IRJFE_41_05

8/8/2019 IRJFE_41_05

http://slidepdf.com/reader/full/irjfe4105 1/9

International Research Journal of Finance and Economics

ISSN 1450-2887 Issue 41 (2010)

© EuroJournals Publishing, Inc. 2008

http://www.eurojournals.com/finance.htm

The Impact of E-Collaboration System on Cycle Time

Reduction "A Study at Alhassan Industry City"Ziad .M. S. Almashaqba

Business Dept. Irbid Private University Jordan ,irbid

E-mail:[email protected]

Tel: 0096227056682; fax: 0096227056681

Akef Zyadat

Marketing Dept. Irbid Private University Jordan, irbid

Tel: 0096227056682; fax: 0096227056681

Abstract

The revolution of the advent of computers in the mid of the last century has broughtseveral changes to business and organizations every where all over the world which we live

in.

Information technology (IT) is one of the main golden applications of computer discovery, which concerns nearly all areas in the organizations, like job content, structure,

and employees.This study will spot the light on discussing an e-collaboration system to reduce the

cycle time inmanufacturing factories.

In these factories waitingkeeps stretching the order-to-delivery cycle time, while

adding unnecessary operating expenseto correct the problems that should never have beencreated in the first place. It's a wrong cycle that feeds on itself, and one that should be

stopped, So how does a company know when its order-to-delivery cycle time is too long.Some of the indicators of poor cycle time include: poor quality, low amount of processing

data, falling sales, too much inventory, too much non-value added activity, poor delivery

and unhappy customers.

Keywords: (E-collaboration,enterprise resource planning (ERPs), information technology

(IT), cycle time reduction (CTR).

1. Introduction Now a days the organizations suffering from the pressure , the first important thing organizations

should concentrate on the cycle time reduction, it is not a speed matter, but it is the proper use of technology for serving customers, which is the hope for the organizations to cut down costs, Nothing

could be further from the truth if proper use of cycle time reduction is employed. The effects of cycle

time reduction are illustrated in this article first in a discussion of cycle time reduction concepts.(James C.& Mark,2000)

One method of for reducing cycle time is " the 3% rule., The 3% rule states that: only 3% of the

elapsed process is actually needed to complete the activity so it is a good place to begin job byorganizations, for example the claim needs only five minutes but the rest of the time was consumed in

collecting information, and waiting to get it

8/8/2019 IRJFE_41_05


International Research Journal of Finance and Economics - Issue 41 (2010) 52

2. Importance of the Study• Evaluation the modern IT tools and it's usage in business organizations, as IT always changing

so it is very important to evaluate this matter.

• Enrich the studies in measuring the use of IT in business field especially in Arabic societies.

• Developing a new model for investigating the impact of information technology tools likecommunication collaboration with the cycle time reduction .

• Applying the research model on Jordanian business organizations.

3. Research Objectives• Studying the importance of IT to the business organizations.

• Maximizing the benefits of using IT in Jordanian business organizations.

• Developing a model to show the amount of value that business organizations extracted fromapplying IT tools.

• Spotting the light on the degree that managers encouraged to apply IT in their organizations.

4. Problem StatementThere is a vague role concerning the amount which business organizations got the value of using andapplying IT in performing their job. The research problem centered around the lake of these

procedures. also researcher sees that there is a lack of using information technology in Jordan

organization, so there is a bad need to investigate the real use of this important issue.

Many manufacturers continue to have trouble delivering products on time, Often, more than95% of the order-to-delivery cycle time consists of waiting: for sales orders to be processed; for

engineering documentation; for corrective actions to design information; for a production process to be

corrected; for a manufacturing bottleneck to be cleared, so , in this MIS study, researcher is going towork on these problems to find a proper solution through the use of MIS tools and applications.

5. Research QuestionsThe study stated several questions created through the deep imagination of understanding the

coefficient relation between the information technology and cycle time reduction, the questions of thestudy are:

1. What are the types of the information technologies available in the company?

2. Is there any relation between the information technology and the business performanceapproaches , like Transaction cost reduction , and cycle time reduction ?

