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:almashaqba@yahoo.com
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 brought
several 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 been
created 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 by
organizations, for example the claim needs only five minutes but the rest of the time was consumed in
collecting information, and waiting to get it
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 like
communication 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 from
applying IT tools.
• Spotting the light on the degree that managers encouraged to apply IT in their organizations.

4. Problem Statement
There is a vague role concerning the amount which business organizations got the value of using and
applying 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 than
95% 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 to
work on these problems to find a proper solution through the use of MIS tools and applications.

5. Research Questions
The 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 the
study 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 performance
approaches , 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 time
reduction 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 products
on-time, with minimal cycle time and low work-in-process costs. The approach is based on the
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 . An
effective 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 MRP
schedule. 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 review
of 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 computers
underlying 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 sophisticated
methodologies 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 review
indicates 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 these
explanations, 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 with
the 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 they
can 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 provide
sharper insights.
Researchers stated four hypotheses are summarized below:
International Research Journal of Finance and Economics - Issue 41 (2010) 54

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 agenda
for 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 business
environment, 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 The
University 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 to
understand more fully the wide variety of cycle time reduction opportunities.
• Kenneth Deemer,2006, A Life Cycle Model Of New Product Profitability, Data Systems
Design, Inc. Santa Clara, CA
A model, based on the product life cycle concept, considers the revenues and expenses
associated 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 when
evaluating 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 by
the 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 design
engineers 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 scarce
financial 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 element
of product planning. It forces planners to take a long range view rather than optimizing for near term
results .
55 International Research Journal of Finance and Economics - Issue 41 (2010)

• 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 become
critical indicators for performance evaluation and cost control.
This paper describes how cycle time metrics in conjunction with traditional cost variance
analysis 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, reduce
capacity, 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 two
objectives:
(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) 626-7726
This 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 Applications
course. 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 developing
websites.
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 and
services, 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 the
websites, 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 collaborate
without 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
International Research Journal of Finance and Economics - Issue 41 (2010) 56

applications and commercial and service settings, especially when schedules or logistics are such that
in-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 used
very 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 Methodology
a. 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 interview
e. Data Collection: From literature review and interview.

8. Research Model & Variables

Independent Variables Dependent Variables

Information Technology cycle time reduction

- Communication
Technology
Cycle Time Reduction
- Human IT
Capital

- Networking

Resource: ( Researchers,2008 )

Discussion
Cycle 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.
57 International Research Journal of Finance and Economics - Issue 41 (2010)

Order-to-delivery cycle time reduction is often a good place to start in the overall effort to
improve 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 two
additional 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 has
already 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 becomes
the 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 once
the 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
International Research Journal of Finance and Economics - Issue 41 (2010) 58

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 the
customer 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.

Results
1. 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.

Recommendations
1. 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.

Summery
The research spotted the light on a very important relation between the e- collaboration systems and
it’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.
59 International Research Journal of Finance and Economics - Issue 41 (2010)

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