Whatever
it is your business sells, you need to deliver it better, faster,
cheaper. Or else. Cycle-time reduction is a vital tool in doing so.
And these days, information technology goes hand-in-hand with
cycle-time reduction.
Cycle time is the amount of time it takes to complete a process.
Any process: developing a subassembly, collecting accounts
receivable or delivering a product to market. The latter, time to
market, is perhaps the best-known. According to a report published
by the FedEx Center for Cycle Time Research at the University of
Memphis, "All too often in organizations, less than 3% of the
elapsed time performing a process has anything to do with real
work." The rest is spent "scheduling, waiting, needless repetition,
getting lost (and) getting found." You reduce cycle time by trimming
the fat and focusing on the real work.
The first generation of the cycle-time improvement, launched
largely in Japan, focused on operations and required little from IT.
In the 1980s, kanban and just-in-time became business buzzwords as
production got leaner. But with these operating efficiencies in
place, IT is about the only way left to cut cycle times.
IT Reductions
IT has enabled dramatic reductions in cycle times. New cars go
from concept to showroom in as few as 24 months, a 50% reduction
over typical 1990 time to market. Computer-aided design (CAD) tools
are a major factor; design processes that once required
time-consuming clay models are now done online. Global collaboration
shortens cycle times, too. For instance, engineers at Detroit-based
General Motors Corp.'s power-train division use an intranet to
exchange complex documents -- CAD drawings, electrical diagrams and
software source code -- with colleagues all over the world.
Naturally, the Internet is helping shrink cycle time, especially
critical time to market. Traditional consumer clinics and focus
groups are giving way to Internet-based feedback systems, in which
consumers study and critique virtual prototypes. Stuttgart,
Germany-based DaimlerChrysler's PT Cruiser will use this tool.
This online response gathering is "so much faster and cheaper"
than traditional focus groups, says Scott Elliott, a principal at
Product Development Consulting Inc.'s Santa Rosa, Calif., office.
Using the Web, he says, "you can survey 1,000 people . . . and get a
60% response. Takes two weeks. It used to take months." Boston-based
Product Development has helped Lucent Technologies Inc. in Murray
Hill, N.J.; Cisco Systems Inc. in San Jose; Eastman Kodak Co. in
Rochester, N.Y.; and others define product specifications.
Ford Motor Co. in Dearborn, Mich., and GM are battling to use the
Internet to reduce cycle times. Both companies hope recently
announced e-commerce plans will reduce costs throughout their supply
chains (News, Nov. 8). As Brian Kelley, president of Ford's global
e-commerce unit, told Computerworld, "If we don't see a significant
reduction in (manufacturing) cycle times, we won't have done our
job." The automakers say that in four years or less, they'll be
delivering built-to-order vehicles in three days.
Is there such a thing as being too fast to market? Elliott says
yes. It's "becoming a little less of an issue," he says, supplanted
by total return on new products. Companies that jump the gun risk
finding "customers aren't ready, or they can't ramp up fast enough,"
says Elliott. "People who do a better job of product definition and
development, but aren't quite as quick to market, can get a better
return."
Christopher Meyer agrees. The author of Fast Cycle Time, Meyer
says coming to market "fast, with junk, is not good." And the
Internet has another effect too, he points out: If you do try to
sell junk, "everybody knows about it" in days.
Business-to-Business
While the Internet's affect on business-to-consumer cycles has
appeal, Meyer and others believe business-to-business is the mother
lode. Most of the advantages to be had by the fast movers -- the
Amazon.coms, the eBays and the Yahoos, which Meyer calls "basically
a landgrab" -- are gone. "If this is a game, the landgrab is
certainly in the second half," he says. "Maybe the fourth quarter."
But the steadier business-to-business effect of the Internet will
eventually be the Louisiana Purchase. The reason: By eliminating
distance as a roadblock, the Internet is breathing new life into
collaboration. "One of the old tenets of product development is that
cross-functional groups should be collocated," Elliott says. "But
that's flattened out. People are learning to collaborate over the
Net."
Global collaboration within a single business is old hat. What's
newer is "horizontal outsourcing." Rather than ordering suppliers to
build subassemblies to rigid specifications, companies "look to them
to add value," Meyer says. "The community goes beyond walls of
enterprise." And it might as well, he adds, because "research shows
that if you're 100 meters from another person, they may as well be
on another continent."
Thus, collaborating with a supplier in Bangalore doesn't have to
be any harder than collaborating with the sales department three
stories down.
Experts agree that as Web-based collaboration grows more
comfortable and robust, cycle times will continue to
shrink.
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