3. Are there any statistical discrepancies in the trends of the sample members about the role

of information technology in cycle time reduction addressed to the personal characters

(sex, age, qualification degree, the duration of the service, administration level)?

4. Is there any impact which is statistically important for the issues of the cycle timereduction on the evaluation of business benefit of the information technology?

6. Previous Research• Ashutosh Agrawal, Ioannis Minis And Rakesh Nagi,2000 ,Cycle Time Reduction By Improved

MRP-Based Production Planning, INT. J. PROD. RES, VOL. 38, NO. 18, 4823± 4841

The important practical problem of planning the production of large assemblies employing an

Material Requirement Planning MRP-based system is considered. The objective is to produce productson-time, with minimal cycle time and low work-in-process costs. The approach is based on the

8/8/2019 IRJFE_41_05


53 International Research Journal of Finance and Economics - Issue 41 (2010)

determination of accurate lead-time estimates and on the introduction and use of lead-time . Aneffective Lead-time Evaluation and Scheduling Algorithm is employed by researchers that can perform

detailed backward scheduling of operations belonging to a large assembly on a given facility with an

objective of minimizing the cycle time. Numerical experiments are presented to validate the performance of the approach. Optimized batch sizes for minimal work-in-process (WIP) costs can also

be obtained . Thus, the important objectives of minimizing cycle time for on-time delivery and

minimizing schedule costs can be accomplished simultaneously.

They conclude Facing global competitiveness, manufacturers are hard pressed to minimize product cycle times and costs, and meet deliveries on time. In the batch production environment for

assembled products, MRP/MRP II still remains a popular tool in industry to accomplish production

planning and scheduling. In addition, most MRP systems perform planning and scheduling using a priori lead-times .

In this paper researchers have revisited this classical and industrially relevant problem of

determining accurate estimates for item lead-times because it is at the heart of a successful MRPschedule. At the backbone of their proposed approach is a recent JIT production methodology for

assembled products.

Contributions of this paper were: IT demonstrates, in quantitative terms, the benefits of introducing lead-time in their ability to minimize cycle time and cost, and to result in more balanced

workloads on resources.It also presents a numeration approach to determine the optimal batch sizes of end-items for

minimal WIP costs . These lot sizes strike a balance between the set-up cost and WIP inventory costs.

Thus, important objectives of minimizing cycle time for on-time delivery and minimizing schedule

costs can be accomplished simultaneously.

• Erik Brynjolfsson, Shinkyu yang, 1996, Information Technology And Productivity: a reviewof the literature sloan school of management Cambridge, Massachusetts published in advances

in computers, academic press, vol.43, pages 179-214.

Researchers want to know The relationship between information technology (IT) and

productivity became a source of debate: During the 1980s the astonishing improvements in computersunderlying capabilities proved almost impossible to assess in terms of their effect on productivity.

Recent research is more encouraging, as new data are identified and more sophisticatedmethodologies are applied. Several researchers document It's positive effect on productivity performance. also, others approach It's contribution from different perspectives, examining its effect on

intermediate measures, on consumer surplus, and on economic growth. Consequently, their

presumption of a “productivity paradox” has eliminated considerably. However, a careful reviewindicates that evidence still remains elusive, with new questions emerging even as old puzzles fade.

This survey categorizes relevant studies into four groups, identifies remaining productivity

puzzles, and reviews four possible explanations for them: measurement, lags, redistribution and

mismanagement. The paper concludes with recommendations for investigating each of theseexplanations, including more careful applications of traditional methodologies, as well as employment

of alternative, broader metrics of welfare to assess and enhance the benefits of IT.

Research on information technology and productivity has often raised frustrating concerns withthe measures and methods commonly used for productivity assessment.

Recently, researchers have developed new data and methodologies, and at the same time have

begun to report It's positive effects on economic performance. many puzzles remain unsolved, and theycan not announce the end of the productivity paradox.

Recently, some researchers have found positive effects of IT. Careful growth accounting

exercises and estimation of production and cost functions for specific sectors or industries can providesharper insights.

