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The Bottom Line on timing

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Stephanie Flanders | 18:11 UK time, Thursday, 3 March 2011

They say the secret of great comedy is in the timing. Most chief executives would probably the same about business: whether you win or lose, timing always seems to have a lot to do with it. But, as your grandmother ought to have told you, there's a difference between doing something quickly and doing it well. When I hosted The Bottom Line this week, I asked my guests how they managed the tricky business of time. And what happened when they got it wrong.

Around the table were David Wild, the chief executive of Halfords, Mike Norris, the head of Computacenter, an IT services firm that does the "corporate plumbing" for big companies around the world and Chris Moore, chief executive of Domino's Pizza in UK and Ireland, which now sells a million pizzas a week in those two countries alone.

As you can imagine, timing means something different to Mr Moore than it does to the other two. Every Domino's Pizza customer is supposed to get their order within 30 minutes, and around 90% of them do. Mr Moore said the lesson of experience - here and in the US - was that "up to 30 minutes, the customer's hungry, after 30 minutes, they're angry". The single most important statistic in his business is the time between the customer putting down the phone and the pizza going out of the door of the shop. Every Domino's franchise has that "out-the-door" time monitored, down to the nearest second.

For Computacenter, timing is a more nuanced affair, with clients paying more, according to how fast they need their IT systems to be put in and, especially, how fast they need them to be fixed when they fail. Smaller companies might be willing to wait a day for the technicians to arrive. Foreign exchange traders in the city are apoplectic if the system is down for 30 seconds - let alone 30 minutes.

The boss of Halfords also had some interesting stories to tell about getting the timing right, and getting it wrong. They timed their anti-freeze supplies about right, for last winter's snow and ice. But this time last year they drastically underestimated how long Chinese migrant workers would stay at home after Chinese New Year. The result was a big shortage of bikes in UK stores in April and May. Another sign of the times. I bet Mr Wild's predecessors didn't have to worry about Chinese holidays and how it would affect the supply of children's bikes.

With the continuing turmoil in the Middle East, I also asked my guests whether they felt a responsibility to keep up with world events generally - and whether it really mattered, from a business standpoint, if they switched off. We had an interesting range of comments on that subject as well, including some intriguing observations from our UK pizza supremo, on the difference between Muammar Gaddafi and Cheryl Cole. For that and more, I'm afraid you'll have to tune in.

Comments

  • Comment number 1.

    Back in the real world, Stephanie one person who we know who has lost the whole idea of timing is....

    (hint: The governor of the Bank of England and his minions.)

  • Comment number 2.

    What would have been really interesting is what role these guys at the top play/played in setting the timing character in their organisations. Does the one at the top actually monitor which Dominos outlet falls outside the tolerance band and the man from computacenter does he have any role at all in setting the standards and ensuring they are met. I suspect there is a degree of distance and anecdotalness in their stories. They do not seem to want to emphasise that these organisations depend of a marriage of chain of command and team work to become and continue to be successful.

  • Comment number 3.

    Another interesting contribution would be from a transport economist. I'd like to see more debate in this area on the value of saving 20 minutes on a train journey from london to birmingham, especially in the real world as the headline proportionate saving quoted is only for one bit of ones journey, and ignores they reality of getting from and to ones primary origin and destination.

  • Comment number 4.

    Oh dear!

    "Foreign exchange traders in the city are apoplectic if the system is down for 30 seconds - let alone 30 minutes".

    Foreign exchange traders pay enough money to ensure that there is a fully functioning back up which kicks in within seconds. If they do not have one, they only themselves to blame. If they do and it does not kick in, they are entitled to be apoplectic.

    My personal experience is that you are far more likely to get grief from from small players/small payers. Actually the big players tend to be eminently reasonable, usually because they have the sense to wear belts and braces.

  • Comment number 5.

    The point about timing is a good one.

    Is it always appropriate to save announcements for the theatre of the budget speech or the autumn statement...?

    I think not.

    Osborne himself broke that rule only a few weeks ago, announcing tax changes on banks.

    So why can't he announce tomorrow, that the fuel duty escalator will be scrapped, sparing us the increase due in April.

  • Comment number 6.

