The ability to reduce production cycle times can be a powerful competitive advantage. A company’s cycle time is a measurement of their efficiency and a bellwether for profitability and competitiveness. However, it’s not easy to reduce manufacturing cycle times, focus on learning how to reduce cycle time, or justify the expense of additional logistics investment without understanding the value. Indeed, the benefits of reducing cycle times can more than compensate.
Competitive Companies Must Reduce Production Cycle Times
A company’s production cycle is an indicator of that organization’s ability to convert assets into profits, inventory into products, and supply chains into cash flow. The production cycle is part of an overall cycle length that also consists of order processing time and the cash-to-cash cycle. Together, these determine a company’s profitability and ability to compete against other providers offering the same products to the same customer base. It is the crucial window of time required for a producer to develop and produce new products to meet changing customer demands.
For the following reasons, producers must either focus on lean manufacturing and process management or partner with contract manufacturers who do.
1. Opportunities to Innovate
Especially in high-technology and other cutting-edge markets, the ability to turn out products even days ahead of the competition can be essential. Those companies that reduce production cycle times can provide innovative solutions and meet sooner launch dates. Cutting-edge R&D departments are rendered obsolete if the production cycle is too inefficient to launch products before direct competitors.
2. Better Positioning for Distribution Channels
Most manufacturers sell to resellers and distributers who in turn sell to consumers. A shorter production cycle is a powerful selling point to companies seeking to please their distributors. The ability to produce on a tighter timetable improves distributor relationships and attractiveness, thus increasing market share and reliability.
3. Increased Productivity
The ability to reduce production cycle times is pivotal in turning out higher volume. It stands to reason that a workforce and assembly assets that produce goods faster can produce more of those goods. Indeed, shorter production cycles are the lifeblood of increased productivity.
4. Higher Customer Satisfaction
Companies who sell to customers should understand one of the key benefits of reducing cycle times is the ability to achieve a higher customer satisfaction quotient. Shorter time to market empowers salespeople to satisfy customer demands and expectations. Quality providers – especially in the customized products space – understand that swift turnaround time improves customer responsiveness and satisfaction.
5. Profitability Advantages
When a manufacturing operation can reduce production cycle times, more products are turned out in less time, increasing profit margins. The ability to shorten this process also results in less raw materials inventory. And fewer man hours means lower labor costs. This focus on lean manufacturing and how to reduce cycle time involves a careful analysis of every step, process, and input, thus reducing costs at every point. This translates into higher profit margins and lower product prices, potentially resulting in more sales as well.