The key differences of time-based competitors appear to be:
- They view the entire system, including suppliers, distributors, and customers, rather than considering only individual functions.
- They focus on reducing "non-value-adding" time rather than trying to make people or machines work harder or faster on value-adding activities.
- They give the measurement of time and responsiveness the same priority as, if not higher priority than, the measurement of cost.
As a strategic weapon, time is the equivalent of money, productivity, quality, even innovation. The ways leading companies manage time - in production, in new product development and introduction, in sales and distribution - represent the most powerful new sources of competitive advantage. Cutting-edge Japanese companies are capitalising on time as a critical source of competitive advantage: shortening the planning loop in the product development cycle and trimming process time in the factory - managing time the way most companies manage costs, quality or inventory. In the early 1960s, the Japanese shifted their strategy, using capital investment to boost work-force productivity. They inaugurated the era of scale-based strategies, achieving high productivity and low costs by building the largest and most capital-intensive facilities that were technologically feasible.
In the mid 1960s top Japanese companies turned to the focused factory as a new source of competitive advantage.
In the late 1960s leading Japanese manufacturers moved towards the flexible factory as a new source of competitive advantage. Two developments drove this move. First, as they expanded and penetrated more markets, the narrow product lines of their focused factories began to pinch, limiting their ability to grow. Second, with growth limited, the economics of the focused factory strategy presented them with an unattractive choice: either reduce variety further or accept the higher costs of broader product lines.
The Toyota (flexible factory) system was, according to its inventor, Taiichi Ohno "born of the need to make many types of automobile in small quantities with the same manufacturing process". With its emphasis on just-in-time production, total quality control, employee decision making on the factory floor, and close supplier relations, the Toyota system gave the many Japanese manufacturers who adopted it in the mid-1970s a distinct competitive advantage. They were enabled to produce a greater variety of products and introduce new products much more rapidly.
They managed structural changes that enabled their operations to execute their processes much faster. As a consequence, time became their new source of competitive advantage.
While time is a basic business performance variable, management seldom monitors its consumption explicitly - almost never with the same precision accorded sales and costs. Yet time is a more critical competitive yardstick than traditional financial measurements. Today's new-generation companies compete with flexible manufacturing and rapid response systems, expanding variety and increasing innovation. A company that builds its strategy on this cycle is a more powerful competitor than one with a traditional strategy based on low wages, scale or focus. These older, cost-based strategies require managers to do whatever is necessary to drive down costs: move production to or source from a low-wage country; build new facilities or consolidate old plants to gain economies of scale; or focus operations down to the most economic subset of activities. These tactics reduce costs but at the expense of responsiveness.
In contrast, strategies based on the cycle of flexible manufacturing, rapid response, expanding variety and increasing innovation are time based. Factories are close to the customers they serve. Organisation structures allow fast responses rather than low costs and control. Companies concentrate on reducing if not eliminating delays and using their response advantages to attract the most profitable customers.
In general, time-based manufacturing policies and practices differ from those of traditional manufacturing along three key dimensions:
Length of production run
Shorten production runs as much as possible. Reduced run lengths mean more frequent production of the complete mix of products and faster response to customers demands.
Organisation of process components
Time based factories are organised by product. To minimise handling and moving of parts, the manufacturing functions for a component or a product are as close together as possible. Parts move from one activity to the next with little or no delay. Because the production process eliminates the need to pile and re-pile parts, they flow quickly and efficiently through the factory.
Complexity of scheduling procedures.
In time based factories, local scheduling enables employees to make more production control decisions on the factory floor, without the time-consuming loop back to management for approval.
The next challenge is to avoid dissipation of factory performance improvements in other parts of the organisation, for example in Sales and Distribution and in Innovation/Product Development.
- Stalk, George. Jnr., "Time - The Next Source of Competitive Advantage". Harvard Business Review, July-August 1988.
- Stalk, George. Jnr., "Time - The Next Source of Competitive Advantage". Quality Progress, June 1989, pp 61 - 68. (Reprint of the above)