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Time
Compression
A
Single-Minded Improvement Strategy
Bill
Tolley responded to the Elevator Button Parable with several
insightful comments:
"My perspectives on
new paradigms relate to speed. In the physical world mankind has found increasing success in competition. Athletes run faster
to win footraces, however, linemen on football teams become greater assets if they can run as fast as those they are to tackle. If the running back can reach the end zone faster than anyone else the result is an increase in efficiency - achieving a higher score and winning. Accordingly, the faster one moves
(the closer to real time) the better the results. To continue with the sports analogy, a quarterback with a "quick release"
who also delivers the ball at a high rate of speed (ball thrown on a line) ascends to the top of his profession, ala Dan Marino. The closer to real time consummation of the thought and the ultimate delivery, the greater the result.
In the last century, the concept of "just in time" inventory management and production product flow was developed. The closer to real time the process operates
yields greater efficiency and less cost. At its ultimate, one could eliminate
all inventory if the process was perfectly timed. [Editor's
note -- Dell has nearly achieved this goal, with extraordinary impact
on Return on Assets] This is an obvious example of my point, but the same concept can be applied in the non-physical world. The speed of
decisions often can also have a profound impact on a business. If executive decisions could be moved into a real time paradigm, one can only wonder what results could be achieved.
An example of my "real time" principle would be the software platform developed by Heritage to operate all of our telecom services. The data-based platform was able to take into account certain variables and make a decision how to route each call
through our network. The computer software took into account costs, quality and
pre-established preferences by customer. This system could process several hundred
thousand calls a day and always made the correct decision based on the variables present. The system functioned in microseconds
-- increments considered "real time" in the industry. This system provided considerable efficiency since operational staff only had to deal with things that broke or changes in configuration of our network.
Finally, back to my previous point - if management decisions could be made in "real time", major efficiencies could be accomplished in
non-production functions. Whereas Heritage was able to create a state of the art operating system, we were
average at best, in other functions of the company, e.g.. marketing and financing.
Had we been able to organize other functions and resources into a real time mode I believe results would have been
dramatic."
If this idea sounds useful to
you, order Competing
Against Time: How Time-Based Competition is Reshaping Global Markets
by George Stalk (Amazon.com link included to save you time). Stalk's
premise is (and I'm convinced he's right) that if you pay attention only
to reducing total elapsed time in your business processes -- not the
"do" time, but the total hours (or days or weeks) elapsed
from beginning to end of a process,
your business will improve.
Sound reasonable? When was the last time a sales cycle
stretched out with a better result? When was the last time
inventory sat on the shelf longer and got better? When was the
last time a receivable got older and became more easily
collectable?
Try it -- ask some part of your organization to drop their detailed
metrics on efficiency, machine utilization, unit labor hours, etc.,
and just focus on dramatically reducing the total elapsed time from
when the "big picture" process starts (such as the moment an
order goes to the floor) and ends (the moment the freight carrier
drives away with the product on its way to the customer). Or in
the even bigger picture, from the time the order arrives until the
time the customer has the order in hand? What
could you do to compress that time by an hour? A day? A
week? As a target, ask them to reduce it by half.
You may see quality improve and cost decline, while customer
satisfaction (or amazement) increases.
Then, as Bill suggests, look for similar opportunities to reduce
elapsed time in management decision-making. For example, the
elapsed time between 11:59 pm on the last day of the month until you
have the books closed, reports in hand, and your next month's
operations & financial plans adjusted accordingly. Or from
the moment the order is shipped until the moment the customer has the
invoice in hand (by how many days could just electronic
invoicing reduce your DSO)?
We're anxious to hear your Time Compression war
story.
Terry Weaver
CEO
Chief Executive Boards International
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