time, transparency & trust in the supply chain -...
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Time, Transparency & Trust Time, Transparency & Trust in the Supply Chainin the Supply Chain
Dr. Richard WildingCranfield School of Management
www.cranfield.ac.uk/som
Dr Richard WildingCranfield School of ManagementCranfield, Bedford, England, MK43 0AL.Tel: +44 (0)1234 754170 Fax: +44 (0)1234 751712 Email: [email protected]
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Agenda
The 3 T’s of Highly Effective Supply Chains.Velocity and Acceleration: the key drivers of Agility.Collaboration: enabling Velocity & Acceleration.Understanding and implementing C3 behaviour.Implementing the concept.
Generate enthusiasm for this simple yet powerful approach!Generate enthusiasm for this simple yet powerful approach!
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The 3T’s of Highly Effective Supply Chains
TransparencyTransparency
Agility Agility
TimeTime
TrustTrust
Transparency
Time
Trust
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Into the millennium…..
“If the 1980’s were about quality and the 1990’sabout re-engineering, then the 2000’s will be about velocity”
Bill Gates, 1999 “Business @ the speed of thought”
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Velocity
Velocity = Distance
TimeTo increase velocity we need to “Compress Time!”
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Agility
“ Agile competition demands that the processes thatsupport the creation, production and distribution of
goods and services be centered on the
customercustomer--perceived value of products.perceived value of products.
Successful agile companies, therefore, know agreat deal about individual customers and interact
routinely and intensively with them”
Source: Goldman et al
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Product: Luxury Saloon CarPrice: £40,000
Weighting %
Performance 30
Uniqueness 25
Comfort 25
Reliability 15
Safety 5
Customer-perceived value of products!
True or False?True or False?
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Product: Luxury Saloon CarPrice: £40,000
Weighting %
Ability to impress women/men 50
Ability to impress friends 25
Lots of toys to play with 20
Leg room in the back 5
Customer-perceived value of products!
True !!True !!
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Cost
Customer
YourCompany Competitor
Value
Time as a strategy
Value
Contin
uous
Inno
vatio
n
Excell
ence
Service Excellence
Adapted from: Ohmae & Kalakota
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They place emphasis on:
Responsiveness
Customer Focus
R&D and Innovation
Key features of organisations that compress time
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Rapid innovation
Time is a Competitive WeaponTime is a Competitive Weapon
“ My job is to make our products/service
obsolete, before our competitors do”Akio Morita, Akio Morita,
Chairman of SonyChairman of Sony
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Acceleration
Rate of change of Velocity
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• Mechanical typewriters had a 30 year life cycle• Electro-mechanical typewriters had a 10 year life
cycle• Electronic typewriters had a 4 year life cycle• Word processors have a 1 year life cycle
Product life cycle acceleration
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Sales
Time
• Less time to make profit• Higher risk of obsolescence
Market
Late Entrant
Obsolescentresource
Shorter life cycles make timing crucial
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-35-30-25-20-15-10-50
ElectronicsFine China
Market Introductionsix months late
50% cost over-runin development
Loss
of p
rofit
ove
rpr
oduc
t life
-cyc
le. (
%)
-33%
-5% -3% -2%
Source: McKinsey & Co., KPMG.
The importance of Time to Market
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Collaboration: Enabling Velocity & Acceleration
Consumerfocus
(e.g. EPOS)
Data Sharing
Integrate intoInternal
Applications
FlexibilityResponsiveness Shared KPIs
Agreed JointProcesses
TRUST
Source: Barratt, 2001
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Increased Customer Demand
Customer Loyalty
Attract the most Profitable Customers
De-stock due to Short Lead Times
Benefits of a time-based strategy
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Customer
YourCompany Competitor
Value Value
Cost
Time as a management tool
Operational ExcellenceAdapted from: Ohmae & Kalakota
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Time as a management toolTime as a management tool
Time is a more useful management tool than cost. Cost is by and large a lagging indicator.
Time is a common direct measure.
Time’s major advantage as a management tool is that it forces analysis down to a physical level.
Source: G Stalk, How Time-based Management Measures Performance
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Within typical company situations
Waste!
Value Adding Time = 5%Value Adding Time = 5%
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A change in perspective
Imagine you are an item being processed!Imagine you are an item being processed!
– I am written up as an order.
– I am moved into a briefcase.
– I wait in the briefcase for 2 days.
– I am faxed to the mail room.
– I am logged in ……..etc
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Defining value adding activity - operational level
An activity adds value if the customer cares about it.
An activity adds value if it physically changes the item.
An activity adds value if it is done right the first time.
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The big debate
A product on a ship for 2 weeks to America, Is this value adding?
– Value adding
– Non-value adding
– Non-value adding but essential!
It all depends on the context!
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Get your Supply Chain on one piece of paper!
