Friday, 30 December 2016

Cost Advantage in Time Compression Approach

The advantage of removing non value added time can be seen in cost reductions. Time compression brings many cost savings that are linked to the removal of fixed and variable overheads as well as working capital and direct costs. There are other cost savings to be made but they do depend on how compression is applied in the business. They could occur by reducing risks in decision processes, removal of rework activities and so on.

Cost implications of time compression are complex. Therefore, it’s important to put the focus on time that affects the service the supply chain offers without spending too much time identifying all the trade-offs. Cost based focus was once encouraged by using performance measurements and linking the profits with the costs. Time compression requires discovering the cost values that are associated with processes to come up with project prioritisation and to help with evaluation.

SCTCM is a toolkit that was developed by a university and industry initiative. Supply chain and cost mapping is the combination of time based process m apping and process cost analysis. SCTCM is able to show how time, value added and the costs all relate to one another throughout the supply chain. It can be useful for prioritisation, analysis and gaining. These benefits need to be weighed against the requirement to collect large amounts of cost data and the possibility of prolonging projects.

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