    SF "Every Domino's Pizza customer ... single most important statistic in his business is the time"

    Just the one statistic, I could imagine the calls are Poisson, but is the cooking and delivery?

  • Comment number 7.

    So it looks like a modern business is a very precisely organised thing. It demands a workforce that is highly predictable and while being able to anticipate moves (in a sense of checkmate moves) in advance still able to apply this knowledge only to the level expected from their rank. This is a test of more then one human quality at a time and a strict test indeed. As a result we have well oiled machinery of business filled with plenty of well calibrated human gears. It is hard enough to fit within the system let alone get to the higher levels. The better (more precise, predictable, flexible, governable) the system, the harder the fit. From my engineering lessons of 30 years ago (PMC – propedeutics of machine construction) I remember that the cost of the parts rises exponentially with a fall of tolerance with ever smaller gains in reliability... The cheapest way of gaining desired result was sorting an output into quality groups to use accordingly (where proper use was determined by pricing)...
    There is no room for any other valuation apart from suitability to fit in...

  • Comment number 8.

    Just in time.

    Supermarkets have systems that order goods to arrive “just in time” as they have very limited storage space (have you noticed every isle blocked at each end by those huge trolleys just loaded off the latest lorry being stacked on the shelves making you life a misery?)… these EPOS systems optimise selling space but rely on a constant flow of vehicles being despatched from central distribution points “just in time” to replace the dwindling stock, this keeps costs down and optimises the available retails square footage, often used as a measure of profitability. Of course these distribution points are mostly in low cost areas, miles “out of town” and generate huge amounts of vehicle movements.

    Strangely this “just in time” logic seems not to apply to the NHS, Civil Service, Local Authorities, Government and most of the rest of the economy – why – well its because they don’t monitor anything in real time only retrospectively… this is what I call an event (in the past) driven model, this of course means that you can only react to things that are already out of date or long since gone. The BOE knows all about this!

    Its not an order of magnitude to difficult to plug some of these systems into the other, for instance the measure of inflation, the movements of population, who lives where and so on as this data is available from companies, Local Councils, Financial Institutions, Insurance companies and so on.

    The biggest non-performer here is the Government and all its associated holdings on behalf of the nation.

    The risk here is that the actual data model of “just in time” used by the supermarkets and McDonalds (who were one of the first to analyse this in great detail to their whole operation) relates to a centrally controlled and administered system many would (politically) baulk at and in addition it has its own inbuilt strategic and logistical weaknesses not to mention political.

    At the other end of the scale sits the NHS, isolated from most of its customers, the local Doctors in their surgeries, Dentists and the rest.

    Surely its time that all homes had (as a basic set of tools) equipment that could via the internet transmit health data such as blood pressure, temperature and other simple information (on a daily basis) that waste so much time for the individual once you actually get to a doctors surgery and wait for an hour.

    Just a thaught

  • Comment number 9.

    Interesting and somewhat typical responses from senior executives. When asked a question about timing they focus upon operational issues. Now their prime focus is/should not be operational but strategic yet we hear nothing from them about the timing of their strategic decision making. In terms of Halfords in particular, history shows that they have mostly got their strategic timing wrong!

  • Comment number 10.

    All this user's posts have been removed.Why?

  • Comment number 11.

    1. JFH, very well said... back in the real world. Oh for the days when the CEO's (MD's back then) that Stephanie would have interviewed would have been leaders of an electrical/electronics manufacturer employing tens of thousands of people, head of a shipbuilding company building the mercantile fleet of the worlds greatest trading nation, and a steel magnate providing his raw material in the foundries of Sheffield. Now so called captains of industry service city spivs with IT, unemployed obese couch potatoes, and companies who profit from $2 per day off shore labour and then supplies it to British customers some of whom used to produce those very items only a few years ago.

    One of the hidden benefits of the ensuing energy and price commodity supply and price crisis will be a return to more local manufacture and trading of goods and services that for only a few quid more could already be produced and supplied here thus providing work and a renewed sense of community and sense of happiness and well-being for people of this country. New economic thinking is require and fast.

  • Comment number 12.

    Perhaps it is not how much time is saved that is important, but what the individual DOES with the time that has been saved. If he is 'going to hell' then it is better to travel slowly....