Step 7 - Define Information Flows Lead TimeStep 7 - Define Information Flows Lead Time
Customer
10,000 pcs / Mon.- 5000 left
- 5000 right
Pack Qty=1 roll
2 Shifts
Pack and DespatchManufacture 1 Manufacture 2 Manufacture 3Goods Inwards
Prod. rate = 110s
C/O = 1 hour
Uptime = 85%
Batch Size = 20002 Shifts
C/O = 15 min
Uptime = 100%
Batch Size = 5002 Shifts
C/O = 5 min
Uptime = 100%
Batch Size = 5002 Shifts
Supplier
10000 LinearMetre Coils
TuesandThurs
1 xdaily
Prod. rate = 110s Prod. rate = 110s
I I I I5 DOS 200 1000 5000 2000 10000
I I
Q
Q
Q
500 ppm
2 people
50000 ppm
5 people
50 ppm
2 people
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1 0.5 4 4 1
2
Sales
(M)
Prodn
Plan
(M)
Prodn
Cntl
(M)
Matl
Plan
(M)
Purch
(M)
Long TermForecast (M)Long Term
Forecast (M)
Daily Order(M)
Weekly Fax(M)
Daily Order (M)
Weekly Schedule (M)
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Adapted From: SA Partners, Cardiff, UK and Rother & Shook “Learning to See” ISBN 0-9667843-0-8
Time ScaleBusiness
Processes
ConsumerDelivery
Goods In
ManagementDecision
ValueAdding
QueueTime
Re-WorkTime
Production
Gaining Transparency of Process
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CommodityMarket End User
(20)
(10)
(5) (5) (5)
(10) (10)
(15)(15)
(20)
Processing (15) Configuring (10)Packaging
Finishing (7)(2)
Glue (18)
Raw MaterialFinished
goods store Material store
stock ConfiguredProduct
Rawmaterial
store
Cut workbuffer
Finishedgoods
warehouseDistribution
centre
Store
Raw Materials Distributor Customer
Length 60 Days Volume 175 Days
Componentcutting (5)
Manufacturer
Simple projects to initiate collaboration.Transparency of Time and Inventory
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Organisational benefits of approach
Creating a TIME-BASED perspective of the entire business process.– Validating and prioritising the opportunities for change.
Achieving total TRANSPARENCY through time based measures. – Providing a foundation for a time-based organisation,
aligned to business processes.Creating TRUST between all “players” and improving customer satisfaction.
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C3 behaviour – an essential for supply chain success.
Cooperation Coordination
Collaboration
C3
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Multiplying the benefits:C3 behaviour and Trust.
High
LowLow HighC3 behaviour
Trust
Win/Lose or Lose/Win [1+1=1 !]
Compromise [1+1=1.5 !]
Win/Win [1+1=8 !]
Adapted from: Covey, 1989
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C3 behaviour and Trust in 54 Collaborative Environments.
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30
40
50
60
70
80
90
100
110
20 30 40 50 60 70 80 90 100 110
C3 Behaviour
Trus
t
Highly Creative!
Total Disaster!
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Emotional Intelligence gains competitive advantage.
A passion for competition and continual improvement.Organisational commitment to a basic strategy.Open communications & trust-building with all stakeholders.Building relationships both internally & externally that offer competitive advantage.Collaboration, support, and sharing of resourcesInnovation, risk taking, and learning together.
Top 25% of companies selected for profitability, Cycle times,output etc. showed the following characteristics:
Source: Goleman “Working with Emotional Intelligence” 1998
Analysis of case histories shows that a Analysis of case histories shows that a change to change to TIME BASEDTIME BASED policies, practices policies, practices and controls can bring:and controls can bring:
Quality improvements 60% to 80 %
Productivity improvements 50%+
Inventory reduction 50% to 90%
Development time reduction 50% to 75%
Source: Professor Goran Persson, Norwegian School of Management
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Cranfield projects.What can be achieved in 16 hours!
Medical Supplies Payment Cycle - 20 days Compression
Saving £150K p.a.
Printers Inventory Replenishment - 16 days to 1 hour!
Armed Forces Engine Refurbishment - Saving £430K p.a.
Pharmaceutical Customer Credit Process - 22 days to 7 days
IT training Course Development - 60 days to 40 days
Armed Forces Officer Evaluation Process - 6 months to 2 months
Retailer Magazine Returns - Saving £250K p.a.
Chemicals Sales order processing -50 hours to 12 hours
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Focus on Time as the Measure of performance
Analyse resources with respect to time
Enable their Business to offermore Responsive Services to their
Customers
Eliminate Waste- giving Cost Savingand improved Quality
Create an organisationMotivated to Working
in a ConstantlyChanging
Environment
An Agile company can expect to......
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TransparencyTransparency
Agility Agility
TimeTime
TrustTrust
Transparency
Time
Trust
Removing one “T” results in collapse!Conclusion.
For effective collaboration the 3 T’s are key!
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Www.cranfield.ac.uk/som
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Dr Richard WildingCranfield School of Management
Cranfield, Bedford, England, MK43 0AL.Tel: +44 (0)1234 754170 Fax: +44 (0)1234 751712
Email: [email protected]: www.cranfield.ac.uk/som/cclt
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