Saudi Electronic University Managing the Lead Time Frontier Discussion

Slide 5.1
Chapter 5:
Managing the lead-time frontier
Harrison and van Hoek, Logistics Management and Strategy: Competing Through the Supply Chain, 4th Edition, © Pearson Education Limited 2011
Slide 5.2
Harrison and van Hoek, Logistics Management and Strategy: Competing Through the Supply Chain, 4th Edition, © Pearson Education Limited 2011
Slide 5.3
Managing the lead-time frontier
• This chapter takes a strategic and
managerial view of time and of the impact
of time on logistics performance.
• How time can provide competitive
advantage in logistics.
Harrison and van Hoek, Logistics Management and Strategy: Competing Through the Supply Chain, 4th Edition, © Pearson Education Limited 2011
Slide 5.4
The role of time in competitive
advantage
• Key issues
1
What is time-based
competition?
2
How does time-based
competition link to other
initiatives?
3
What is the purpose of
time-based competition?
Harrison and van Hoek, Logistics Management and Strategy: Competing Through the Supply Chain, 4th Edition, © Pearson Education Limited 2011
Slide 5.5
The role of time in competitive
advantage
• Definition and concepts
quality
cost
business advantage
Time-based competing time
The timely response to customer
needs
Harrison and van Hoek, Logistics Management and Strategy: Competing Through the Supply Chain, 4th Edition, © Pearson Education Limited 2011
Slide 5.6
The role of time in competitive
advantage
– Traditional opinion
Fast delivery
High quality
Low cost
Harrison and van Hoek, Logistics Management and Strategy: Competing Through the Supply Chain, 4th Edition, © Pearson Education Limited 2011
Slide 5.7
The role of time in competitive
advantage
– good quality actually reduces costs by
measures as:
• designing the process so that defects cannot
occur;
• designing the products so that they are easy
to make and distribute;
• Training personnel so that they understand
the process and its limitations.
Harrison and van Hoek, Logistics Management and Strategy: Competing Through the Supply Chain, 4th Edition, © Pearson Education Limited 2011
Slide 5.8
The role of time in competitive
advantage
Improving quality
Cost increasing
Reducing lead time
Harrison and van Hoek, Logistics Management and Strategy: Competing Through the Supply Chain, 4th Edition, © Pearson Education Limited 2011
Slide 5.9
The role of time in competitive
advantage
Time-based initiatives
• When a company attacks time directly the benefits
are shorter cycle times and inventory turns
Finding sources and causes of breakdowns
Time reduction
Cost reduction
Quality improving
Finding sources and causes of delays
Harrison and van Hoek, Logistics Management and Strategy: Competing Through the Supply Chain, 4th Edition, © Pearson Education Limited 2011
Slide 5.10
The role of time in competitive advantage
Time-based opportunities to customer
needs and add value
– Increased responsiveness to customer needs
deliver a product
or service on time
deal with customer
queries and
complaints on time
Increased
responsiveness to
customer
Customer
loyalty
– Managing increased variety
Reducing overall lead-time
Reducing product complexity
Reducing process set-up time
Production with
more frequency and
smaller batches
Increased
variety of
products
Harrison and van Hoek, Logistics Management and Strategy: Competing Through the Supply Chain, 4th Edition, © Pearson Education Limited 2011
Slide 5.11
The role of time in competitive
advantage
• Time-based opportunities to add value
– Increased product innovation
• Reducing new product development lead time 
Innovation through product design faster than
competitors  Competitive advantage
– Improved return on new products
• Putting new product earlier to market can
–
–
–
–
Extend the sales life of the product
Charge a higher price
Won new customers
Build a high market share through building on the initial
leader
Harrison and van Hoek, Logistics Management and Strategy: Competing Through the Supply Chain, 4th Edition, © Pearson Education Limited 2011
Slide 5.12
Figure 5.1
Break-even time
Harrison and van Hoek, Logistics Management and Strategy: Competing Through the Supply Chain, 4th Edition, © Pearson Education Limited 2011
Slide 5.13
The role of time in competitive
advantage
• Time-based opportunities to reduce cost
– Reducing working capital
• Eliminate unnecessary steps and wasted time
• Focus: inventory (raw materials, work-in-process
goods and finished goods)
– Reducing plant and equipment capital
• Remove the equipment not employed in activities
• Focus: racking and pallets formerly used to store
inventory
Harrison and van Hoek, Logistics Management and Strategy: Competing Through the Supply Chain, 4th Edition, © Pearson Education Limited 2011
Slide 5.14
The role of time in competitive
advantage
• Time-based opportunities to reduce cost
– Reducing development costs
• Elimination of rework and reduction of distracting
unnecessary projects
– Reducing quality costs
• Reducing lead time so as to accelerate feedback
and hence reduce time between error being made
and problem being detected.
Harrison and van Hoek, Logistics Management and Strategy: Competing Through the Supply Chain, 4th Edition, © Pearson Education Limited 2011
Slide 5.15
The role of time in competitive
advantage
• Limitations to time-based approaches
– Limitation to the need for speed
• Not all operating environments require speed.
• Not all customers value speed.
– Limitation to degree of speed required
• Time-based approaches are not about managing
exceptions but managing for speed reliably.
