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Competitive
Advantage - A Matter of Time
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Written: 1996 "It is not possible to hold the day, it is possible not to lose it" - Sundial 15th century. After 5000 years of civilisation, after having split the atom, after taking the moon in its giant leap and after being able to create energy by altering the sum total of mass in the universe, human kind has yet to understand the most bountiful of all resources. Time. It can not be created or destroyed. It cannot be slowed down (except in relativistic theory), it is the most equitably distributed resource and flows its course, affecting our every act and thought all pervasively, yet it remains mystic, discrete yet cyclical, plentiful yet painfully inadequate; in short, little understood and totally beyond our control. Ever since man learnt to barter, the rules of efficiency and productivity have decided the fate of business ventures. In other words, the ability to make better use of time has been the key to economic success. Modern management has not been able to rewrite this script. From Taylor to Demming and from Rockefeller to Jim Clark, its still a story of the quicker takes all. We Indians have an infamous reputation in the world when it comes to time management (remember Indian Stretchable Time ?). There is a supposed difference in the perspective of time between the orient, where vedic time is seen to be cyclical and recurring, and the occident, where it is linear and discrete. Anand Kasturi, 35, a Bangalore based consultant, feels that this dichotomy is key - that Indians are not bad at managing time, we merely have a different perspective of it. This implies that when you keep in mind the cosmic cycles and the passage of the universe, 9.00 AM, Monday, is no different from any time on Monday morning. Be that as it may, the effect of such a holistic mind span is that the average Indian company achieves less in a day, a month or in a year than its Western counterpart. Likewise for the Indian manager. Which is fine until they start competing on the global marketplace in a fight to the finish. Behold, those ancient monsters, efficiency and productivity, rise from the past to swallow the slower and the weaker. If speed makes us sacrifice value of the product or service we offer, then the tradeoff must be understood and deliberated upon. Blind speed is as dangerous as congenital procrastination. By now, though, most managers agree on three things. The first is that time is a source of competitive advantage. The second is that Indian companies are further from winning this competitive edge than the Western Corporation, though a certain discipline is already being driven in by the culture of the multinationals. The third point of consensus is that the advancement in information technology is the single greatest influence in organisational time management. The question that remains, therefore, is : how does a company gear itself up for a spurt in productivity and competitive time utilisation ? You can't control time, but you can manage your organisation to make the best use of available time, and the four levels at which you can do this are: strategic, project, cycle, and individual levels. Time management expertise apparently does not naturally extend across the levels. Examples abound of companies good at some levels but not at others. The problem, therefore, has different avatars and accordingly, needs to be tackled differently at each level. In the rest of this article, we will look at this problem at the four levels and identify at each, the typical time stealers and the tenets of improved time management. Its critical to bear in mind that any source of competitive advantage is likely to get competed away in the long run. As George Stalk Jr. , BCG, says, in his 1988 HBR article Time : The Next Source of Competitive Advantage:"Like competition itself, competitive advantage is a constantly moving target. For any company in any industry, the key is not to get stuck with a single, simple notion of its source of advantage. The best competitors, the most successful ones, know how to keep moving and always stay on the cutting edge. MANAGING STRATEGIC TIME "I wasted time, and now time doth waste me" - Shakespeare "Richard II" Strategic planners are sometimes troubled by the consequences of being too early. Unfortunately the cost of being late could be fatally high. Godrej GE(Rs 540 cr), one of the oldest and strongest players in the refrigerator market is relaunching its Washing Machines. Unfortunately, newer, faster companies have already been in the business for over 5 years, and are in very commanding positions in the rapidly growing market. Harsh Mariwala, 45, MD, Marico (Rs 350 cr), agrees that Marico's success in cooking oils is due in no mean measure to its being able to occupy the Safflower oils niche early enough - making it unattractive for others to compete for the high ground of healthy cooking oils. Flexibility is key. As Vikram Kaushik, 46, Vice President, Marketing & Exports, Britannia Industries(Rs 659.2 cr), says,".. the key in strategic planning is to retain at all times the ability to speed things up". Jayant Kumar, 42, CFO, BPL Telecom, (Group T/o 1176 cr) explains how BPL made use of strategic timing when in the CTV business, they --focussed their resources in the early years, while the demand outstripped the supply, to develop and improve their products. Then, when the supply caught up, they were able to direct all resources towards advertising. Strategic time management thus implies, at one level, speed, in spotting opportunities, making decisions and setting in motion the wheels of implementation. At another, further level, as propounded by George Stalk Jr and Thomas Hout of BCG, strategic time management suggests that time be the principal dimension along which the organisation chooses to compete, to differentiate itself and stay ahead of the competition. Opportunity spotting can be honed by better ability to forecast the future and improved skills at continuously collecting more and better information and using the same. Motorola feels that in the information systems business the return on a programme needs to be assured for 5 years. Jose Tormo,43, Director Motorola Strategic Planning, Information Systems Group, classifies future events on their uncertainty and criticality, and accordingly focuses his attention on information gathering. He defines his job as reading the next 5 years. Improved decision making, says James Andrew, 35, MD, BCG, is a matter of viewing decision making as a process. Like any process unless it is designed for efficiency it will not deliver on that count. A well designed decision making system should define turnaround times, information required and the evaluation processes. The design should address the questions : "What are the decisions