Global competitiveness is forcing companies of all sizes to go to ever-greater lengths to improve customer satisfaction (Northey & Southway, 1993, pp. 11-12). Organizations that focus on cycle time as a productivity measure, can both decrease delivery time and improve quality, thereby creating a more satisfied customer. An organization's total business-cycle time is measured "from the time a customer's need is identified to receipt of payment from that customer for the finished product" (pp. 11-12).
Total business-cycle time within an organization includes any or all of the following sub cycles or loops (Northey & Southway, pp. 11-12). The make/ship loop is the time from receipt of material, through the value-adding conversion steps, to shipment or transfer of a finished product to the distribution loop. The distribution loop. The time from finished production to shipment to the customer from the distribution warehouse. The supply loop is the time from release of the purchase order to stocking the correct materials in the right quantities at the right point in the manufacturing process. The new-product-introduction loop is the time from identification of the need for a new product to delivery of the first unit of product to a customer. The strategic-business-development loop is the time required to develop a new strategy, make the decision to adopt it, and then implement the strategy.
Over the past decade, "it has become clear that the compartmentalization of these loops has inhibited competitiveness" (Northey & Southway, pp. 11-12). All loops must be integrated if total business-cycle time is to be reduced. In the 1980s, most companies focused on the make/ship loop. Before 1980, high order backlogs in this loop created a sense of complacency. "This complacency rippled through the distribution and supply loops as well" (pp. 11-12). As long as customers tolerated the long wait, the system worked, because it enabl...