Harrison and van Hoek, Logistics Management and Strategy: Competing Through the Supply Chain, 4th Edition, © Pearson Education Limited 2011
Slide 5.16
Figure 5.2
Distribution of shipment cycle times in days
Harrison and van Hoek, Logistics Management and Strategy: Competing Through the Supply Chain, 4th Edition, © Pearson Education Limited 2011
Slide 5.17
P:D ratios and differences
• Key issues
1
2
What are P- and D-times?
Why are P- and D-times
important to logistics
strategy?
Harrison and van Hoek, Logistics Management and Strategy: Competing Through the Supply Chain, 4th Edition, © Pearson Education Limited 2011
Slide 5.18
P:D ratios and differences
• P-time and D-time are measures of
performance of the supply pipeline.
• Using time to measure supply chain
performance
– P-time (Production time)
• The time it takes to pass a product or service
through supply chain
• including the time needed to procure the longest
lead time parts and the total manufacturing time
P-time = customer raises order
deliver product to customer
Harrison and van Hoek, Logistics Management and Strategy: Competing Through the Supply Chain, 4th Edition, © Pearson Education Limited 2011
Slide 5.19
P:D ratios and differences
• Using time to measure supply chain
performance
– D-time (Demand time)
• The time for which a customer is willing to wait to
have their demand fulfilled
D-time
 [ expected minimum , expected maximum ]
• Manufacturers with short D-times face increased
supply chain challenges compared with those who
have long D-times.
Harrison and van Hoek, Logistics Management and Strategy: Competing Through the Supply Chain, 4th Edition, © Pearson Education Limited 2011
Slide 5.20
Figure 5.3
When P-time is > D-time
Harrison and van Hoek, Logistics Management and Strategy: Competing Through the Supply Chain, 4th Edition, © Pearson Education Limited 2011
Slide 5.21
Time-based process mapping
• Key issue
1
How do you go about
measuring time in a supply
chain?
Harrison and van Hoek, Logistics Management and Strategy: Competing Through the Supply Chain, 4th Edition, © Pearson Education Limited 2011
Slide 5.22
Time-based process mapping
❖Stage 1: create a task force
❖Stage 2: select the process to map
❖Stage 3: collect data
❖Stage 4: flow chart the process
❖Stage 5: distinguishing between value-adding
and non-value-adding time
❖Stage 6: construct the time-based process map
❖Stage 7: solution generation
Harrison and van Hoek, Logistics Management and Strategy: Competing Through the Supply Chain, 4th Edition, © Pearson Education Limited 2011
Slide 5.23
Table 5.2
Example of process document
Harrison and van Hoek, Logistics Management and Strategy: Competing Through the Supply Chain, 4th Edition, © Pearson Education Limited 2011
Slide 5.24
Figure 5.4
Process activity mapping and sources of waste
Harrison and van Hoek, Logistics Management and Strategy: Competing Through the Supply Chain, 4th Edition, © Pearson Education Limited 2011
Slide 5.25
Figure 5.5
Walk the process (12 steps)
Harrison and van Hoek, Logistics Management and Strategy: Competing Through the Supply Chain, 4th Edition, © Pearson Education Limited 2011
Slide 5.26
Figure 5.6
Identify every process step
Harrison and van Hoek, Logistics Management and Strategy: Competing Through the Supply Chain, 4th Edition, © Pearson Education Limited 2011
Slide 5.27
Table 5.3
Time-based analysis data
Harrison and van Hoek, Logistics Management and Strategy: Competing Through the Supply Chain, 4th Edition, © Pearson Education Limited 2011
Slide 5.28
Figure 5.7
Time-based process map: current
Harrison and van Hoek, Logistics Management and Strategy: Competing Through the Supply Chain, 4th Edition, © Pearson Education Limited 2011
Slide 5.29
Figure 5.8
Cause-and-effect diagram
Harrison and van Hoek, Logistics Management and Strategy: Competing Through the Supply Chain, 4th Edition, © Pearson Education Limited 2011
Slide 5.30
Figure 5.9
Time-based process map: re-engineered
Harrison and van Hoek, Logistics Management and Strategy: Competing Through the Supply Chain, 4th Edition, © Pearson Education Limited 2011
Slide 5.31
Figure 5.10
A methodology for time-based process improvement
Harrison and van Hoek, Logistics Management and Strategy: Competing Through the Supply Chain, 4th Edition, © Pearson Education Limited 2011
Slide 5.32
Managing timeliness in the
logistics pipeline
• Strategies to cope when P-time is
greater than D-time
Strategy when
P-time > D-time
Short term
Long term
•Make-to-order
•Make-to-stock
•Marketing
•Product development
•Process improvement
Harrison and van Hoek, Logistics Management and Strategy: Competing Through the Supply Chain, 4th Edition, © Pearson Education Limited 2011
Slide 5.33
Managing timeliness in the
logistics pipeline
• Ways to reduce P-time
•Control
▪ Optimizing throughput and improving process capability
•Simplify
▪ Untangling process flows and reducing product complexity
•Compress
▪ straightening process flows and reducing batch sizes
•Integrate
▪ Improving communications and implementing teams
•Coordinate
▪ Adding customer-specific parts as late as possible
•Automate
▪ Using robots and IT systems
Harrison and van Hoek, Logistics Management and Strategy: Competing Through the Supply Chain, 4th Edition, © Pearson Education Limited 2011

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