that will be put through the process ?", "What are the key requirements that the process needs to satisfy ? (speed, risk, etc.)", and finally, "Who needs to be involved ? (authorities, experts)". Its critical to define the depth and detail of information - to distinguish what's required from what is merely interesting. In implementation, speed can be achieved either through a command and control mechanism or through empowered teams. The top management needs to move towards making quicker, fewer decisions, with each having a bigger impact i.e. the decisions that matter. That way, lower management gets to take decisions on their own and, by virtue of open and defined processes, understand how decisions are made. The organisation becomes more responsive. Speed, says Andrew, may be an offensive opportunity or a defensive necessity. For example, the price of new technology falls with time. So a company buying technology and not using it effectively, loses not only the advantage of time, but also cost as the later buyers can access the technology at a lower cost. Moreover if you are quicker to implement, you can match the product to a later need of the market than the competition. Benetton leverages this skill to stay on the cutting edge of fashion across the globe. Harsh Mariwala feels "You can't change the culture of an organisation overnight ...... but we have been working with cross functional task-forces and are seeing the results." Time based competition, on the other hand, as propounded by Stalk & Hout, can be a good way of launching an indirect attack on the opposition. It does not require the expense and the resources of a frontal, direct attack; and is harder to copy. It also yields high monetary and strategic returns, but involves a sea change in the structures, systems and the very essence of the organisation and is a difficult process, requiring reengineering the organisation to deliver consistently in continuously faster times. Be it in product development, or in customer service or in manufacturing, the company must be significantly faster than the competition in each sphere. The story of how Honda took on a challenge from Yamaha and out manoeuvred the latter is now legendary. In the process Honda achieved inventory turns of 302 and introduced or replaces 113 models in 18 months. Closer home, consider the example of Microland, which practises a 6 -month planning cycle. In Jul 95 they had no clue that there was an opportunity on the internet. In Aug they identified one. September to October, a delegation visited the US, studied the internet, players and spoke to prospective partners. In November, tie-ups were in place. In December the division was formed, and in April the next year they organised the Event Internet India. The strategic time management thus defines, for a company, how it will look at the whole issue of time. Will it be fast and daring, or will it be slow and prudent. Its quite obvious that the greater the operational burden on the top management, the slower the company will be, strategically. Compaq ($14.8 b) encourages all its managers to take a "can do" attitude, rather than "prepare notes for the management to decide". In turn, the top management is urged to take "entrepreneurial risk in strategy decisions". There is, of course a trade off between time saving and risk minimisation. Modular approach to growth will lower risk but increase time. The greatest antidote to risk is information. S. Gopalan, 40, CEO, Integra Techsoft, a Bangalore based software company that specialises in componentware, says, it is "...far better to have passed up the opportunity - knowing that the risk was too great, rather than miss it because we couldn't collect enough information..." What if the information is not available ? Hatim Tyabji, 52, CEO Verifone ($472 m) suggests, "Decision making today is all about having the guts to make the decision on very incomplete information......" Also included in the strategic outlook towards time is the issue of investing in time saving. Whether it is investing in systems, or training people on time management, it must be incorporated in the strategy of the company for it to be far reaching. BPL's investment in "FAST" - Factory Automation Systems Technology - shows how its strategic speed drives cycle times in the company, as it allows them to design moulds in shorter periods and lower cost, and enhances new business and new product performance. Conversely, time as a resource can also be invested. Motorola believes in such investment when it comes to doing business in a new country. The credo is : "Go in, put in people, understand the government, the culture, then do business."
1. Using a scanning model for continuously monitoring the environment for new businesses and products 2. Learning to use soft as well as hard information well. 3. Building an organisation wide information gathering, processing and sharing system, preferably a paperless one. 4. Encouraging learning, 5. Practising delegation of operations, focussing on strategic issues. 6. Making decision making a transparent process, so that decision making across the organization becomes speedier. The passport for survival in the competitive era is responsiveness. This means being able to spot and react to opportunities and threats in the business environment before the competition. As Ashwani Windlass, MD, 40, Hutchinson Max, puts it, "...this requires the philiosophy of speed to be accepted by the entire organisation." If you haven't embraced the "philosophy of speed" in your organisation, be warned that you are poised on the brink of a chasm of inefficiency and uncompetitiveness from which there is no escape. Cases At Standard Chartered Bank (GBP 9.676 b), if a call in Mumbai, Delhi or Calcutta is not responded to in 24 hours, the bank pays the customer a fine of Rs 50 per day of delay. V Ramachandran, 35, Head Personal Banking, Standard Chartered Bank, wants to extend these guarantees to all centres and covering all services by next year.
Hutchison Max : The business requires a lot of investment, in capital goods which are going to become obsolete in 6-9 months. Therefore realising revenue generation to the hilt is crucial. (ROI). Earlier it took 24 hours to give a prospective customer a phone. Now it can be done instantly. Answering customer queries : earlier 90% of the problems were solved within 48 hours. Now 98% within 24 hours and 95% instantly. Hutchison Max also practices customer simulation - a process that helps them to identify potential customer problems and have solutions ready. ICICI (Rs. 2379.1 cr)When KV Kamath used to visit a client, it would take someone at the branch 3 days to put together a report on the client. Once this was seen as a problem, a simple database was created on the existing information technology backbone that allowed Kamath to access the same information sitting on his desk, in a matter of minutes.
