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Lean Consumption meets Lean Provision

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by Daniel T Jones of Lean Enterprise Academy shown at the Frontiers of Lean Summit 2005 on 31st October 2005 run by the Lean Enterprise Academy

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Lean Consumption meets Lean Provision

  1. 1. Lean Consumption Meets Lean Provision Daniel T. Jones Chairman, Lean Enterprise Academy Frontiers of Lean Summit October 31, 2005
  2. 2. Toyota’s Lean Strategy “Brilliant process management is our strategy. We get brilliant results from average people managing brilliant processes. We observe that our competitors often get average (or worse) results from brilliant people managing broken processes.” Lean Thinking is Process Thinking
  3. 3. Lean Principles • Specify value from the standpoint of the consumer - (not from your assets and organisation) • Identify the value stream through the steps required to create and deliver each product and remove the wasted steps • Make the process of value creation flow smoothly and quickly to the customer • But only in line with the pull of the consumer • While pursuing perfection by constantly improving the product and the value stream As a result products are getting better and cheaper
  4. 4. What is Happening to Consumption? • So why is consumption still so frustrating? – The custom built computer that refuses to work with the rest of the kit in our home office – The car repair involving so much waiting and complaints about work done wrong – The drive to the big box retailer with thousands of items, where we fail to find exactly what we are looking for – The medical procedure that involves so much time – The business trip with endless queues, handoffs and delays – The exasperation of “help desks and support centres that neither help nor support Consumers are drowning in a sea of brilliant objects
  5. 5. Challenges Facing Consumers • Mass customisation has added to their choices • The end of regulation has extended the number of things they have to make choices about • The self-service economy enables them to buy more personal capital goods to replace services • Two-income and single-parent households have less time to manage consumption • Ageing households have more time - but less energy • The internet is blurring production and consumption and has opened access to a global supply base Managing household consumption takes more time
  6. 6. The Consumer’s Dilemma • There are more consumption decisions to make about more categories of products from more suppliers and channels that all need to be obtained, installed, integrated, maintained, repaired, upgraded and recycled • Plus the evolution of the production process, facilitated by IT and more personal capital goods claims more (unpaid) time and energy while blurring the boundary between consumption and provision • Most consumers will have less useful time and energy in the future to manage this consumption because of changing households and getting older
  7. 7. Lean Consumption and Provision • We now understand that Production (including design and supplier management) is a process. A series of actions manufacturers must perform in the proper sequence to create value for customers • Consumption is also a process. A series of actions consumers must perform in the proper sequence to obtain the value they seek • Provision is a third process. The actions that someone must perform between the factory and the customer to achieve the objectives of both parties There is a yawning gap between the last two
  8. 8. The Consumption Process • The key is to recognise that consumption not as an isolated transaction between strangers • But we need to learn to see that consumption is a process of steps to enable the consumer to solve their problem (not the object but it’s use) • It involves searching, selecting, obtaining, integrating, maintaining, upgrading, disposing and replacing many items over time • Interacting with several providers of goods and services in a parallel provision process Let’s follow an example
  9. 9. Principles of Lean Consumption 1. Solve the consumer’s problem completely 2. Don’t waste the consumer’s (or the provider’s) time 3. Provide exactly what the consumer wants 4. Deliver it where it’s wanted 5. Supply it when it’s wanted 6. Continually reduce the consumer’s time and hassle in solving their problems
  10. 10. Provision Processes are Broken • Growing spending on “new” products, features and options that fail to attract new customers • Growing spending to increase customer loyalty as customers become less loyal • High out of stocks, lost sales and remaindering • Larger investments in bigger assets which have a shrinking ability to create competitive advantage • Outsourcing customer support so direct contact with the consumer is lost • Employee dissatisfaction and high staff turnover How can we improve provision and consumption?
  11. 11. Learning to See Consumption and Provision Daniel T. Jones Chairman, Lean Enterprise Academy Frontiers of Lean Summit October 31, 2005
  12. 12. Mapping Consumption • We always start by “Taking a Walk” through the consumer’s Gemba • Listing the steps – observing what is happening • Distinguishing between steps that create value and those that don’t • And recording the consumer’s experiences with each step • Finally adding up the total “unpaid” time of consumer
  13. 13. Unpaid Work • What is happening to our Time? • Personal Time – sleeping, dressing, personal hygiene and eating – has stayed constant • Paid Work Time – has declined for most • Unpaid Work Time – cleaning, household chores, and obtaining, installing, maintaining and disposing of the goods and services we need – is rising for all • Leisure Time – sports, exercise, entertainment, travel for pleasure, relaxing with friends (and experiential shopping?) – is being squeezed
  14. 14. Mapping Provision • Again we start by “taking a walk” through the provider’s Gemba – where value is created • Listing the steps – observing what is happening • Distinguishing which steps create value and which don’t – but this time also paying attention to who is performing them – in particular to the person who is creating value – how much of their time is wasted? • And recording their experiences of each element of the work – and of their interactions with the consumer
  15. 15. Connecting the Maps • Lining up the two maps shows us the whole shared process for the first time – including the points of interaction between consumer and provider • We can now see lots of wasted time, lots of disconnects and lack of communication and preparation, lots of frustration • We can also see lots of opportunities for improvement – although the provider will have to take the initiative to realise them
  16. 16. Broken Processes • Every one loses – – Consumers are frustrated by the wasted time and extra cost they are paying – Employees are stressed by coping with frustrated consumers – Providers do not make an adequate return on their investment or gain the market share they could • Everyone blames Bad People! • But the root cause of the problem is a bad process that no one can see or manage
  17. 17. “Don’t Waste My Time” Daniel T. Jones Chairman, Lean Enterprise Academy Frontiers of Lean Summit October 31, 2005
  18. 18. Don’t Waste My Time • Your Time is Free! So it does not matter if you queue! • Next time you see a queue ask two questions – Is the amount of work done by the provider reduced by having customers wait? – Would there be a queue if the providers had to pay customers for waiting time? • We see queues everywhere – at airports, shops etc. • We also wait for appointments with the doctor or for the service technician to call • There are also many queues and time wastes between providers upstream – waiting for parts, information etc.
  19. 19. Wasting Time • In reality the consumer and the providers time is wasted by a poorly designed and disconnected consumption and provision processes • Mapping both processes and their interactions reveals this wasted time and cost • It is also the way to identify and prioritise the opportunities for win-win collaboration to cut this wasted time and cost for both parties • And create a better future state
  20. 20. Rules for Saving Time • Create a dialogue with consumers to understand their needs and to level demand • Pre-diagnose the problem to be solved – so you can pre-order the parts and plan the work • Save the time of your value creating employees by – Matching capacity to demand – Separating types of work into separate streams – Creating standardised work flows and flows of materials to support them • Better outcomes create a virtuous circle with customers, reduces costs and free up resources to increase throughput and grow sales and profits

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