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Friday, June 9, 2023

Lean Quote: Power of Time Management

On Fridays I will post a Lean related Quote. Throughout our lifetimes many people touch our lives and leave us with words of wisdom. These can both be a source of new learning and also a point to pause and reflect upon lessons we have learned. Within Lean active learning is an important aspect on this journey because without learning we can not improve.

"Standing still is the fastest way of moving backwards in a rapidly changing world.  —  Lauren Bacall   

Time-based competition is a demonstration of the power of time management, and how companies can use it to gain a competitive advantage. For companies that make best use of time as they respond and adapt to changes in the market and other possible conditions and obstacles, they will gain an adaptive advantage. But time-based competition is about more than just viewing time as a critical resource, it’s about time as the basis of strategy.

George Stalk and Thomas Hout, both of The Boston Consulting Group, wrote, Competing Against Time: How Time-Based Competition Is Reshaping the Global Economy in 1990.  This book was one of the first to identify the importance of time as a competitive advantage.

Based on their research, they outline four rules of responsiveness that the value-delivery systems of corporations are subject to:

The .05 to 5 Rule
Most products and many services are actually receiving value for only 0.05 to 5 percent of the time they are in the value-delivery systems of their companies.

The 3/3 Rule
The waiting time has 3 components, which are the time lost while waiting for:
- Completion of the batch a particular product or service is part of
- Completion of the batch ahead of the batch a particular product or service is part of
- Management to get around to making and executing the decision to send the batch on to the next step of the value added process

The ¼-2-20 Rule
For every quartering of the time interval required to provide a service or product, the productivity of labor and of working capital can often double, resulting is as much as a 20% reduction in costs.

The 3 x 2 Rule
Companies that cut the time consumption of their value-delivery systems experience growth rates of 3 times the industry average and 2 times the profit margins.

The golden rule of time based competitiveness is to never delay a customer value adding step by a non-value adding step.  Instead, seek to do such steps in parallel.

Competition expressed in response time is known as time-based competition. Companies engaged in time-based competition seek to reduce the amount of time devoted during each stage of the general cycle by eliminating non-value-adding from activities, shortening time, and efficiently coordinating value-adding activities.

When response time to consumer needs is shorter than the one demonstrated by rivals, the company can achieve a greater competitive advantage and, frequently, tends to be dominant and is expressed in speed, which contributes to short delivery time, lower costs, higher quality, flexibility, and credible delivery.

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