FedEx's Cycle Time Research

 

FEDEX'S CYCLE TIME RESEARCH

The Cycle Time Challenge

Cycle time reduction has become a key area of opportunity for organizations that are under increasing pressure to get more done with fewer resources in order to remain competitive. By reducing cycle time organizations can reduce cost (or opportunity cost), increase quality, and improve customer service. All too often in organizations less than three percent of the elapsed time performing a process has anything to do with real work. The rest of the time is spent scheduling, waiting, needless repetition, getting lost, getting found, "left hand not knowing what the right hand is doing," etc.

Cycle time reduction is not just about working faster; it is also about working smarter. By making innovative use of information technology, operations management, empowerment, behavior modification, organizational redesign, outsourcing, parallel processing, economic analysis, etc., business processes can be reengineered such that waste and non-value added activities are eliminated, thereby cost effectively reducing cycle time.

This is the mission behind The FedEx Center for Cycle Time Research (FECCTR). Formed in 1993 as a strategic alliance between The University of Memphis and FedEx, its purpose is to conduct research concerning ways of reducing time in organizational processes-the amount of time it takes to complete a task-in a way that reduces cost and/or increases customer service. Much of the Center’s work focuses on finding new ways of using information technology and organizational change to speed the flow of information, thereby reducing paperwork and needless activity.

CYCLE TIME RESEARCH - A Publication of the FedEx Center for Cycle Time Research

The journal’s purpose is to report research results from scientific investigation of cycle time issues using case studies, field surveys, field experiments, laboratory experiments, and model building. Cycle Time Research is aimed at publishing research on ways to reduce the time it takes to complete organizational processes in a way that reduces costs and/or increases customer service.

The goal of the journal is to provide a focused source to find leading edge research in the area of cycle time reduction in all types of organizations, both public and private sector. Manuscripts published in Cycle Time Research are aimed at the both the academic and practitioner audience.

CYCLE TIME RESEARCH Journal, 1998 Edition

Time and Technology-Competing for Customers in the Future: Most organizations share three common concerns. First, they are overwhelmed by the rapidly growing amount of computing and network technology they know less and less about. Organizations are extremely concerned about how to apply technological innovation, including the Internet, for competitive advantage. Second, they are under pressure to improve customer service while simultaneously reducing costs. This would appear to be contradictory. Yet, because of the economics of computer technology — which decreases in cost as capability increases-it can be harnessed to improve customer service while simultaneously reducing costs. The third concern is a stronger than ever desire to achieve competitive advantage through some product or service innovation.

Competitive strategies, technology, and cycle time are explored in this article as ways to allow organizations to gain competitive advantage by differentiating their products and services and serving niche markets in compelling ways. A framework is provided for interaction with customers through technology and cycle time to determine the types of innovations and improvements they would like to see in an organization’s products and services.

Using Decision Engineering to Achieve Short Predictable Lead Time at Sun Microsystems, Inc: The Short Predictable Lead time (SPL) team at Sun was formed in 1996 to solve a cycle time reduction problem previously addressed by several groups inside the company: how to make order fulfillment lead time, the time elapsed between when a customer requests a product and when he receives it, shorter and more predictable. The team used a decision engineering approach, applying the tools and techniques of decision analysis, to address the issue.

The team first developed a model called the Decision Chain to illustrate the interdependencies among decisions made at different points of a company’s value chain, along with the ultimate effects on customers. Decision Chain analysis has also helped Sun executives understand the need for greater cross-functional coordination to address the company’s cycle time challenges. For example, a marketing executive can use the Decision Chain to see how his decisions shape or constrain the decision opportunities available to a supply chain executive; and both can use the tool to see how their decisions together determine the ultimate delivery experience of a customer.

The other tool used by the SPL team was a Complexity Breakdown Model that provides a simple means of identifying key elements of complexity in the business environment. The SPL team used the model to identify, prioritize, and exploit opportunities for cycle time reduction in a sensible, directed manner. This model has also been an extremely useful tool for communicating and strategizing to achieve cycle time reduction at Sun.

Cycle Time Reduction in Software Testing: Fast cycle time and software testing are often at odds with each other in many organizations. Thorough testing can often delay software implementation, but can uncover errors that would cause difficulties after the software was implemented. Thorough software testing, if considered from project inception, should increase software quality, lower testing time, and decrease systems development cycle time overall.

An in-depth case study of software testers was conducted to explore cycle time issues in the testing process of a major Fortune 500 corporation. The study was designed to better understand the current issues pertaining to software testing and to deliver a set of actionable and constructive recommendations for the purpose of reducing testing cycle time.

Based on the case study, the testing process was found to be lacking a way to capture systems knowledge, testing procedures, and formal systems development methodology. The researchers determined that in order to improve testing cycle time and software quality, the organization studied should standardize on one systems development methodology, transform the testing process into one that has structure, incorporate the use of cross-functional test teams, and institute rewards for good testing.

A Decision Support System for Integrated Inventory Management: Many organizations wrestle with the issues of inventory locations and stocking levels. When it is critical to have inventory available for customers, the traditional approach has been to place a large amount of inventory at all locations. Carrying an excessive amount of inventory achieves a high service level, but can be enormously costly, especially if the product has a high cost per unit. All too often organizations underestimate the cost of carrying inventory.

In today’s increasingly competitive marketplace organizations cannot afford to carry excessive levels of inventory. At the same time customer service, which includes having the product available for the customer at the right place and the right time, is increasingly important. To balance these two issues it is critical for an organization to set a service level goal and strategically plan their inventory logistics to achieve this goal at minimum cost.

This article examines this inventory issue for a major international manufacturer of medical diagnostic equipment. A decision support tool is developed to assist the organization in deciding where service parts should be inventoried and in what quantity to minimize total inventory and logistics cost, while meeting a demanding customer service requirement.

Improving Supply Chain Performance for Replacement Parts Distribution: This article presents an overview of a research project that examined the supply chain for components and replacement parts for a Fortune 500 manufacturing company. The project first examined the supply chain network, which extended from the manufacturer through distribution centers and on to independent distributors and retailers in an effort to identify opportunities for improvement. This was accomplished through a series of in-depth field interviews, a survey, and a cross-functional, interorganizational workshop consisting of representatives from various supply chain members.

The objective of the study was to identify opportunities for improving supply chain performance, with an emphasis placed on reducing the cycle time required to move materials through the supply chain. Selected findings from the research project are presented along with recommendations for reducing cycle time and improving customer satisfaction.

Re-posted with permission. Copyright )1998 by the Federal Express Center for Cycle Time Research.

Subscriptions: Subscriptions to this journal are available. Visit FECCTR or contact them at: The University of Memphis, Fogelman Executive Center, #104, Memphis, TN 38152

Check out how Makino helps reduce cycle time by visiting your industry’s smarter solutions section and reading our case histories.