Time-Based Manufacturing

This paper sets out the battle report of a Time-Based Management (TBM) implementation. While significant lead time reduction was achieved, the emphasis of the case study is not on the results gained or on convincing others of the value of time-based operations. Instead, the case study discussion is focused on describing the process of change that this particular organization went through and the implementation steps that were either the most challenging to carry out or that were most crucial for overall success.

The objective of this discussion is to provide information, suggestions, proven tactics, warnings of potential pitfalls, and overall battle experience to those who are considering embarking on the journey towards Time-Based Management and the obtainment of real competitive advantage.

A number of manufacturing and other organizations around the world have realized significant benefits through the adoption of Time-Based Management techniques. From the implementation of JIT work cells and Kanban cards on the shop floor to the use of cross-functional employee teams for developing new products and processing customer orders, these companies have reengin-eered their work processes to gain quantum improvements in lead time, work-in-process, cost, service, and quality.

The overall philosophy of Time-Based Management, as well as many of the specific techniques and tactics of TBM, are generally well known today throughout most manufacturing enterprises. At the same time, many examples and success stories exist in the APICS literature and in other books and articles. However, even when organizations are armed with a solid understanding of what TBM is and what it looks like after implementation, the evolution from traditional to time-based is typically not a simple or straightforward process.

Indeed, companies that have been successful in implementing TBM or other significant organizational changes, such as Total Quality Management (TQM), have typically dedicated considerable resources, time, and effort from all levels of the organization to the improvement process. At the same time, and as we will see exemplified in the case study described below, these successful implementers of TBM have worked as hard, or harder, on setting strategic direction and specific goals for the improvement process, and on carefully managing the process of organizational change, as they have on the specifics of work cells, product structures, or run charts.

The relevance and overall importance of setting strategic direction and of managing the change process is explained in the following paragraphs.

Many organizations, as they strive to achieve competitive advantage, are today focusing hard on providing excellent customer value. As set out in figure 1, customer value can be shown as

being dependant upon the key competitive dimensions of quality, service, cost, and time. While it is easy to see from this equation that customer value increases as quality and service improves and/or as cost and time are decreased, it is not so obvious as to which competitive element has the greatest impact on customer value. Prior to embarking on a significant improvement process, however, companies need to understand which of these four elements is most critical for achieving a high level of customer value and competitive advantage in order for improvement efforts to be properly focused.

As our case example will illustrate, successful implementation of TBM requires that overall strategic direction be set at the onset of the project that is based on the real business needs of the organization and the reality of what is required to achieve competitive advantage. Both the Generals and the troops need to understand well that either lead time, service, quality, cost, or some specific combination of these key competitive dimensions is the critical success factor that will lead to competitive advantage. At the same time, it is equally important to understand by how much the organization needs to improve to achieve a position of dominance, or to win the war. As is the case on the battlefield, organizations that follow a battle plan aimed at finishing second will not survive for long!

For example, there is little point in reducing manufacturing costs by even as much as 50% if the customer is basing his/her buy decision on the company's ability to provide fast service or quick order fulfilment. In this instance, the key competitive dimension or battle objective is lead time reduction more than it is cost reduction (albeit that the customer may be willing to wait if the price is significantly lower, such as for next day photo-finishing versus 1-hour photo-finishing). Of course, reducing costs while at the same time reducing lead times will provide even greater customer value and competitive advantage, yet the dominant improvement objective of lead time reduction must take priority.

There may also be little point in reducing lead times by, say, 25% if the competition can still provide significantly faster service or order turnaround. In this instance, further lead time reduction or some other means of achieving competitive advantage must be found. While a 25% reduction is indeed a positive step forwards, the organization must realize that additional efforts will be required to gain real competitive advantage.

Companies, like armies, that enter battle without a solid strategy or battle-plan, and without specific targets or goals that are well understood by the troops, will suffer a high causality rate and, more often than not, surrender the battle.

To be Continued

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