The achievement of time compression requires a quality-based approach.
This can be viewed from two perspectives of quality. First, time com-pression demands that product quality is to a specification that matches
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Figure 5.2 Time-based process mapping – value-add analysis
customer needs and more specifically end-user needs. Anything less will obviously have strategic market implications, such as a loss of customers and goodwill. This will consume unnecessary time in the sales, marketing and manufacturing process, which will have to rectify or replace the product or customers. An investigation of these time-wasting activities can, therefore, highlight possible root causes of problems that may be
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Retail Wholesale Warehouse Assembly ends Ingredient/Component production ends Process 1 starts < Process 2 starts
Grey bars = Stock Non-colour = Process End customer
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Figure 5.3 Time-based process map of an entire supply chain. This UK example shows the key processes that move material out of the ground and maps the processes that evolve the material into something that fulfils customer demand. Value time is not displayed in this view;
however, value analysis revealed that the aspects noted in bold are key issues. The longest process time in this example was the decision-making process, which consumed 14 days and is therefore the largest element of the finished goods supply lead time. In contrast, the overall production time of just a few minutes is the shortest element
founded in quality issues. Time, therefore, provides the focus for quality improvement.
The above complements the second dimension of quality where it is not just important for the customer but also for the company. This is the total quality management (TQM) approach (Oakland and Beardmore, 1995), which also focuses on waste elimination. One key issue with TQM programmes is that they have been known to lose impetus because of a lack of focus. Mallinger (1993) and Glover (1993) identify the need for a holistic approach to provide a focus for TQM to operate effectively.
A time compression approach provides this because it uses a simple measure that is visible to the total supply chain and not just a small isolated segment. It can thus link and integrate all of the elements of a TQM approach using the key metric of ‘time’. An example of this might be a focus on the time taken to make critical decisions that in effect constrain an order or product batch being processed. Typically sales and operations meetings tasked with matching demand and production may represent this process constraint, as illustrated in the TBPM shown in Figure 5.3. By implication, the lapse times of these meetings sit on the critical path of any supply chain process. The majority of this time is non-value-add and therefore provides a key focus for addressing the total quality of all activities that interplay with the process. Examples will in-clude the major quality-related aspects, from systems to produce accurate and timely information through to the more routine but easily under-estimated aspects such as people attending meetings on time, effective communications and proper prioritization of tasks and activities. The non-value activity, particularly the low-profile issues, may not be generally recorded from a cost perspective but the delay on the critical path can be measured in terms of inventory cover and customer lead time and is therefore high visible.
The TIme ComPressIoN aPProaCh – TeChNoloGy advaNTaGe
Technology should not be applied purely for reasons associated with what is on offer or mimicking the competition. Its application must take account of the individual circumstances of the business and its customer needs, and then ensure a competitive differentiation. A focus on the time-based impact of the application of technology will help steer a company to this goal. Examples of technologies that can achieve time compression are numerous and some of the more notable developments (Barker and Helms, 1992) include: computer numerically controlled (CNC) machines,
robotics, computers in manufacturing (CIM) and logistics-related examples such as the WMS application mentioned earlier. All of these reduce time for individual activities, but the time-based impact must be considered holistically in order to check that the technology is appropriate for the supply chain. A key perspective is that many automated systems cannot cope with high levels of demand variation, largely because the technology is designed against very exacting functional specifications. A time com-pression approach provides the focus for the application of technology when the seven strategies identified by Carter et al are addressed in a carefully considered sequence. This usually considers the low- or non-technology strategy solution before moving to state-of-the-art automated solutions, such as computerized material handling and control or the various forms of ERP. This approach will ensure that the application of technology is strategically significant as well as delivering tactical pro-ductivity gains.
The TIme ComPressIoN aPProaCh – CusTomer foCus
Different customer and ultimate end-user needs are satisfied by channels that are capable of delivering different types of service. Different product and market sectors have different service needs. The most appropriate way to meet these needs is through channels that are specifically designed to have distinct logistical capabilities. The alternative is to push everything through the same channel – but the result will be that some customers will be over-served while others are underserved. This will have an adverse effect on costs, customer goodwill and ultimately sustainable profitability. This is all linked with the principle of horizontal boundary definition and is important in channel construction because of the signifi-cant impact it can have on the customer.
One of the key impacts of the requirement for distinct logistics chan-nels is the need to align them to different types of market and product segment. Figure 5.4 illustrates a simplified form of segmentation into four generic supply categories for differing product and market types (adapted from FhG ISI, 1993). The horizontal axis represents levels of demand certainty, with the vertical axis showing levels of product complexity.
Different product types fit into one of the quadrants according to the certainty and complexity criteria.
The chart shows that products that have a volatile demand pattern and low constructional complexity will require flexible supply operations to minimize risk. An agile approach is required so that the business process
can respond rapidly to new customer requirements in a market that is populated by ‘fast follower’ competitors enabled by low product complexity. Conversely, products that have more stable and predictable demand are usually in more cost-focused supply situations demanding lower unit costs through tighter management control and probable large economies of scale.
There are therefore two basic supply concepts, one where a business process must be agile, for example a high fashion garment supply chain, and one lean, where a typical example would be commodity-based products such as industrial chemicals. It must be recognized that a range of different products lie between these extremes and may therefore require a mix of both approaches. For example, quadrant 1 would be represented by super-value goods such as the manufacture of aircraft.
These are highly complex items sold into markets with some uncertainty and influenced by fluctuating business cycles and therefore require process agility. Some lean approaches will, however, be required to underpin the longer-horizon investments in a supply market that has the time to evolve and apply competitive pressure. Quadrant 2 is the converse of 1 in that it is characterized by fast-moving consumer goods (FMCG)-type products, which generally sell in more consistent market