Time-Based
Competition Strategy (TBC)
TBC centers on using
the time dimension strategically vis-a-vis customers
and competitors to improve a firm's relative
performance in such areas as :
o Response time
o Cycle time
o bead time
o On-time delivery
o Time to market
o Just-in-time inventory
o Real time
· In an era
of shorter product life-cycles, fragmented and
globalized markets, narrow profit margins, and
intensified competition, time becomes a critical
source of competitive advantage
· By viewing
the entire organization as a value delivery
system, managers can realize strategic and operating
advantages by managing time (not cash), reducing
lead times, and eliminating wasted time
· Speeding
up core business processes, developing a high
degree of internal responsiveness and coordination
among different parts of the company, and offering
more variety, enables the firm to strengthen
its relationships with its customers
· Time-based
concepts lead to establishing new relationships
between suppliers and customers which result
in time and cost savings, enhanced productivity,
and ability to customize products/services for
individual customers
BENEFITS
OF TIME-BASED COMPETITION (TBC)
Direct benefits
:
· Decreased
cycle time and reduced costs : ?increased profits
and accelerated growth
Indirect
benefits :
· Increased
value differentiation
· Increased variety and flexibility
· Strengthened relationships with customers
· Enhanced barriers to imitation
PRIMARY QUESTIONS
FOR MANAGERS WHO CONSIDER TBC
·
Company : Why does it take us so long?
· Customer : What is
the value for the customer of speeding up ?
· Competitor : Who is
setting the pace ?
BECOMING
A TBC COMPETITOR
Laying the
groundwork
· Preparing
the way for change increases the likelihood
of success
· Commitment
of top managers to change by taking actions
to convince employees of the great opportunity
is essential
· Benchmarking
to underscore the need to do things differently
· Setting
ambitious, aggressive targets, comparable to
successful time-based companies
Designing
the structure
· A high level
steering committee in charge of overall responsibility
for the project (providing resources, defining
targets, monitoring performance, ensuring quality)
· A
project management team responsible for execution,
coordination, and management of all project
steps, and for communicating results to the
organization
· Breakthrough
teams to analyze problems, consider alternatives,
and develop specific proposals for change; members
should represent each department or function
whose participation affects the outcome
· It
is crucial for success to choose the right team
members, the best personnel of the company -
open minded, motivated, and skilled communicators
Reinforcing
the frame
· Empowering
team members, yet, working with them, watching
their performance, giving feedback, and creating
a dialogue
· Frequent
and open communication between project personnel
and the rest of the organization, to cultivate
positive expectations, avoid resentments, and
build employee involvement in the process
· Frequent
meetings of team members to share results and
experiences
STEPS IN
TBC IMPLEMENTATION
Mapping
· The main
objectives of mapping are to identify physical
flows, stocks, and activities as well as information
flows, decision points, and communication patterns
· Mapping
is achieved by conducting interviews to capture
the perspectives of various organizational levels
· It involves
creating flow charts of the system, and recording
actual (not designed) behavior
· Problems
are diagnosed by looking for :
o Activities and
policies that cancel each other
o Duplicated efforts
o Weak links between information flows and
physical tasks
o lack of flexibility in operations, decisions,
training and financing
o lack of accountability, ownership, or monitoring
· Questions
to be asked include: How does it happen? Why
this way?
· Who
set the process, when and why? Have the conditions
changed?
· Results
should be communicated to all those involved
Measuring
Using time as the
metric for measurement demonstrates where the
biggest opportunities for reducing total cycle
time lie, and reveals where time is spent, where
errors are created, where and why delays occur,
and where work-in-process inventory is held.
Items to be measured include :
All relevant
time-related dimensions (i.e., cycle time,
time to break-even, response time to customer),
including ranges, sources and causes for each
dimension
Whatever is of value
to the customer, as well as how well the company
11 delivers that value
· All activities
that consume time, including travel, inventory
buffers, approvals, revisions, rework, errors,
design changes, decision making, setups, analysis,
personnel changes
·
Results should be communicated to all those
involved.
Modifying
TBC involves an iterative
process of testing results, and modifying the
master plan, by designing a new process, and
implementing changes.
Design entails determining
the changes that are necessary to achieve the
time-based goals, developing a model that reflects
the actual complexity of the organization, comparing
the model to competitive benchmarks, evaluating
the feasibility of the recommendations, and
assessing the value of the changes to customers.
Resources should be committed to put the new
model into practice, and no compromises should
be made.
Implementation entails
understanding how people feel about the new
model, and adapting the organization, structure,
and expectations to the requirements of the
model. Early success should be strived for,
and specific time-line milestones should be
developed in advance. Resistance should be anticipated,
and plans should be made to overcome it.
TBC COMPANIES
SHOULD STRUCTURE WORK
· Focus on
the whole system and its main sequence, rather
than improve function by function
· Generate
a continuous flow of work, rather than work
in departments and batches; by creating a smoother
flow through the main sequence, the cycle time
of the entire delivery process is reduced, thus
raising throughput capacity
· Form
self-scheduling closed-loop teams that include
all functional people and decision makers necessary
to maintain a continuous flow and on-time delivery,
and are empowered to decide and act
· Change
upstream practices to relieve downstream symptoms,
rather than relieve bottlenecks as they occur,
to speed work
HOW TBC COMPANIES
CREATE AND SHARE INFORMATION
· Teams create
and use information simultaneously, rather than
specialists creating information, then sharing
it with users
· Multifunctional
groups build their own sources of information
to do everyday work
· Information
is processed locally for fast feedback, rather
than having slow central processing
HOW TBC COMPANIES
MEASURE PERFORMANCE
· Time is
the metric, in addition to cost
· Physical
results are looked for, rather than just financial
ones
· Measures
are throughput-oriented, rather than utilization-oriented
· Teams,
rather than individuals or departments, are
measured
· Time-based
performance measures include :
o Time from idea
of new product to market
o Rate of new product introduction
o Percent first competitor to market
o Time lost waiting for decisions
o Inventory turnover
o Cycle time
o Leads time quoted to customers
o Percent deliveries on time
REQUIREMENTS
FOR SUSTAINING TIME IMPROVEMENT
· Institutionalizing
of the process basics
· Monitoring
progress against vision, and emphasizing gaps
that exist
· Conducting
frequent performance evaluations
· Making
sure goals are not compromised
· Stressing
that the company values the process, not just
the first results
· Forcing
early prototyping in every activity
· Applying
continuous market research at Iow ntensity,
rather than episodic studies
· Monitoring
new product launching early, tracking not just
sales and customer satisfaction, but also engineering,
packaging, performance
· Developing
in-house proprietary techniques, and not relying
on off-the
shelf techniques that perpetuate someone else's
view of the problem
Sources
:
Competitive Against
Time, G.
Stalk and T. Hout, Freee Press, NY, 1990
Gaining and Soustaining Competitive Advantage, Jay. B. Barney, Addison-Wesley, 1997
Contemporary Strategic Analysis, Robert M. Grant, 3th edition, Blackwell, 1998
Strategic Management, Raphael Amit, Professor at Wharton University of Pennsylvania, US
(c) ECOFINE, Bernard Jaquier, Professor in Economics and Finance, Switzerland, 2018