"Lean Thinking" by James Womak and Daniel Jones

Introduction

This, Womak and Jones’s fifth book, develops the ideas presented in their renowned titles such as “The Machine that Changed the World”, which popularised the ideas of the Toyota Production System in the western world.

These previous books primarily focused on industrial supply-chain improvements; this book seeks to “lean” consumers’ consumption processes by “completely solving their problems permanently” through addressing the following:

  • Don’t waste my time
  • Get me exactly what I want
  • Provide value where I want
  • Solve my problem when I want
  • Solve my whole problem permanently, ie to stop problems arising.

The authors observe that while consumers are offered more products for sale through an increasing number of channels, their consumption experience is no better as:

  • The choice offered requires more decision time from the consumer.
  • A decrease in quality of service from help-desks that are anything but helpful.
  • The onus is shifting towards the consumer to manage the consumption of goods or services bought, especially technological ones, that often need to be integrated with others to work properly.

All this takes place in a domestic environment where free time seems to be increasingly precious. The authors argue that the consumers are better served when their processes are aligned with their suppliers’ processes. The book gives a brief run-through of “consumption maps” – these will be familiar to readers from previous books as value-stream maps to show what time is value-added and what time is wasted.

Solve Problems Completely

Typically, consumer help-desks are staffed by the least-skilled workers in the organisation. The authors argue that placing more highly-skilled workers on the help-desks allows for a greater number of calls to be solved first time and for the remainder to be categorised more accurately and then accurately targeted for follow-up solution.

Initially, each call will take longer; in the long term, the number of calls will fall.

Don’t Waste My Time

The authors propose the following for eliminating consumer queuing:

  • Create a knowledge dialogue with the consumer by using highly-trained employees.
  • Pre-diagnose the problem by spending extra time upfront in investigating not only the immediate problem but also the underlying causes.
  • Save the time of the employees by improving internal processes.
  • Level demand – a “spike” in demand often arises from the supplier’s dysfunctional processes. For example in the UK, car-tax is due for renewal at a month-end. This means that the end of every month, approximately one-twelfth of all UK car owners will renew their tax, leading to queues and delays. In this case, an obvious suggestion is to level the demand by having the renewals fall due on any day of the year, rather than just at the month-end.

The authors give several examples; the one involving health-care is the most instructive as it is counterintuitive at first glance. This approach allows patients to book on the current day only – no other advance bookings are allowed. The patients are allocated longer appointments to allow doctors to diagnose more accurately, which reduces the number of follow-on appointments.  Note the similarity between this and the approach to reduce call-centre queuing mentioned above.

Exactly What I Want

The authors give detailed examples of best practice from both the US (Nike) and the UK (Tesco) of how stock replenishment should occur frequently, using small quantities, using the consumers’ purchase of stock as the trigger-point for the restocking process. The key to enabling this is accurate tracking of stock – usually a technological solution using IT systems linked to bar-scanners, or increasingly, RFID (radio-frequency identifier) chips.

One of the most interesting parts of the book concerns offshoring and outsourcing – currently a highly-emotive topic. The authors make a convincing case that the best location for innovative, low-volume and/or highly-customised products is in the lowest-labour-cost region nearest to the consumer (my emphasis).

For the UK and other western European countries, this region may be in Eastern Europe; for the US, this region may be Mexico.  The reason for this is that consumers for these types of goods are willing to pay a premium for rapid feedback and fast delivery. Conversely, products that are of high volume and/or low customisation are best produced in the region of lowest cost globally, eg China or Vietnam for both US and UK markets.

Value Where I Want It

The authors make the point that we all consume according to different circumstances. Sometimes we are more pressed for time: in this case we are more likely to shop at a more local, but more expensive store. On the occasions when we have more time, we will shop at a cheaper but more distant store – trading cost for convenience. In order to cater for these different consumption circumstances, some companies, like Tesco in the UK, have opened different-sized stores – a few huge ones, some intermediate-sized and some small stores, along with internet-based ordering/delivery.
The case study points out that the additional success factors in this approach, namely:

  • Loyalty cards to track an individual consumer’s purchases across different sizes of store. This allows the smaller stores to stock only the most popular items for those consumers who are willing to pay the premium.
  • Deliveries are performed frequently by vehicles that visit every store, regardless of size, on their route. In Toyota, such a system is known as a “water-spider”, after the insect that flits around ponds when feeding.
  • Smaller stores are restocked by the water-spider from larger stores, rather from than a central warehouse.

Solve The Problem When I Want

The larger the purchase, the more protracted the decision process – while we may buy a book impulsively, we would rarely buy a house in this manner. It follows that the “buy now!” exhortation is usually biased toward the convenience of the supplier, rather than the consumer. The authors argue that the best approach to resolve this conflict is for the consumer and supplier to collaborate - consumers share their plans  in advance in return for lower prices from the supplier. Such collaboration is seen in airline and train journeys, where discounts can be obtained for booking in advance.

However, the authors envisage this demand-levelling collaboration being extended to other purchases, for example a car showroom where only demonstration cars are displayed – all cars for purchase are customised to order. Those who want a car quickly pay a higher premium; those who are prepared to wait obtain a reduced price – the longer the delay tolerated, the greater the reduction. In this manner, the consumer is happy with both the car and the price; the supplier is able to level demand to keep their costs competitive.

Challenges Of Lean Management

The authors give a timely reminder of the common factors for successful business process change initiatives – by directly involving the people who participate:

  • they can see the whole process
  • they understand the logic of the process, its current failings and the need for change
  • they participate and believe in the virtues of the new process.

The authors strongly believe that the increased capacity from the reduction in waste activities be put toward business growth rather than simply as a vehicle for reducing staff headcount. The authors’ justification is that senior management often under-estimates the amount of domain knowledge that is lost through redundancy.

Solve My Whole Problem Permanently

The authors’ briefly suggest future best practise. They suggest that suppliers of products concentrate getting to know the consumer better and to sell value rather just products or piecemeal services, with a note to say that delivering value from a consumers’ point of view may involve collaboration and/or aggregation with other suppliers.

One of the downsides for a consumer in having a supplier of highly-aggregated services is the large quantity of personal information that supplier holds. The authors briefly discuss the privacy and data-protection concerns implicit in this model but I feel these issues could be a block to large-scale adoption. Consumers need to feel there is a significant demonstrable extra value in order to feel comfortable with these issues.

One facet of the book that deserves greater emphasis is that of using consumption maps to reduce environmental waste. The authors give the example that the energy expended during the international transportation of perishable-food goods is less than that of the consumer driving to the store to purchase the goods and their subsequent refrigeration.

Summary

This thought-provoking book builds on Womak and Jones’s previous ideas on the supply-chain improvement, and applies them to the issue of improving consumer service-provision. Its non-technical style will suit a wide readership, from small business owners to senior executives in large organisations, who seek to improve the service they give to their consumers. It will also prove useful for practitioners who seek to understand the latest thinking from two of the recognised leaders in the field. Highly recommended.

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