Time-based management definition
/What is Time-Based Management?
Time-based management focuses on reducing the amount of time required to complete a process. The concept is most commonly employed in the production area, where time reduction eliminates labor and inventory holding costs, thereby making a company's products more cost-competitive. A business that continually focuses on time-based management should build up a substantial advantage over its rivals over an extended period of time. This approach has multiple benefits for an organization. For example, it can result in faster customer response times, lower labor costs, and a reduced investment in inventory. It can also reduce levels of production waste, and result in shorter production development cycles.
Time-based management works most effectively when a company is not burdened by restrictive work rules, and where there is a high level of trust between management and employees regarding ongoing changes to processes.
Since time-based management seeks to shrink the time invested in a business, it can be considered a tool of the lean management philosophy.
Advantages of Time-Based Management
There are multiple advantages to the time-based management concept. They are as follows:
Reduced labor costs. Reducing the time required to complete a task inherently reduces the associated amount of labor, so labor costs decline.
Reduced inventory holding costs. Reducing the duration of the production process also reduces the amount of time that a business holds inventory, so it can more quickly push it out to customers and be paid for it.
Quicker order fulfillment. When it takes less time to produce a product, the seller can promise faster fulfillment times to its customers, which can increase customer loyalty.
Reduced production waste. By shrinking the amount of inventory in process, it is easier to spot instances of waste and fix them. The result is an overall reduction in the amount of waste produced.
All of these improvements sum to a clear competitive advantage, since a business using time-based management will likely earn more profits than its competitors and attract more customers.
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Example of Time-Based Management
Sunflower Accounting Services is a mid-sized firm that handles month-end close processes for a portfolio of small businesses. Historically, their closing process took 10 business days, which delayed financial reporting for their clients and created a bottleneck for decision-making.
Clients began requesting faster turnaround on financial reports to support quicker strategic decisions. The firm's leadership recognized the need to optimize internal processes to reduce the close time without sacrificing accuracy. The firm decided to implement a time-based management strategy focused on eliminating inefficiencies and streamlining operations. This strategy involved the following activities:
Process mapping. They began by mapping out each step of the month-end close process—from data collection and journal entries to reconciliations and reporting. This revealed that many tasks were being done sequentially that could be done in parallel, and that some time was lost waiting for client information.
Technology optimization. They invested in cloud-based accounting tools that integrated client bank feeds and transaction data in real time. This eliminated the need for back-and-forth emails and manual data entry, saving hours per client.
Standardization. The team created standardized templates for recurring journal entries, account reconciliations, and internal review checklists. This reduced variability in how staff approached their work and cut down on rework.
Time targets. Each phase of the process was assigned a time target. For instance, bank reconciliations were to be completed within 2 days of month-end. Teams were given daily metrics and dashboards to track their progress, making it easier to stay on pace.
Client collaboration. Clients were educated on what documents and data were needed by specific dates. An online portal was introduced with automated reminders to ensure timely submission.
Within two months, the average close time dropped from 10 days to 5.5 days. Client satisfaction improved significantly, and the team reported less stress due to better structure and fewer last-minute issues. Additionally, the firm could now handle more clients without hiring additional staff.
This example highlights how time-based management—by analyzing workflow, cutting delays, setting time targets, and leveraging technology—can lead to faster service delivery, improved client satisfaction, and better use of resources.