Researchers stated four hypotheses are summarized below:

8/8/2019 IRJFE_41_05



1. Measurement Error: Outputs (and inputs) of information-using industries are not being properly measured by conventional approaches.

2. Lags: Time lags in the pay-offs of information technology make analysis of current costs

versus current benefits misleading.3. Redistribution: Information technology is especially likely to be used in redistributive

activities among firms, making it privately beneficial without adding to total output.

4. Mismanagement: The lack of explicit measures of the value of information make it

particularly vulnerable to misapplication and over consumption by managers.• James C. Wetherbe and Mark N. Frolick, 2000, Cycle Time Reduction: Concepts And Case

Studies , Volume 3.

Organizations usually compete based on time. As a result, cycle-time reduction is a key agendafor organizations interested in achieving increased customer service and reduced cost. With improved

cycle time, organizations can often eliminate or reduce inventory while expanding customer service

offerings.The purpose of this paper is to present the fundamental concepts of cycle time reduction and to

show how IS can be used to reduce cycle time, increase customer service, and reduce costs

significantly. The study examines several organizations that used IS as a way to leverage cycle time for

competitive advantage

As organizations come under increasing pressure to compete in today’s fast changing businessenvironment, they look for the one issue to give them competitive advantage. This issue is often to

seek a way to reduce their cycle time in such a way as it decreases cost and/or increases customer service. Often companies use technology to help reduce cycle time. In these cases information

technology is the encouraged for cycle time reduction. Given this interest in cycle time researchers

established the Center for Cycle Time Research as a strategic alliance between FedEx and TheUniversity of Memphis.

The primary focus of the center is to conduct research on ways to reduce cycle time. As a result

of this research, researchers have been able to develop and refine methodologies of reducing cycle

time. As they continue working with different organizations in different industries, they hope tounderstand more fully the wide variety of cycle time reduction opportunities.

• Kenneth Deemer,2006, A Life Cycle Model Of New Product Profitability, Data SystemsDesign, Inc. Santa Clara, CA

A model, based on the product life cycle concept, considers the revenues and expensesassociated with development, introduction, and marketing of new products. Key parameters may be

varied individually to investigate the project's profitability under different scenarios. The product life

cycle model may be programmed on a hand calculator and used as a convenient first pass whenevaluating new product proposals.

In the electronics and computer industries, technological change is so rapid that development

cycles frequently exceed the market life of new products. Many products are technically obsolete bythe time they are offered for sale. Others encounter severe competitive pressure or lack of market

acceptance and fail to return the large amounts of capital invested in their development. High

technology companies are facing escalating costs of capital, plant and equipment. Shortages of designengineers and of skilled assembly workers are driving up the cost of labor. To recover these increasing

costs of expanding their business, companies demand high rates of return on investment in new

products. Many high-growth companies require large profit margins and rapid payback to finance their

continued growth. It is important to carefully identify marketing opportunities and to allocate scarcefinancial and management resources to those projects that offer the greatest potential for profitability .

Researchers conclude that products which are carefully planned are more likely to succeed than

those which are conceived. Analysis of the expected life cycle characteristics is an important elementof product planning. It forces planners to take a long range view rather than optimizing for near term

results .

8/8/2019 IRJFE_41_05



• Leslie Kren , Thomas Tyson,2005, Using Cycle Time To Measure Performance And Control

Costs In Focused Factories In today’s competitive marketplace, manufacturers must fully satisfy their customer needs as

cost efficiently as possible. To fulfill these dual, often competing, objectives, many companies have

adopted a focused-factory configuration. In focused factories, unique products and/or processes are

separately monitored, and the cycle times required to complete key bottleneck operations becomecritical indicators for performance evaluation and cost control.

This paper describes how cycle time metrics in conjunction with traditional cost varianceanalysis can be used in a focused factory that includes production cells. It presents several general- purpose reports that could be prepared to identify cycle-time efficiency and non-value added cost. It

then presents a detailed example showing how Parcel, Inc. a Fairport, NY tool-making company,actually employs cycle-time metrics for a variety of internal reporting purposes.

