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

Competing with TimeLeeds School of Business University of ColoradoBoulder, CO 80309-0419

Competing with TimeLeeds School of Business University of ColoradoBoulder, CO 80309-0419

Professor Stephen Lawrence

Sources of Competitive Advantage

Low wage rates

Scale economies

Focused production

Flexibleproduction

IncreasedVariety

Increasedinnovation

Fast ResponseTime

COST-BASEDMGMT

TIME-FLEXMGMT

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


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


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-TimeThe “Just In Time” -- a Swedish country music band

http://www.canit.se/~micael/jit.htm

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 15 - 4

Sources of Waste

1. Overproduction2. Waiting time3. Transportation4. Unnecessary processes5. Inventory6. Motion and activity7. 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


Flexible Resources

• Multifunctional, cross-trained workers

• General purpose machines

• Study operators & improve operations


Ch 15 - 6

Standard Operating Routine


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


Ch 15 - 8

Mfg Cell With Worker Routes

Enter

Worker 1

Worker 2Worker

3

Exit

Key: Product routeWorker route

Machines


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


Ch 15 - 14

Kanban Squares

X X X

XX

X

Flow of workFlow of information


Ch 15 - 25

Reducing Setup Time

• Preset desired settings

• Use quick fasteners

• Use locator pins

• Prevent misalignments

• Eliminate tools

• Make movements easier


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


Ch 15 - 22

Inventory Hides Problems

Poor Quality

UnreliableSupplier

MachineBreakdownInefficient

Layout

BadDesign

LengthySetups


Ch 15 - 23

Lower Levels Of Inventory To Expose Problems

Poor Quality

UnreliableSupplier

MachineBreakdownInefficient

Layout

BadDesign

LengthySetups


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


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


Ch 15 - 32

Visual Control

Library shelfWork station

Visual kanbansTool board

Machine controls

BetterGood Best

30-50

Howto

sensor


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

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