It all starts with wrapping your cord around a metal tube (called a mandrel) and setting it in place with heat from the heat gun. It's a simple process, sure, but it's easy to make a mistake and damage your cord for good. If you're going to tackle this project, make sure you follow the insturctions at Make: Projects "to a T."
Or Try a Chain Sinnet...
Want a simpler solution for "shortening" long cords? Try a chain sinnet. You don't need any tools (other than your hands) and it's nearly impossible to mess up! Check it out here: Keep Extra Long Cords in Check with a Chain Sinnet