They conclude that the paper has presented hypothetical and real-world examples to illustrate

how cycle time metrics can be used in focused factories that contain production cells. Cycle time has become one of the most critical indicators in competitive, manufacturing environments because it helps

management focus on the two key factors in today’s marketplace , fully satisfying customer needs and

conducting operations as cost efficiently as possible. they initially showed how cycle time rates can be

computed at both practical and expected actual (planned) capacity levels, and how cycle time

efficiency can be compared and analyzed on either inter-shift or time-series basis. Progress towards physical benchmarks (i.e., 95% of practical capacity or 80% of payroll hours) can then be effectively

monitored and corrective actions (i.e., redesign product flows, introduce new technology, reducecapacity, etc.) can be undertaken. In conjunction with traditional accounting variances, conversion cost

rates based on practical capacity and planned levels of output can be compared to generate a

measurable amount of cost. Identifying under-applied conversion cost as a cost will accomplish twoobjectives:

(1) IT will not burden products with excess cost.

(2) IT will direct management in its cost control efforts. In researchers' opinion, cycle time in

conjunction with accounting variances, are key metrics in production cell environments.

• Sharon Paranto,2004, Using The Web As A Collaborative Tool, 1200 S. Jay St., Aberdeen, SD

57401, (605) 626-7726This paper describes how the Internet was used as a collaborative tool in a "real-world" website

development project, a group project assigned to students taking an Advanced Computer Applicationscourse. Students worked collaboratively in small groups and coordinated with area businesses, both in

person and online, to develop interactive websites for the businesses. The ability to temporarily publish

the websites to the university's E-learning server meant that students could work on the project at their convenience and the corresponding businesses were able to review the websites and test the interactive

forms at their convenience. E-mail also provided a means of communication among group members, as

well as between groups and the corresponding organizations for which the groups were developingwebsites.

As the websites were developed, the sponsoring organizations were asked to provide keywords,

words that clients would be expected to use in a search for their type of organization or products andservices, as well as a short, one-sentence description of the organization. These were sent to the

students via e-mail and the students incorporated the keywords and description into the website . When

the websites were approved by the sponsoring organizations, they were published to actual sites and

the sites were submitted to search engines. The students also incorporated interactive forms into thewebsites, thus allowing the organizations to use the Web to communicate with customers and potential

clients.

As the world becomes more global in nature, the ability to communicate and collaboratewithout regard to time or place becomes increasingly important. The Web is an inexpensive and easily

accessible tool that can be used effectively to enhance collaborative efforts, in both educational

8/8/2019 IRJFE_41_05



applications and commercial and service settings, especially when schedules or logistics are such thatin-person meetings are difficult, if not impossible.

By using the Internet for sharing information when working on collaborative projects, time and

place become less of an issue. In the classroom project described in this paper.The same techniques can be broadened and incorporated into not only other classroom

collaboration projects, but also collaborative projects within businesses and organizations. As the

world becomes more global in nature, the ability to collaborate without regard to time and/or place

becomes increasingly important. The Web is an inexpensive and easily accessible tool that can be usedvery effectively in enhancing collaborative efforts and achieving teamwork, especially when schedules

or logistics are such that in-person meetings are difficult, if not impossible.

7. Research Methodologya. Population: The research population consists of the managers of the three levels (top management

level, middle managers, and operational levels) in the manufacturing companies in

Jordan qualified industry zones (QIZ). The study includes Alhassan industry city.

b. Sample: Information technology users & managers.c. Instrument: Interviewing the targeted sample in their place

d. Validity & Reliability: Researchers did the interview by them selves and face to face interviewe. Data Collection: From literature review and interview.

8. Research Model & Variables

- Communication

Technology

- Human IT

Capital

- Networking

Independent Variables

Information Technology Dependent Variables

cycle time reduction

Cycle Time Reduction

Resource: ( Researchers,2008 )

DiscussionCycle Time Reduction for Successful Manufacturing

Cycle time reduction is one of the most important elements of successful manufacturing today. More

and more customers are demanding that manufacturers quickly respond to their wants and needs,

deliver perfect quality products on time. This trend, which will continue, has led companies to focus

more attention on their order-to-delivery cycle time.