2. Sanjay Choudhury, 45, Managing Director, Levi Strauss : For a country like India, especially for our kind of product, getting an edge on key retail space is an extremely important competitive advantage. By entering the market early, we have been able to take a lead over other jeans brands... 3. K R Ehrnreich, 53 ,President & CEO, Philips India Ltd (Rs 1587 cr): I would challenge any organisation that the level of waste of time in the organisation is to the extent of 50%. The major reason for this is that the fallacy of the fundamental assumption most managers carry - that a person lower in the organisation must be lower in intelligence and trustworthiness. 4. James Andrew, 35, MD, BCG : The infrastructure in India may be poor and not conducive to speed, but those that can work around this will reap great rewards. Those that can do it earlier will reap rewards for a longer period. 5. Sid Khanna, 44, Managing Partner, Arthur Anderson : Many Indian companies are moving in the right direction, but they are not moving quickly enough. There are clearly signs of improvement, in areas like speed to market. You need to start by saying that the customer is king and pander to all his needs. If you don't go through the evaluation of your business process from a customer service point of view, a lot of current IT money is going to go waste. And I would say, that there is a whole wave of ruthless pruning that companies need to do before getting into IT. 6. C K Prahalad, Professor, Ann Arbor, Michigan University : I would like to see a greater sense of urgency. Not anxiety. But surely a sense of excitement, and the need to perform critical tasks quickly - faster than others have taken. Time is important.... The overall strategic direction needs to be clear, else each decision will have to be worked from first principles which will slow down the organisation. 7. A.Marfatia, 68, Group President, Easy Call Paging Service, (Rs 30 cr) : Required speed of response in the marketplace is growing exponentially, but ......Management in India does not seem to want to operate on real time. The Indian reaction to competition is to lower prices, increase advertising spends and go home at 5:30. 8. Hatim Tyabji, 52, CEO , Verifone : Todays fast changing world requires decision making of a very different nature - having the guts to make the decisions on very incomplete information, but in a short time span. You have to take the decisions and role with the punches.....changing the time culture of an organisation is not a struggle that you ever win, its an ongoing battle. MANAGING
PROJECT TIME On 3rd Aug 1995, Enron International's (Enron Corp $9.2 bn) Dabhol Power Project ran into the great Indian time warp. When it emerged on the 9th of December 1996, exactly 493 days later, at an additional cost of $200 000 per day, the IRR of the project had dropped from 22% to 16 %. The escalation in capital cost itself amounted to $8 million. Add to this the huge cost to the economy of a delay of 16 months in the availability of 2450 MW of power, and you begin to appreciate the enormous impact of time overruns. When a project overruns its time schedule, therefore, the financing costs, and overheads can prove to be a heavy burden, often bringing into question the very viability of a project. Add to it the opportunity cost of forgone returns as well as the loss of initiative if a competitor beats you to it, and you have the recipe for a disaster. C. Mankermi,44, GM Developments, Videocon International (1594cr), feels that not being able to bring out the 280 litre frost free refrigerator to the market in time, caused Videocon considerable loss of share to BPL in the segment. In the case of Enron, the major components in the cost escalation were Debt servicing, legal costs (there were 150 contracts), administrative & corporate (maintaining an office and managerial personnel), Inventories, and time guarantees to MSEB and to contractors like GE for turbines (there were 15 major and 100 minor contractors). The success of a project is practically inseparable from its timeliness. Christopher Meyer, in his book, "Fast Cycle Times", quotes a McKinsey & Co study on new products which shows that products that came in 50 % over budget, but on time, lost 3.5% of their total profits while products on budget but 6 months late lost 27 - 33 % of total profits. (This excludes products where cash is injected in a last ditch effort to bring them out on time.) Would you apply project management practices like PERT to a test marketing excercise ? A channel launch ? Does the word project trigger off images in your mind of setting up of new facilities or construction of roads or bridges ? If the answers are no, no and yes, join the conventional club. Its an error that many managers make : that of not viewing a lot of activities as projects and so omitting the rigour of a project management exercise. Om Prakash Chaudhury, 28, Manager, Feedback Ventures + Collaborations, defines a project as " Any new and planned effort, involving more than one activity, carried out by more than one agency, incurring a certain cost and time." Viewed in this light a foray into a new product, or a test market or even setting up of a new distribution channel could qualify as a project. Its fine to say that the rules of traditional project planning can therefore be applied to many activities, but what are these golden rules of timely project execution ? Here are a few, explained from the traditional "project management" perspective; see how many you can use in any activity that you undertake - say an Employee Satisfaction Survey, or a Sales Training Programme. A project needs a champion. The selection of the project leader is critical to the project. The tougher the project the more important the role of the project leader. The use of the word leader instead of manager is intentional, because leadership qualities as much as management qualities drive a project. "You have to have the drive of a bull, but also be tough enough to take a lot of punishment, " says Vinod Sawhney, 38, VP New Product Development & Exports, Godrej GE Appliances Ltd. who was appointed project leader at the time of conception of the Mohali Project, and continued till delivery. At L&T's Engineering Construction & Contractors Group, too, the project leader is chosen at the tendering stage, and does much of the work for the tender. The team selection comes next, and should also be done as early as possible. Clarity of roles and a shared vision and passion makes for commitment to timely completion. There is the legendary story of how Ford's Taurus development team came into office one evening and by next morning they had broken enough ground to account for 6 months of work. For Godrej GE's Mohalli project, a special 2-tier project team was appointed, with the first tier chosen from the organisation and the second tier recruited specially for the project. The team was also formed with every function represented, and located on site. This helped build a new culture and minimised decision delays. The key to a well managed project is complete and detailed planning. The project plan should include the PERT chart, the manpower plan, the finance plan, responsibility charting, materials plan, equipment plan and each of these should include contingencies. 