AME Author, Fulcrum ConsultingWorks, Inc., President, 2017 Inductee into the Million Dollar Consultant® Hall of Fame, AME board member, Great Lakes Region
Ah, the good old days. We told customers what they would get, and when. Often wrong on the “when” part, we explained that our business wasn’t easy and they’d get it as soon as possible. Little did we know just how quickly ASAP could have been had we thought differently.
While not intuitively obvious to big batch thinkers, a significant lean benefit was faster delivery to customers. Now combining lean, technology, analysis of Big Data and creative thinking, we’ve trained the customer to expect immediate. Being competitive requires customization at that same speed.
So, we add sizes, colors, capability options, and every other distinguishing characteristic we can conceive. Done well, that results in increased sales and profits. Done poorly, it can kill a business. Understanding customer use of a product and focus on simplifying complexity are requirements of success.
Complexity costs are not easily quantified, but appreciate them we must. Product derivative and customization strategies that ignore the very real impacts of complexity can slice margins, induce errors, and engulf an organization in chaos. Standard costs will mislead decision-making even more than usual. Does your executive team acknowledge those facts?
Added options inject inventory management ramifications, opportunities for error in order entry, production and shipping, and additional transactions from BOMs to purchasing to receiving to accounts payable. This potential waste and confusion can be eliminated or minimized by creating systems that consider strategic implications from the beginning.
Postponement processes–waiting until the last possible moment to finalize an item for a specific customer–can simplify execution of mass customization. A product design team that doesn’t understand postponement or design products to facilitate it will undermine that operational strategy.
Too many non-operational executives believe that shipping to one more country is easy. They fail to understand that adding one more color or size or software option or customer label grows complexity. Operational leadership must ensure scalable processes and parts rationalization. Modular product design using common parts and processes designed to eliminate costly transactions are requisite to simplification thinking.
Design engineers and product marketing may well not understand how important simplicity is to creating and meeting market expectations. We can’t afford not to. Lean alone didn’t enable rising customer expectations and alone it won’t ensure simplification. Perhaps not intuitively obvious, technology and analytics are integral to simplification. We have access to more data more quickly than ever, and to ignore it as “not lean” is silly. If data is valuable, use it. If it’s not, don’t create it in the first place. That thinking is at the core of simplification and of lean.
What additional opportunities do you have to simplify work lives within your organization?
