1. Competing with Time Leeds School of Business University of Colorado Boulder, CO 80309-0419 Competing with Time Leeds School of Business University of Colorado Boulder, CO 80309-0419 Professor Stephen Lawrence

2. The Persistence of Memory, Salvador Dali, 1931

3. The Value Equation

4. 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.

5. Production as it looks to the Cartoonist

6. 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

7. 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

8. 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

9. 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

10. Lead Time Strategies

11. 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

12. 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

13. Comparative Lead Times Engineer to Order Make to Order Assemble to Order Make to Stock Customer LeadtimeInternal Leadtime

14. Professor Stephen Lawrence Just In Time & Lean Systems

15. Just-in-Time The “Just In Time” -- a Swedish country music band http://www.canit.se/~micael/jit.htm

16. 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!

17. Ch 15 - 4 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

18. 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

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

20. Ch 15 - 6 Standard Operating Routine © 2000 by Prentice-Hall Inc, Russell/Taylor Operations Management 3/e

21. Ch 15 - 7 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

22. Ch 15 - 8 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

23. Ch 15 - 9 Worker Routes Lengthened As Volume Decreases Worker 1 Worker 2 Worker 3 Cell 1 Cell 5Cell 3 Cell 2 Cell 4 © 2000 by Prentice-Hall Inc, Russell/Taylor Operations Management 3/e

24. Ch 15 - 10 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

25. Ch 15 - 14 Kanban Squares XX X X X X Flow of work Flow of information © 2000 by Prentice-Hall Inc, Russell/Taylor Operations Management 3/e

26. Ch 15 - 21 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

27. Ch 15 - 25 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

28. Ch 15 - 22 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

29. Ch 15 - 23 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

30. Ch 15 - 26 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

31. Ch 15 - 29 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

32. Ch 15 - 32 Visual Control Library shelfWork station Visual kanbansTool board Machine controls Better Good Best 30-50 How to sensor © 2000 by Prentice-Hall Inc, Russell/Taylor Operations Management 3/e

33. Ch 15 - 34 Benefits Of Lean Systems 1. Reduced inventory 2. Improved quality 3. Lower costs 4. Reduced space requirements 5. Shorter lead time 6. Increased productivity 7. Greater flexibility 8. Better relations with suppliers 9. Simplified scheduling and control activities 10.Increased capacity 11.Better use of human resources 12.More product variety © 2000 by Prentice-Hall Inc, Russell/Taylor Operations Management 3/e

34. Benefits of Lean Systems GECircuit breakers3 wks3 days MotorolaPagers3 wks2 days Hewlett-PackardElectronic test equip4 wks5 days BrunswickFishing reels3 wks1 wk MatsushitaWashing machines 360 hrs2 hrs Harley-DavidsonMotorcycles1 yr3 days Order-to-finish Company Product Old New ``How managers can compete through speed,’’ Fortune, 2/13/89

35. Business Process Design

36. Order Management Systems Order planning, Sales forecasting Capacity planning Order generation Cost estimation Pricing Order receipt Order prioritization Scheduling Fulfillment Billing Returns and claims Post sales service Shapiro, Rangan, & Sviokla, “Staple yourself to an order,” HBR, 1992.

37. Business Process (Re)Design Identify your key processes Analyze the steps involved in each Improve for effectiveness and efficiency Ask yourself: Where is the web? Spell out the new process Remember change management Go deep, don’t stay shallow How to reengineer your unit, HBS Press, 2000

38. Proven Strategies Start from scratch –Don’t expedite current operations Wipe out approval –Cut away layers of management Form multi-functional teams –Increase communication Develop clear but honest deadlines –Benchmark capabilities Improve distribution –Close the sales-engineering-factory-warehouse loop Develop a “time-based” culture –Change performance statistics

39. Competing with Time