25% of the total time available should be spent on planning, though for critical projects the figure could go up. Project time can be broken up into planning time and implementation time. Chaudhury, who focuses on project implementation feels that most implementation delays can be traced back to sketchy or slipshod planning. The gravest examples of slipshod planning are the government projects such as the Bangalore Ring Road, where after the work was started on the road, the land disputes surfaced, leading to an indefinite and perhaps infinite delay in completion. Sawhney explains that for the Mohalli project, vendors and contractors were appointed with not just cost but also time considerations. ABC classification of equipment with respect to lead times also helped to ensure that the long lead time equipment was ordered well in time. Time was considered not only for ordering, but also receipt, trans-shipment and installation. The PERT is, of course, the god which all project teams must evoke and worship. There is no benefit all the planning in the world unless the schedule is fanatically obeyed. H. M. Desai, 61, VP, L&T ECC Group (T/o 1600 cr), stresses that at no stage must time be allowed to overtake the plan. Staying continuously ahead is the key for L&T's success and reputation as contractors. L&T always follows an internal deadline that is ahead of the actual one. This kind of schedule sanctity requires regular reporting and monthly meetings involving all the partner organisations, including vendors. Activity meetings for the project team may be held every week. Processes in a project need to be scrutinised relentlessly, to see if they can be performed simultaneously instead of sequentially. In new product development, Vikram Kaushik recommends "Integrated product planning using the RMD approach - or the research marketing development approach," where product, marketing strategy and advertising are simultaneously developed instead of the traditional sequential way. In the case of Godrej GE's Mohalli project, non-production related buildings were constructed while the plant was being planned. Morover, equipment installation and plant construction were also carried out together (with adequate stocks of tarpaulin to protect the machinery) so that the 2 activities finished together. Understanding the legal and administrative environment is of paramount importance. In infrastructure projects, it is central to the life or death of a project. Mankermi expresses his angst: "..... govt approvals are required at each stage. In the case of telecom for example, the tendering process takes 6 months, and more delays occur along the way for further sanctions, security, land acquisition etc." L&T also uses its own quarries for big projects, to avoid wasting time negotiating with the local cartels. Competence building is another pillar of timely project execution - one that L&T has built its infrastructure business on. As a result, when a bridge project of the Konkan railway ran into trouble, the contractors, who had originally beaten L&T to the bid, asked L&T to help out with the incremental launching technique being used for the bridge. Desai suggests that congestion towards the end of a project can be very costly. Chaudhury adds, "...the timesaving potential of a project is much greater upstream." The logic of this is obvious : upstream delays affect many more activities and calls for a greater amount of rescheduling. Setting up a network could prove to be the saviour of a project. Chaudhury, Feedback Ventures says, "...simple networks are necessary to every project. For big projects, where time is of the essence, trunked mobile radios can be very effective." Managers in IT companies have made substantial inroads into time wastage using a combination of a project management software and a schedule manager. Sivaguru, 39, Managing Consultant, Integra Techsoft, has been designing a utility that can do just this, for his company. He feels that unto time can be saved by networking, and project management tools. Mascot, a 30% subsidiary of Mastek, USA, uses project management tools even to plan purchase of office space. They feel that substantial time saving occurs as soon as the sequence is defined and followed universally. Vinod
Sawhney was the project manager for Godrej GE's Mohalli plant. The
project, costing Rs.120 crores, with a plant capacity of 500,000
refrigerators per year, and occupying, in all 75 acres, took just
20 months to set up. It was made tougher by the fact that he was
a marketing & sales person, lacking a technical background.
In Fact, he had to follow a matrix structure, with team members
reporting to Sawhney for PERT, administration related activities,
and to functional heads for technical support. Sawhney maintains
that following the cardinal rules of project planning led to the
success of the project. He feels that sales and marketing background
actually helped him drive a sense of urgency and immediacy throughout
the course of the project.
When Engineering Executive Glen Gardner of Chrysler was given the responsibility, in 1988, of heading the project for the development of the LH platform vehicles (dubbed the Last Hope) with a bet the company budget of $1.6 billion, they were asking him to cut the development cycle from 4-6 years to 39 months. Gardner started by housing all team members in a single facility specially designed to foster communications. He then replaced the patchwork of CAD systems with a single, uniform and advanced system, with even the vendors using the same system. This single step made design change incorporation a one hour phenomenon. Earlier it took days. Senior management stepped out of the way and the team could and had to make its own decisions by consensus. In 1992 the LH cars Intrepid, Vision, New Yorker, Concorde - gave Chrysler more orders than any car since the minivan. The team cut time by 25% and the investment to 30% below any previous program, and pulled Chrysler back from the edge of bankruptcy.
Use
of consultants, if in house experience is inadequate. Else, specialist
on environmental, legal clearances and dispute resolution mechanisms
to be part of the team (if the project calls for such expertise).