8/8/2019 IRJFE_41_05



Order-to-delivery cycle time reduction is often a good place to start in the overall effort toimprove operations because it can often be done without heavy capital investment. Clearly, long cycle

times cause high inventories, higher cost, and poor customer service. As a result, many manufacturers

are streamlining internal and external supply operations to reduce overall order-to-cash cycle time.Some have even undertaken initiatives to extensively redesign and streamline the entire supply chain

process.

Customers Want Cycle Time Reduction

Customers generally evaluate a supplier’s performance on four factors: product performance (features),

price, quality, and delivery within a reasonable time. Now customers are increasingly emphasizing twoadditional performance criteria: flawless delivery, that is, very short-cycle on-time delivery, and

responsiveness to the customers’ changing needs. In fact, flawless delivery and responsiveness can

very often be the difference in getting new customers and keeping old ones.In the past, manufacturers made products and stored them in Finished Goods Inventory (the

“make-to-stock” mode) and waited for customers to place orders to buy them. In this “push”

production model, large runs of batches of products are produced using highly inaccurate sales

forecasts.In contrast, today, it is the customer who largely dictates what products are manufactured and

when. The customer says: “I’ll let you know what and how many I want, when I’m ready to buy, and

then you ship it exactly as I want the product configured, and in a very short lead time.” This trend hasalready contributed to the adoption of short cycle, pull-oriented lean manufacturing models, where

products are made to customer demand, (sometimes called “demand flow manufacturing” or “mass

customization”).A major consequence of this trend is that CEOs and others in top management are revisiting

their existing strategies and operational tactics. That in turn has led many to pursue new initiatives and

directions, including:

Demand Management—Using improved sales forecasting processes and sales and operations planning processes to give top management a better handle on demand and supply.

Cross-functional Integration—Redesigning order-to-delivery and other key processes to

connect processes across the enterprise.Lean Manufacturing—Radically redesigning information flow and material flow processes with

dramatically shorter cycle times, lower costs, minimum inventory, and near perfect delivery

performance.Supply Chain Management —Implementing supply chain planning, execution, and event-level

alert systems, sometimes in conjunction with other modern information technology. As customers up

the ante by insisting orders be promptly delivered and at a precise time, reducing cycle time becomesthe pivotal point in a supplier order-to delivery performance rating. A shorter order-to-delivery cycle

time also has other implications, including reduced inventories, lower costs, and more effective use of

resources .

In addition, experience has shown that production throughput can improve dramatically oncethe order-to-delivery cycle time is substantially reduced. An added set of benefits affects the bottom

line in lower operating expenses, dramatically decreased requirements for working capital, and

increased profit margins.

What Makes Cycle Times Longer?

Many different processes, not just the manufacturing process, contribute to long cycle times. While all

the delay may appear on the factory floor in the form of waiting (often more than 95% of the order-to-

delivery cycle time consists of waiting), the causes for those waits stem from various processes both

8/8/2019 IRJFE_41_05



internal and external to manufacturing. When order-to-delivery problems are properly diagnosed,management almost always finds that one or more problems have contributed to the delay.

Interview Analysis

Researchers put down several questions for the research sample in Alhassan industrial zone:

1. What are the communication technology you use in your company for reducing time? They

reply that they use an enterprise resource planning systems (ERPs) called ( MOVEX) to tie thecustomer with the mother company and the production branches.

2. How do you organize your human resources in the company? They use a separate system called

“ so easy” and it is used to show all information about the HR in their company.3. What networking you use? They use the internet and they depend upon it totally as they are

tightened to the mother company through the internet.

4. What is the benefit of CTR in your company? They reply that they reduce the time of production, inventory, customer satisfaction, accuracy , and reducing total time with increasing

the efficiency of production as well.

Results1. Applying E – collaboration decreases the time to markets.2. Applying E – collaboration increases productivity and quality.

3. E – collaboration increases mutuality of knowledge management among the workers.

4. E – collaboration reduce inventory and inventory costs.

5. E – collaboration opened the door of more inventory coasts.6. Applying E – collaboration decreases the turn over rate of employees because of the ease of use

of the job.

