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 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. 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.
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 land grab 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.
Cycle time: The time that elapses from the beginning to the end of a process or subprocess. The process in question may be as extensive as conceptualizing, developing, testing and bringing to market a complex product - or as simple as putting one bolt on that product. In either case - and those in between - finding places to cut time improves efficiency.
Time to market: The time that begins when resources are assigned to assess a product's feasibility and ends when the first production unit is delivered. In manufacturing, time to market used to be measured in years. Back then, it required extensive guesswork; companies sometimes committed themselves to products, then watched market trends doom those products by the time they hit production. Ford's Edsel is a notorious example. IT has both necessitated and made possible faster turnaround.