Don't underestimate the power of effective project management, therefore. Embrace teams and task forces, create closed decision loops and be true to your PERT chart. It could prove to be the difference between black and red in your bottom line. Quotes 1. Vinod Sawhney : A project leader has to have the tenacity of a bull and tough enough hide to take a lot of punishment. 2. Pradeep Kar, 39, MD, Microland : We have virtual teams working on projects. The planning time ranges from 25% - 33% of the total time. Large projects get simulated at our proof-of-concept centre so that the customer experiences minimum downtime. For a bank upgrading its network, for example, we may only be able to work after working hours. Simulation becomes very important. 3. Sid Khanna, 44, Managing Partner, Arthur Anderson :The key problem is lack of discipline in bringing total attention to the decision. Making sure that all the resources and management skills are brought to bear aggressively, to take a view and its all done piecemeal, at a time. We have ended up saving 35 crores for some of our clients, and yet they've taken a year to make the decision to start - when theyre losing 10 lakhs a day. It has elements of project time management and elements of personal time management. If both are missing, then you dissipate it, and say tomorrow.... without taking a decision. And that leads to a strategic failure to enter the mkt some times. It doesn't matter what you say. Our business leaders don't show the work ethic in terms of commitment, and it ripples all the way down. .
5. Dinesh Puri, 41, MD, Power Tel Boca Rs 7.5 Cr: For a senior manager - the higher you go, the more time you spend on information exchange. We work very well in hierarchies, but when we have to go across departments and interface with other hierarchies, we get completely halted. Thats Indian culture. Senior managers are dealing with more and more departments.... A CEO spends most of his time ensuring that the walls are getting broken down. 6. Harsh Mariwala, 45, MD, Marico : (As with Saffola and with Revive), ....we have taken to the practice of using cross functional task forces on projects. Each person brings a different skill to the team. 7. Jim Robertson, 59, Cadburys: 3 to 4 years back, we had lots of ongoing projects - there were many initiatives but we were not delivering on any, in terms of time, profits or volumes. It required rigour and discipline, but we selected 4 out of 25 as priority projects. We find now that we are achieving more..."
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And you run and you run, to catch up with the sun but its sinking L&T McNeil, a 63 crore company manufacturing tyre making machinery found that one of its products, called the sender mechanism, was taking 3 months to manufacture, which was not acceptible internationally. On analysis, the product was found to be travelling 6 km within the factory in the manufacturing process. L&T McNeil decided then to switch to Time Based Manufacturing. While traditional manufacturing tries to maximise the production run, being driven by scale economies, Time Based Manufacturing aims for a production run of 1 unit. Traditional manufacturing organises itself around process technology centres, like cutting, stamping, dyeing, (with the result that of the total manufacturing time for a product, often less than 5% is actually used for operations and the rest in travelling and waiting). Time Based Manufacturing is organised around products.In L&T McNeil, for example, a "cell" was created for the sender mechanism, with all processes required adjacent to each other. Instead of organising by departments this now called for a part of the factory to be organised by the product. The sender mechanism is now being made in 2 days. A cycle is any series of activities which are sequential, repetitive and the stages by themselves are predictable, though the outcomes may differ. The aim in a cycle is to evaluate all possible outcomes in each stage beforehand and for each, have a ready action so that no time is lost in the course of the cycle merely to weigh the options afresh. Cycles are all about systems. Many activities in companies are being carried out repetitively but nobody has bothered to systematise it. Once you start looking at something as a cycle, its easy to start measuring and monitoring it, setting standards and beating them. Motorola Information Systems Group has launched its 10 X imperative in an effort to reduce their new product development time. The 4 categories of new products they deal with are Incremental, Enhancement, Core Platform and Radical Innovation Products. They decided in 1992, that they would cut the time taken for each by a factor of 10. The results, says Jose Tormo, are not as high as desired but commendable, as up to 7 times improvement has already been achieved in some areas. What's Motorola's secret ? There's no single factor, says Tormo. For example, you can hire the best people, but they may not stay the best people in a changing scenario. The key, he argues, is in the leadership. Setting an example, motivating and rewarding effort, being available, sharing the vision and pushing people and drawing them out are the things that Motorola leaders do. At Motorola, time saving is seen as equivalent to quality improvement. In any cycle, if there are non-value-added items, removing them will not only cut the cycle time, it will also remove a potential source of error. Motorola's renowned 6-sigma quality programme is based on this thinking.