7. Applying E – collaboration decreases the conflict between workers.

Recommendations1. Companies should integrate HR with the whole systems to be more effective.

2. Companies should update their systems from time to time.

3. Companies should train their workers for any updates of the E– collaboration matters.

SummeryThe research spotted the light on a very important relation between the e- collaboration systems andit’s role in reducing the cycle time reduction through tying the whole systems in the company with one

effective system resulting in reducing inventory and increasing the efficiency of the organization and

by using this technique the company will be in a good place for competition.

8/8/2019 IRJFE_41_05



References[1] Alina m. chircu, Robert j. Kauffman, and doug keskey Maximizing The Value Of Internet-

Based Corporate Travel Reservation System, communications of the acm November

2001/vol.44,no.11

[2] Arun rai, ravi patnavakuni, and nanika patnavakuni , 1997 , Technology Investment And

Business Performance, communications of the acm , vol . 40, no.7

[3] Ashutosh Agrawal, Ioannis Minis And Rakesh Nagi,2000 ,Cycle Time Reduction By Improved

MRP-Based Production Planning, INT. J. PROD. RES, VOL. 38, NO. 18, 4823± 4841[4] Brain subirana & other, 2003 , Measuring The Impact Of Information Technology On Value

And Productivity Using A Process-Based Approach: the case for rfid technologies, mit sloanworking paper no.4450-03 , ccs working paper no.223

[5] Erik brynjolfsson, shinkyu yang, 1996, Information Technology And Productivity: a review of

the literature mit sloan school of management Cambridge, Massachusetts published in advancesin computers, academic press, vol.43, pages 179-214.

[6] Erick . clemons , 1991 , Evaluation Strategic Investment In Information Technology, januar

vol.34,no.1 of the ACM.

[7] James C. Wetherbe and Mark N. Frolick, 2000, Cycle Time Reduction: Concepts And Case

Studies , Volume 3.

[8] Jason dedrick, vijay gurbaxani , Kenneth kraemer, Information Technology And Economic Performance: a critical review of the empirical evidence ACM computing surveys,vol.35,no.1,march 2003 , pp. 1-28.

[9] Jeremy A, 2002, Fusing Business And Technology Decisions: A Market Perspective Of

Government Trends And Issues, IBM global services, USA,NY[10] Gyeung-min J. Kim, ,James R. Burns,2004 Decision Process Cycle Time Reduction Through

Coordination Of Modeling Activities

[11] Keebom Kang, Kevin R. Gue, Donald R. Eaton, Cycle Time Reduction For Naval Aviation

Depots, Monterey, California 93943-5103, U.S.A.

[12] Kenneth Deemer,2006, A Life Cycle Model Of New Product Profitability, Data Systems

Design, Inc. Santa Clara, CA

[13] Leslie Kren , Thomas Tyson,2005, Using Cycle Time To Measure Performance And ControlCosts In Focused Factories

[14] Nada R. Sanders, Raj Soin,2002, An Empirical Study Of The Impact Of E-Business

Technologies On Organizational Collaboration And Performance271 Rike Hall, Wright StateUniversity

[15] Nigel Melville, Kenneth l. kraemer , vijay gurbaxani, 2004, Information Technology And

Organizational Performance: an integrative model of it business value, center for research oninformation technology and orgnizations university of California.

[16] Rainer Alt, Marc A. , Jِ rg U. Grau,2002, Collaboration In The Consumer Product Goods

Industry – Analysis Of Marketplaces, ECIS • June 6–8, Gdansk, Poland

[17] Sharon Paranto,2004, USING THE WEB AS A COLLABORATIVE TOOL, 1200 S. Jay St.,

Aberdeen, SD 57401, (605) 626-7726[18] Stephanie t. Bernd T 1995. Bridging Information Technology And Business: Some Modeling

Aspects. SIGOIS Bulletin, vol. 16, NO 1.[19] Vijay Gurbaxani and Seungjin Whang, 1991 , The Impact Of Information System On

Organizations And Markets, /communications of the ACM /vol ,34,no.l

IRJFE_41_05

Documents

Transcript of IRJFE_41_05