That Work And Those That Don't
Teaching Dollars And Cents Makes
Baldrige Winner Wins Again
What You Ask For
by Peter Block
Closed: Diary Of A Shutdown
Views for a Change
The Quality Tool I Never Use
A speedy approach to
cycle-time sluggishness may be the boost to get you ahead
of the pack.
Here's a quiz:
What do FedEx, Jiffy Lube, H & R Block and Domino's
Pizza have in common? (Okay, aside from the fact that
they're all businesses, smarty.)
Answer: Each one of these companies has reduced its
production time to provide its product or service in less
time than its competitors. And each company uses its
new-found quickness to beat the competition and gain
market share. That means FedEx, Jiffy Lube, H & R
Block and Domino's Pizza are now raking in the profits,
leaving the rest of the delivery services, oil changers,
tax consultants and pizza guys with their heads spinning,
trying to figure out just how, when and why they started
getting blown away. It may be a conundrum for the
competition, but don't let reduced production time be a
mystery to you.
To reduce your production time and beat the competition,
you need to undergo rapid-cycle time redesign, and Paul
Debetaz, senior manager at Southwest Consulting, can take
you through the paces in a hurry. Five days, to be
A Redesign To Make Your Head
Wait a minute. Did someone say five days? What kind of
redesign can you get in five days? It sounds like, to
quote that musical moppet of the 70's, Meatloaf, a Coupe
DeVille hiding at the bottom of a Cracker Jack's box. But
Debetaz can show you that, indeed, he's not bluffing.
Those four big players-FedEx, Jiffy Lube, H & R Block
and Domino's Pizza-all underwent successful cycle-time
reduction. And they're not the only ones. Southwest
Consulting's success stories include: on-time deliveries
to customers improved from 82 to 96 percent for one
company; order management cycle-time reduced from 6 to 3
days for another and price quotes to customer cycle-time
reduction of 50 percent in yet another case.
In general terms, the advantages to compressing process
cycle-time are four-fold. You'll get increased
productivity (as production time decreases, output per
unit of time increases); price premiums (customers
perceive products and services provided in less time as
more valuable); reduced risk (by producing products and
services faster, firms can rely on shorter forecasts,
which are more accurate than long-range ones); and
increased market share (consumers tend to have more
confidence in responsive suppliers, and reward them with
their business accordingly).
If the rapid cycle-time redesign works so well, and if it
only takes five days, why isn't every business doing it?
Rapid cycle-time redesign is not for the faint at heart.
If your bottom lip begins to quiver at the thought of
relocating your desk, if you cower at criticism or feel
faint at the idea of new job tasks, Debetaz's program is
not for you. That's because, according to Debetaz, to
make rapid cycle-time redesigns work you've got to
address and often alter some or all organizational
components which contribute to process cycle-times.
Including organizational structure, reporting
relationships, decision authority, physical layout and
employee skill levels. Ouch.
When faced with such an intimidating and all-encompassing
redesign, it's easy to see why Southwest's policy of
getting the process done in five days is popular. You've
got to be pretty brave to undergo the process, and
standard six to 18 month long processes leave room for
enthusiasm to wane.
How Rapid Cycle-Time Redesign
Southwest's rapid cycle-time redesign requires careful
planning and a clearly written charter before the
redesign begins. Once a plan and charter are in place, 10
to 12 employees are chosen from the commissioning company
to participate on the redesign team.
These members should represent the various levels and
functions of the organization, so that the team can do
four things: get input from those working closely with
external customers, get input from those who intimately
understand the intricacies of the day-to-day operations,
gain the support of those most affected by the redesign
plan and avoid redesigning in a vacuum.
Southwest consultants serve as facilitators to guide
members through the redesign process and to maintain the
aggressive pace necessary for successful completion.
Typically, the program consists of three consecutive days
to begin the redesign process, and then two more days
after a one-and-a-half week break. "The break is great as
a soak-time for team members," says Debetaz. "They
collect some additional data and talk to workers outside
the redesign team."
After the five-day redesign, about 50 percent of the new
process is designed. Selected design team members then
finalize the remaining 50 percent with process owners in
the workplace and the subsequent redesign process and
organizational changes are implemented within 90
Mapping How it is Now
During the first days of the redesign process, the
redesign team sits down with Post-It notes and identifies
a step with each one. The group then organizes the notes
into the order that represents the process as it is now.