Order-delivery
Total manufacturing time
Recruitment
Appointing distributors /dealers In the case of new products, the Japanese way of regular, incremental improvements, and cross functional teams have seen many of them spurt ahead of their American counterparts. What drives continuous improvement ? Among others, use of technology and prototyping and EPD (electronic product definition) customer oriented processes , use of robotics and flexibility in manufacturing, inventory and process control software. Jamie Considine, 34, Operations Manager, Molex Corporation ($32.5m), says "We started measuring cycle times in 1995 Oct. What used to take 26 - 27 days then now takes 7 days, and we are heading for 3 to 4 days. We figure that we need to cut cycle time by 50% per year. Thats how many other countries progress. The shortening of lead times is an important competitive parameter along with quality and cost. When TV/VCR manufacturers cut order lead time, it didnt surprise us. These companies are facing a rapid change in consumer preferences, which leads to widening of product range and variety, with a shallower inventory. So they, and therefore we as suppliers, need to be much more responsive. Adds Radhakrishnan M.S., 32, Manager, Manufacturing, "Earlier the production schedule was revised once in 2 weeks, now its once a week and revisited every day. We have smaller runs, with more changeovers. Technology aids change overs - with modular and quick change machine parts. Earlier we had one changeover per 7-8 days, now there are 2-3 changes per day. A year and a half back, the change over was as rare as once in a month. Today even the technician says 'why don't we finish off whats required first?' " Molex, a fortune 500 company, uses a process called stereo lithography to manufacture prototypes of its products. A laser beam creates the prototype out of a special photosensitive resin. The company is able to create prototypes of complicated connectors in 4 to 24 hours, instead of the earlier 5-7 days. This is apart from the advantage of being able to show a customer a replica of the product instead of engineering drawings, and freedom from stamping and dying processes which anyway cannot create hollow parts. THE ASIAN PAINTS PRODUCTION PLANNING & DELIVERY SYSTEM Asian Paints has 42 Depots, 6 Regional Distribution Centres and 4 Plants. Each Depot handles over 1000 (80% inventory, 20% order based) Stock Keeping Units. The depots supply directly to the retailers. The plants undertake 15 day runs. The depots have a trimesterly forecasting exercise, in 15 day batches. There is a minimum level of inventory maintained at the depots. The system connects all factories, all depots, all RDCs and zonal offices. The forecasts for the next fortnight are fed into the system. It decides production for each plant, as well as allocation and transportation. Allocation logic is also programmed. In case of shortfall, or excess demand or regional stock holding mismatches, the system provides solution to the problem. The advantages : There is no human interface to sort out allocation problems or production-demand mismatches. This in turn implies that there are no delays on account of the person concerned making time for the task, and the human mind is anyway, no match for a computer when it comes to doing large numbers of repetitive calculations . The person moreover, can be freed for other tasks instead. Finally,
with a clear and transparent allocation logic based on the forecasts,
the onus of accurate, optimum inventory and allocation is on the
branches. The system also allows for Sampling of depots to check
for inventory levels and cost of lost sales. Manufacturing
is a cycle that is usually monitored and measured. Even here though,
we find time improvements possible if we look at structurally different
manufacturing organisation - used by companies competing primarily
on time. L&T McNeil was growing at 60% per year, but was facing
increasing problems in committing and meeting internationally competitive
deadlines. Quoted lead times went up to 11-12 months. Studies showed
that of the 9 odd months that it took to manufacture the product,
there were less than 100 days of productive work. By eliminating
all the rest of the unproductive activities, and restructuring the
way manufacturing was structured, L&T McNeil is now able to
deliver the same product in 100 days. Mathews, 63, CEO, L&T
McNeil maintains that the quality has also improved simultaneously.
He outlines the 5 broad stages of the transformation :
To what extent can you shorten time taken to service a customer complaint ? How does zero sound, incredible ? Well, Motorola addresses any pager complaint that can't be rectified then and there by replacing the faulty piece with a working one. Infosys urges its US based clients to inform them about glitches just before they go home. Which happens to be morning, Indian time. By evening small bugs can be tackled so that when the customer hits his desk next morning, the problem has been solved. Zero time. An effective way of differentiating your service offering for competitive advantage. Reengineering
? In fact the entire business can be seen as a system of overlapping cycles, and learning to manage cycles and teams could be the surest way to evolving into a fast company. Meyers' book deals specifically with this. The cycles should be managed by teams who practice the OODA (Observation, Orientation, Decision, Action) loop, discovered by the US air force as the reason for success of pilots in dogfights, when executed faster. Whether or not you believe in the OODA, you must surely know that income, profits and turnover are what economists call flow variables - they are only relevant when defined over a time period. What is the value of Sales that materialises next year ? Or profits that may accrue in future ? Can it ever be more than todays profits ? Accelerating all the cycles that make up your business can convert all those potential profits into income realised in this year. And faster business beans more business, more income, more profits. Q.E.D.
Quotes : Case