  • Comment number 13.

    The bottom line is that they have got their timing right and are making money ... which generally means that they could not give two hoots about anyone or anything else!

    Too many of these people in business ... that is why the UK is struggling viz a viz its over exposed and over privileged global sector and a weak domestic sector.

  • Comment number 14.


    Ms S Flanders wrote:


    'We had an interesting range of comments on that subject as well, including some intriguing observations from our UK pizza supremo, on the difference between Muammar Gaddafi and Cheryl Cole. For that and more, I'm afraid you'll have to TUNE in.'


    Will your advertising bait live up to its promise this time Ms Flanders ?

  • Comment number 15.

    We use electronic circuit boards. I used to buy them from the UK, but I now buy them from China. Why? Because they are 75% cheaper, have very low error rates, and the UPS shipping from China is 20% more than the UPS shipping from within the UK.

    What's odd is that the machines they use to make the circuit boards in China are German, the raw materials are made in the US and Europe, and it's not a particularly labour intensive job.

    I have noticed that the Chinese holidays are taking longer to get over, but generally their quality hasn't suffered.

    Ideally I'd like to purchase in the UK, but economically it doesn't make sense: no company in the UK, using the same equipment & materials can produce circuit boards anywhere near the same quality within 150% of the price, for the relative low volumes I use. Why is that?

  • Comment number 16.

    If Halfords under-estimated the time Chinese workers overstayed their Spring Holiday last year to find a shortage of bicycles in their shops just two months later then both their sourcing and lead-times are seriously screwed up.

    First, nobody sane or honest within the EU would source their bikes in China as the anti-dumping duty applied to imports of bikes from China runs at 48.5% on top of the standard import tariff of 14%.

    Secondly, to allow just an eight week lead-time out of the Far East for this type of product is wholly inadequate as it does not allow for component sourcing from elsewhere plus a shipping time of around four weeks.

    What I suspect actually happened to Halfords' bikes last year was that a lot of Chinese workers did not return from their Spring Holidays as the minimum wage in the interior had been increased, so they could make a better living closer to home. Also these workers were not employed by bike manufacturers but by bike component manufacturers in China who supply parts to the bike factories in Bangladesh, Thailand, Indonesia and all stations east which were not shut for holidays.

    This means two things. There is not a proper supply chain policy within the business and that senior management don't know what they are talking about.

    This is not unusual with many British companies which is why generally speaking their performance is poor. This is also why we don't manufacture more in the UK as the only reason for sourcing in the Far East is that it is supposed to be cheaper.

    Given the costs of financing, freighting, stock holding and warehousing batched production from overseas I feel that argument is a lot thinner than it appears to be, particularly if you are dealing with complex product on long lead-times with a customer base that has every right to expect high quality.

    Surely it has to be easier to make locally?

    Please note: I haven't even got into carbon foot-printing at all in this argument.

  • Comment number 17.

    Actually in my view there was a clear example of timing in the markets yesterday Stephanie and I am surprised that you missed it. It would appear that the President of the European Central Bank used the shock effect of in effect pre-annoucing an interest-rate move.This led the economist Shaun Richards to point this out.
    "This would be a very significant move if it took place as unless the Bank of England moves swiftly it may well be that the ECB raises interest-rates first and with the relative inflation rates the Bank of England would be looking much less credible as an institution."
    http://t.co/vY8xPPn
    That to my mind would be an example of timing! If the European Central Bank with much lower inflation than we have raised interest-rates first...

  • Comment number 18.

    @17. At 10:00am on 04 Mar 2011, DorsetJane wrote:

    "That to my mind would be an example of timing! If the European Central Bank with much lower inflation than we have raised interest-rates first..."

    ---------------------------------------------------------------------------

    ... and when you look at Brazil

  • Comment number 19.

    8 UnionRep

    An interesting set of points.

    However, I shouldn't get too excited about what supermarkets say they do. I agree they have significantly improved their bottom line by investing in their supply chains but they are now at the point where each successful just-in-time experience is off-set by a just-too-late experience. This is what you get from alienating your suppliers. This is very evident with one of the leading brands which I will not name for obvious reasons.