This process map should illustrate existing process
steps, decisions points, work transfers and re-work
loops. Then, the group adds further details that will
later determine what process steps can be eliminated.
These details are:
Real value-added (RVA)- activities that transform
inputs into outputs. They're perceived as valuable to the
customer, like assembly, packaging and fabrication.
Business value-added (BVA)- process steps that are
installed by management, like scheduling, marketing,
invoicing and record-keeping. These things are necessary
to support and monitor internal business functions, but
don¹t have much perceived value to the
Non-value added (NVA)- process steps that
contribute to neither customer satisfaction or improved
business operations. Things like inspections, excessive
transit, waiting and storage are NVAs.
Variances- problems, defects, mistakes or other
disturbances that affect efficiency, like getting the
wrong parts, or entering data incorrectly.
Key Variances- variances that cause the most
significant process problems such as stopping the process
or producing defects.
Paperwork- internal documents required to complete
steps within the process.
Cycle-time efficiency (CE)= (RVA) Real
value added time
Once the process map is complete, the redesign team
begins to focus on cycle-time. Many of the procedures
that redesign members are accustomed to will end up on
the cutting room floor at this phase, so Southwest's
consultants start by emphasizing just how important
cycle-time reduction is. Debetaz likes to present his
teams with the four rules of responsiveness:
Rule #1: .05 to 5 rule-value is created in only
.05 to 5 percent of the total time employed in a
Rule #2: 3/3 rule-time lost in most processes is
equally attributed to three sources: waiting for
completion of a unit of work; waiting for physical or
intellectual rework to be done or waiting for management
to make a decision.
Rule #3: ¼-2-20 rule-if time is compressed in
a process by one-quarter, labor productivity doubles and
costs are reduced by 20 percent.
Rule #4: 3x2 rule-when process times are
compressed to be at least 50 percent faster than the
competition, growth at three times the industry average
is likely and profits of two times the industry average
Now the team returns to the process map and focuses on
breaking all the processes down into sub-processes. For
example, order processing begins with a customer placing
an order and ends with the customer receiving their
goods. Sub-processes to order processing include getting
credit approval and order entry.
At this point, redesign team members document process
times and cycle times for each sub-process. Both
statistics are noted on the map and then the team
calculates the overall efficiency for each sub-process
using this calculation:
Total cycle-time (CT= RVA+BVA+NVA)
Based on the results of this
calculation for each sub-process, redesign efforts would
begin by reducing the highest cycle-time efficiency
Actual Cycle Time Reduction
Once you've established cycle-time efficiency ratios,
says Debetaz, then you have to look for the conditions
that contribute to high (or inefficient) ratios. Typical
contributing factors are key variances, excessive
transfers and rework loops and too much paperwork. The
goal at this point is to identify where any of these
conditions exist, and to reduce or eliminate them
according to their value-added status. For example, real
value added activities should be streamlined, business
value-added activities should be minimized and non-value
added activities like variances and transfers should be
eliminated. (Refer to the sidebar to see what this might
When you reach this stage in your rapid cycle redesign,
you might feel like your office is less an office than a
demolition derby. It's important to keep momentum up at
this point, and use that momentum to a create a map of
how the process should be. Construct this map just below
the existing map made out of Post-It notes, so you can
see the stunning process improvements you've made (this
should make you feel proud and boastful. That's good-you
deserve it). Now that you have your courage and
enthusiasm back, implement the new process. Keep the
following in mind:
*Metrics-how are you going to measure this new
*Layout-are changes to the office space necessary?
*Team configuration-are your new process-centered teams
really practical? How are they configured (by product, by
*Role responsibilities-which roles are changing? What
skills are required for new positions?
*Task/decision transfers-which tasks/decisions should be
*Training plan-is training necessary to support the new
*Implementation-what actions or steps will you take?
*Communication-the what, when, where and how of
communicating the outcomes of the redesign
Once you've gone through the steps of
rapid-cycle redesign, you can expect some results that
are astounding by any critic's standards. And considering
the tremendous benefits of rapid cycle-time redesign,
it's no wonder you'd want it done fast. Maybe even five
Cycle-time: The total time elapsed in a process or sub-process
required for transforming an input to an output.
Processing time: The time required for activities
which directly transform inputs into outputs.
Non-processing time: Non value-added and business
value-added activities which add time and cost to