Competing against time

More than ever the element of time is critical to businesses today. Businesses need to compete on the basis of speed to achieve a competitive edge in the marketplace. Being responsive to customers needs as they occur and reducing the time between conception and delivery to the customer are central to Lean. Stalk and Hout in their book, Competing Against Time, identified 4 rules of response:

1. The 0.05 to 5 rule: Value is being added between 0.05% and 5% of the total time.


2. The 3/3 rule: The wait time, during which no value is added is split 3 ways, each accounting for approximately one third of the time:
• Waiting for the completion of batches
• Waiting for physical and intellectual rework
• Waiting for management decisions


3. The 1/4-2-20 rule: For every quartering of the total completion time, productivity will double and cost will be reduced by 20%.
   


4. The 3 x 2 rule: Companies competing on the basis of speed enjoy growth rates of three times the average, and twice the profit margin.

Tags: lean

posted by Simon Baker @ permalink
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