    Generally speaking I don't feel it is reasonable to compare private sector behaviour with the public sector as the cultures are wholly different.

    Whilst I agree that government is a `non-performer' in supply chain terms their solution need not be found in private sector methodology as the ethos is different. So we need another model or models within the public sector. I would suggest a conception of public service in the total sense of providing what the end-user needs would be a more useful starting point than just shifting stuff around.

  • Comment number 20.

    16. At 09:41am on 04 Mar 2011, stanilic wrote:

    "Surely it has to be easier to make locally?"

    ---------------------------------------------------------------------------

    If it is easy then companies won't be able to generate (the dreaded, so called) Sustainable Competitive Advantage. Any company has access to the easy. As your post clearly pointed out matching the supply chain to the end customer, if done successfully, leads to higher performance.

    [I guess if one were writing this comment as an answer to a secondary school business essay it would have to mention Dell ... but I won't be tempted]

  • Comment number 21.

    15 Crookwood.

    Might I suggest the answer has to be in the low volumes. If you are finding UPS a satisfactory freight provider then you are a small customer.

    It is very interesting though that you have a supplier in China who can see the benefit in servicing small accounts to a good standard. All credit to them.

    As you say, we should be able to do as well here but it all comes down to the cost of servicing low volumes as there are no economies of scale to offset the high costs in setting up manufacturing here. If commercial property costs were actually commercial, then those small workshops that succoured me as a child could be re-established and good people could earn a wage rather than exist on so-called benefits.

  • Comment number 22.

    This massive scoop reveals the dangers of owning a High St bike shop and a pizza parlour and not having a reliable clock.

    Stephanie, this is an entertaining kick forward into the weekend, unlike all those meaningless guessing debates about the governments manufactured boring-boring guessed statistics.

    As we 'bump along the bottom for another 2/3 years towards a significantly less prosperous but stable economy', (my only word on this mess), let us just lighten up a little, after all it's all out of our control and laughing can ease the pain.

  • Comment number 23.

    This was a bit of a wasted opportunity and rather lazy journalism.

    Computacenter might want to be seen as an "IT services" company that provides the " corporate plumbing" but in reality they are an outsourcing company that shifts boxes. Timing to them is just about the economics of shifting Dell or HP boxes at very low margins which is why they no longer bother to hold any stock because on 3 or 4% gross margin they cant afford to. Look at their acounts and you will see this reflected in their huge turnover and very low profit.

    Come on Stephanie do some research!

  • Comment number 24.

    #20 Mike3

    You do not generate Competitive Advantage, it is a strategic choice that should be developed from the corporate planning process. See Michael Porter's book of the same name.

  • Comment number 25.

    14. At 08:39am on 04 Mar 2011, Amused2Death wrote:


    Ms S Flanders wrote:


    'We had an interesting range of comments on that subject as well, including some intriguing observations from our UK pizza supremo, on the difference between Muammar Gaddafi and Cheryl Cole. For that and more, I'm afraid you'll have to TUNE in.'


    Will your advertising bait live up to its promise this time Ms Flanders ?
    __________________________________________________________________________________
    It might be that I am overtly analytical, but after today's event Isn't it really a "raisin in a dough" (if you forgive a turn of phrase), this remark of Mdme Flanders? What to spin off and what to keep of a media empire? Is it better to influence people's minds by talking about foreign autocrats or giving a nice spin to a football match brawl?
    The philosophy is one of simplification; respect is a nicer expression of fear and they fear only the most competitive ones. Ergo: let's build competitiveness. (Plays all right with my first comment, I guess).

    As to practical solutions to Arrows social choice conundrum, one has to see it together with a law of unintended consequences. (here I probably jump over some important stage of argument) Dictatorship only works if it is concealed enough and wrapped up in a cobweb of institutionalised choice. The predictability of outcome is blurred by the feeling of inevitability... Even communist knew it, only were not skilled enough (or, there weren't sufficient means available to them) to conceal the trick.

  • Comment number 26.

    Stephanie

    Naughty, naughty!

    Mr. Wild did not talk about bikes from China. He just said products from China. You added the bikes to spice up your narrative above. It may have been all those own-brand tents from the Zheijiang Massive that caused the problem.....

 

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