: Molex There are 12 - 15 different colours of wires that go into each harness, and the sizes differ as well. Earlier the process would be done in batches of 5000 harnesses. With a single machine doing the wire cutting, it implied 60000 operations. Took the whole day. 1)The lot sizes were reduced to 100-1500. Increases in changeover time were soon offset by the other benefits, the increased motivation of being able to finish the job, better and more frequent quality checks and correction 2)The cycle time and machine downtime was measured and benchmarked against Molex factories worldwide - to bring in optimisation techniques, such as preventive maintainence. 3) Increased training, which was documented. Multi-tasking was made de-rigeur. 4)The operators work was studied at close range. Duplicate documentation was removed. It was discovered that operators often processed colours that they liked better or wires that would run better, with no knowledge of which job was for which batch or order. It required a fundamental change on the part of the management to see the operator not just as someone who operates the machine and goes away, but as someone who needs to know when the customer needs the product. Now jobs have priority numbers and workers always know when the job is due to the customer. On his own initiative then he finishes it or finds ways to do the job that has earlier delivery date. 5) Once the management spent time with operators, they came up with requests and suggestions. Small automation facilities that could improve the process. This caused a very powerful transition. The shopfloor people developed the confidence to make suggestions knowing that management would respond. It amounted to a revolution on the shop floor. Says Considine "...Its as though we give them what they want and get out of their way." 6) Logistics of smaller batches were worked out. It was found that customers preferred smaller batches - say 50 sets of 200 rather than 1 set of 10,000. Does this mean the end of the batch production ? Considine feels that the trend is definitely in that direction. Quotes 1. Walt Scheela, 47, MD, Birla 3M : Understanding Customer requirements in India is a big problem, as they don't let us look at the application. We are the tape experts and in the best position to offer solutions. Customers try to define waht they need. Then they find that it doesn't work as well so they re-specify ....... the process can take upto 1 year this way. 2. L H Bhatia, 51, Sales Director, BPL Ltd. "We have moved away from 12 monthly cycles per year, to 13 cycles of 4 weeks. The "month-end" means very little to us now. 3. Giri Khatod, ZZ, Country Manager, Verifone: We believe in building object libraries - our library in Bangalore serves the entire Verifone world. This implies taking a little longer for the first program, but its serves us well..... Verifone technology also makes it possible for merchants to get money from a credit card transaction in 3 days instead of the earlier 30. 4. Ashwani Windlass,40, MD, Hutchison Max (Max India Rs 700 cr) : We have to issue 60,000 bills per month. It really helped to split the bill run into 5 cycles. Now we can ensure 24 hour deliver of bills. This further helps to cut our billing to collection cycles. 5. Ravi Sachdeva, 40, Senior General Manager, DCM benetton : The key activities for us are : picking up collections from Italy, booking orders from shopsdevelopment and sourcing of the fabric and the in-house manufacturing. ..... At any point we are dealing with 3 seasons, one for which the despatches are coming to an end, the next one, for which production has already commenced, and the subsequent season for which collections have been brought from Italy and products are under development. 6. Sanjay Choudhury, 45, MD, Levi Strauss India : We have spent a lot of time and money to be able to connect to connect with our retailers and suppliers....It takes between 1 and 6 months to appoint a new dealer depending on the difficulty in negotiating a deal for space. So we plan for a certain no of outlets to open and build our store-fixtures and furniture ahead of time. It takes between 1 and 7 days to ship products from the factory to the shop shelf, depending on transport availability. In future, we may have to consider C&F agents. 7. Sushil Handa, 43, MD, Core Healthcare (Rs 133.7 cr): Thanks to process mapping and a task force, we have brought down our order execution time from 7 days to 3 days. We have increased the productivity of packing lines in our IV Fluid division by more than 250%. We have also reorganised our entire manufacturing organisation with independent production teams being responsible for a product line right from product planning to delivery of finished goods. 8. Arvind Nair, 41, MD, Amtrex (Rs 81.76 cr) : Our production lead time has gone from 8 weeks to 3 weeks. The bigger suppliers' systems have been reworked. Some of them were carrying stocks. The amount of stocks in the supply chain has gone down from 90-95 days to 30 days. Its basically about getting rid of the "Chalta hai" attitude.
"Do you love life ? Then do not waste time - for that is the stuff life is made of." Benjamin Franklin. Micro time comprises the unit of the organisation's time. Its a moot question whether organisational time management should start at the strategic level and work downwards or start at the bottom of the organisation and move upwards, but unless the people value and utilise time - theirs, their colleagues and their customers - its difficult to see how the organisation can improve.
Time culture may be a national characteristic. Tyabji of Verifone says "We in the US are far more cognizant of time and have much greater sense of urgency than many of the corporarions in Europe. UK - is like a country club by comparison". According to Andrew, the Japanese time culture makes them take quite a long time to make decisions, but once decided, the implementation is quick. In contrast to this, in the West, decision making is quick, but implementation may be protracted. That both can be done quickly, is proven by the Korean company Hyundai. In the 60's they undertook orders for 15 large merchant ships. Hyundai didn't have a yard and had never built ships, but made the decision and built yards, ships and delivered on time. And that achieving neither is also possible, is aptly demonstrated by Many Indian industries - examples abound in telecom, infrastructure, construction and many others. Sid Khanna is especially vituperative "As a matter of a national cultural failure, we don't value time. Its staggering that it doesn't matter whether something is done today or tomorrow or day after. Its a cultural disease." N. S. Raghavan,53, Deputy Managing Director, Infosys, echoes a common sentiment that "...dealing with export market builds time consciousness". Despite the national cultural trend, the culture of the organisation itself has a role to play in optimising time. The culture in many Indian companies is an "office-club-culture". Social pleasantries, gossip and banter abound. Though it serves as a pressure release system, it slows down the organisation to no end. Changing the culture is a daunting task, but the key elements are : creating a shared vision, creating a customer focus and setting an example from the top. Som Mittal, 45, MD, Digital Equipment Corp (Rs 257 Cr)., India, Who turned Digital India around, feels that adopting and sharing the vision brought a sense of urgency to Digital. Adopting the "internal customer approach" has also helped focus its peoples energies on critical tasks. Digital has, in the past 3 years tripled sales without any increases in manpower, working capital or outstandings. Pawan Kant Munjal, 67, Director Hero Honda Motors ( Rs 633 cr), expands on top management commitment " As a matter of practice, the chairman and directors office has to respond to each and every piece of correspondence within 24 hours of its receipt." As a matter of culture Hero has been committed to time optimisation and Hero Cycles was one of the first in India to adopt JIT manufacturing. Also, in the typical Indian (private sector) company, the executive prides himself on his late hours, and spends many an evening in office. Is this