The recession appears to be over; demand is up. Unfortunately for many, that means a return to doing dumb things. Often, hard times force us to rethink and improve our operations; good times allow us to forget the bad. Let’s not forget the pains and the solutions—foremost of which is to reduce cycle time.
The manufacturing revolution of the 70s and 80s that changed our perception of inventory, processes, and quality were all based on difficult times. It was the timely reduction of cycle time that changed our perceptions. That concept was just-in-time (JIT). The breakthrough of JIT was the rejection of traditional manufacturing assumptions that long production runs produced the highest level of efficiencies and that all inventory is an asset. JIT is cycle time reduction carried to the extreme.
In contrast to just-in-case (JIC) where we have built contingencies, especially time and inventory, JIT is zero contingencies or buffers. JIT demands an intricate choreography between commerce trading partners—correlating orders, operations, and delivery. The incoming parts from suppliers must arrive JIT to be inducted into the manufacturing or operations processes. JIT aims to reduce the process cycle time between acceptance of orders and fulfillment of expectations.
Clearly, any interruption or defect at any point in the process cycle would have an impact across the entire process because there are no buffers to mitigate disruptions.
Why bother chasing such a difficult and elusive coordination? Because time is not only money, it is quality, responsiveness, flexibility, efficiencies, and the ultimate effective utilization of scarce resources—but quality was and is the major rationale.
Quality has a multiplier effect. It decreases as defects are unresolved—even if each step in a 15-step process has a 93 percent quality rate. By the time we complete the 15th step in a serial manufacturing process, we only have a 33 percent quality rate.
At most companies, there are hundreds of processes and hundreds of parts for a single piece of finished product; if any one of those parts or processes is bad, the final product is defective.
Shortening the time between the customer order and delivery means identifying where value to the customer is created throughout the process and eliminating waste in the process and constraints on continuous flow (non-value-added activity in which cycle time can be reduced or eliminated include repair due to defects; machine setup; and inspection, test, and schedule delays).
Reduced process cycle times generate benefits in several areas:
- Lower inventories of work-in-progress and finished goods.
- Improved responsiveness to customer needs is achieved with production flexibility.
- Improved quality due to shorter defect pipeline.
- Greater operating efficiencies due to less material in progress.
- Response time management means introducing new service/products offerings, penetrating new markets, and satisfying changing customer demands more quickly.
- Responsive, time-based companies that focus on reducing time-consuming functions in every aspect of their business often out perform their competitors and realize significant and tangible benefits.
The basic lessons we learned so painfully from JIT and quality control initiatives are that a reduction in process cycle time exposes problems, improves resource management, and reduces overall costs. Supply management should initiate measurable programs in process time reductions, material delivery times, and acquisition cycle timeframes.
Reducing process cycle time is the most important task—reduce cycle time, and costs will decrease while productivity and quality increase. If you can only accomplish one objective, forget technology; just reduce process cycle time.
Now that the recession is finally over, let’s not forget those hard-fought lessons.