Continuous improvement Requires total employment involvement Essence of JIT is willingness of workers to –spot quality problems –halt production when necessary –generate ideas for improvement –analyze problems –perform different functions © 2000 by Prentice-Hall Inc, Russell/Taylor Operations Management 3/e

Ch Visual Control Library shelfWork station Visual kanbansTool board Machine controls Better Good Best How to sensor © 2000 by Prentice-Hall Inc, Russell/Taylor Operations Management 3/e