a global phenomenon ? Apparently not. Vikram Kaushik says, "... in the west, there is a greater premium on private and personal time. In India we work longer hours and on weekends....or work goes home with us at 5:30". , V.Sudhakar,44, General Manager, UB Networks ($400 m) makes the telling point, "In the US very few people work on weekends. Here its very common. The hours are longer, yet there is no one here who is globally competitive. Why ?". The information infrastructure could well hold the answer to this conundrum. It requires both the investment in the backbone as well as providing the tools for accessing the information in an egalitarian rather than hierarchical fashion. Those who do make the required infrastructure investment in their workplaces, are able to realise the full potential of their manpower, and that too, without working late. How often, for example, have you faced software mismatches of the version kind in the process of trying to access data ? UB Networks follows a world wide policy of having one common software platform. Manoj Nair,32, formerly Resident Director, HCL Frontline (Group 624 cr), agrees that most people are slowed down by inadequate information-flow, on account of not having invested adequately in the automation, decision support systems and information technology. Those who have made these investments are able to achieve higher levels of productivity and consequently, pay. The point is driven home by Percy Batlivala, Director, Motorola ISG (Motorola : $270.4m) who says "Our infrastructure is good compared to Indian companies but by global standards, poor, as customers still complain about not getting through." Time
Savers
THE
WAR SYSTEM AT INFOSYS One of the things that can help individuals in the organisation is a high quality training programme so that people don't waste time on the learning curve. "Learning on the job" is really a crude way of avoiding the rigour of a well engineered training programme. Gopal Sarma, 31, Deputy MD Feedback Ventures + Colaborations, points out that there is a vicious cycle in this, as often top management doesn't have time for training, so the juniors don't learn, which creates more pressure on the top management. Another idea is to actually have your people go through a time management workshop. A third is to reduce the no of meetings in favour of asynchronous information exchange over internal mail systems. And when meetings are necessary, have them standing around the table, not sitting. The list goes on, but at the root is an attitudinal change that calls for people to look at time as a river - not from the bank as they already do, but from a raft, paddling against the tide. Advice from a trainer : WHAT THE INDIVIDUAL CAN DO : Kichu Krishnan, a Bangalore based Time Management trainer, suggests that people who have clear long term result areas are better at time management. This incidentally is also the central pillar of Dr. Steven Covey's intellectual empire. Time management is nothing but managing results, and understanding the Pareto 80-20 principle, which states that 80 % of the time goes into 20% of the results and vice versa. Even the best have trouble with this, but the worst offenders are typically those who stay late in office every day. How
to start ? Personal time management is one of the most difficult things to do - it requires the least amount of pontificating and the maximum of self-discipline. But you only have to look at a Dhirubhai Ambani, a Karsanbhai Patel or a Bill Gates to understand what is possible in one lifetime.
Quotes : 1. Pawan Munjal, 67, Director, Hero Honda Motors : It has to be operationalised at the top management level......We have brought about a self imposed discipline in terms of meeting deadlines. 2. Ravi Sachdeva, 40,Senior General Manager , DCM Benetton : Failure to establish a market orientation and shared vision across the organisation is the biggest obstacle to better time management. 3. Sanjay Choudhury ,45, MD, Levi Strauss India: E-mail is both a blessing and a curse .... I get my secretary to screen calls, manage appointments and assist in managing basic family requirements (like remembering my wife's birthday) 4. Ravi Butalia, 44, Vice President, Indusind Bank ($ 66.3m) : We have adopted a lean structure....productivity and profit per employee will probably be the highest among all banks in the country.....All branches have a single window concept so that the customer does not have to go to various persons for getting different services......We have taken membership of SWIFT (Society for Worldwide Interbank Financial Transactions) which gives instantaneous access to 3000 financial institutions across 80 countries. Opening a single letter of credit takes us 17 minutes. 5. Walt Scheela ,47, MD, Birla 3M : Ive come to realize - what I'm going to run out of is not money - its time 6. Cyrus Guzder, 51, MD, Air Freight Ltd(Rs 409 cr) : "Whether its the pick up process or the billing process ... you can't avoid technology." 7. Siddharth Varma, 33, General Manager Marketing, Reebok India Company (Reebok $ 5.60 bn): We follow a uniform system of daily time management from the CEO downwards called the Reebok Way. Furthermore, every reebok manager is connected with Reebok worldwide through CCMail, which reduces time, cost and paper. 8. Som Mittal, 45, MD, Digital Equipment Corp, India : I do a lot of my paperwork while I'm travelling to and from work. On Indian roads, having a car with a good suspension helps. I make sure I spend a lot of my time on Sundays with my family ...... but I wake up early enough to get in a lot of work as well.
"One cannot be more responsive to customers without high quality processes.....Time is the best route to quality" - Reiner, Barnes & Ericksen, "Time and Quality" , BCG. James
Andrew feels that Indian companies need to ask 2 basic questions:
You don't have to search very far for proof. Wipro Global R&D was presented a bonus checque by Crescent, amounting to 10% of the project fee, for finishing aproject ahead of time, which helped Crescent shorten its time to market. Or consider K. Bhushan, 51, who took over as MD of an ailing Yogokawa Bluestar and turned it around in a year and a half. He says that his success was mainly due to being able to ensure better time management through the organisation. He says, "I didn't have to build any systems, or processes. They were all there. I just had to convince the people that it was in their interest to follow the systems" In 1996, L&T was asked to take over the final stage of work on a floodlight tower for the Wills World Cup One Day match in Bangalore. They were told that only 10 days were available. Though it was monetarily a small job, L&T took up the challenge, marshalled resources from its 280 odd sites, and a was able to walk away in 9 days from the completed project. What is the benefit, one may ask, of such effort ? The answer, in the words of Vinod Sawhney, "....when we were planning the project, the construction of the buildings was a critical part, and had to be finished ahead of time.... so we chose L&T." Need we say more ? BOOKS ARTICLES
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