Sunday, July 23, 2006

Time Waste

"Time waste differs from material waste in that there can be no salvage. The easiest of all wastes, and the hardest to correct, is the waste of time, because wasted time does not litter the floor like wasted material." Henry Ford, Today and Tomorrow, 1926.

1 comment:

Karl McCracken said...

Yet again, Henry shows himself to be one of the fathers of Lean . . .

Its interesting that in most industries, time is not seen as an improtant factor. Sure, everone'll talk about time as if it were important, but doing something about it seems to be another matter altogether.

You'd think that the service sector would see things differently - after all, pretty much everything they sell is time. But I recently did some work with a major firm of accountants, and it was almost impossible for them to see things from a time-based perspective through their customer's eyes.

To prepare a set of accounts, their value stream was something like this:

Receive data -> Wait 11 days -> Prepare accounts (3 days work / 21 days elapsed) -> Manager checks work & rework (1 day's work / 15 elapsed days) -> Partner sign-off & meet with client (0.5 day's work / 27 elapsed days).

Total value added: 4.5 days
Elapsed time: 74 days

I suggested that they could cut their lead time to 21 days (7 days for each stage), but this met some (OK, lots) of resistance. They couldn't see the value in reducing their queuing times ("after all, time in an in-tray costs nothing, right?") and were petrified that if they did it quicker, their clients would want a price reduction (go figure).

However, the moment of clarity came when I started talking about working capital costs. They do most of the 'work' at the front of the process, and then sit on it for more than 40 days before they can invoice their client. So we put in place a system to control their process to a 42 day target (still a way off what's achievable, but sometimes you take what you can get!).

The resulting saving in working capital for the firm runs to several hundred thousands of dollars.

The lesson here is that time matters but to get people to see this, express it in terms of cash!