Thinking End to End
In many service industries, of course, the “raw material” is information rather than molecules -- like the data in the claim application processed by an insurance company. But the situation is the same. Value is only delivered at the end of the stream.
Today I see a lot of progress in applying lean thinking to isolated segments of the value stream, even across functions within firms. But optimizing the entire stream as it flows between firms -- to truly solve the customer’s problem while helping all the providing organizations to prosper -- still seems to be elusive.
Take the case of motor vehicles. As customers, we do want to obtain a physical object called a car or a truck. But the real problem we are usually trying to solve is personal mobility: We want to get places cost-effectively with no hassle or wasted time. So the processes of buying the vehicle and then keeping it running through an extended life are critical parts of the complete value stream. This total stream must link the car manufacturer’s design and production processes to the car dealer’s sales and service processes.
I’ve just been looking at the data collected by J.D. Power and Associates on customer satisfaction, by brand of vehicle, with the car buying experience and with the car service experience in the
But the service experience at
What’s worse, as Dan Jones and I report in our recent book, Lean Solutions, (where we provide data collected by the International Car Distribution Programme) all 37 brands are terrible at meeting customer needs cost effectively! Thus
How can this be? And how can
The heart of the problem I think is that
So the simple fact is that because
Lexus dealers, by contrast, do treat their customers well. But they seem to achieve this by spending more on sales and service, not by creating smooth flowing, lower-cost value streams. With a higher-priced product, they can afford to do this despite the waste in their processes.
We now know that the belief that better sales and service costs more is simply wrong. In fact, better sales and service, like better quality in products, actually costs less. This is because large amounts of wasted time and effort for dealers and customers can be eliminated through careful process analysis. Dan Jones and his colleagues at the
Now that other manufacturers are closing the gap with
I don’t doubt that
So the challenge now for all of us -- no matter which customers we serve -- is to begin conversations across firms about optimizing total value streams. The best approach is to take a walk together, backwards from the end customer (or, even better, with the end customer), in order to draw an accurate map of the total value stream with all its shortcomings. Then it’s time to talk seriously about how to create a smoother-flowing, higher-quality, lower-cost value stream that can be a win-win-win for providers, their suppliers, and consumers, as everyone learns to think end to end.
Chairman and CEO
Lean Enterprise Institute (LEI)
P.S. In our recent book, Lean Solutions,
Join the Conversation and Stop the Rework
In the spring of 1997, as I was starting the nonprofit Lean Enterprise Institute, I visited a company that I hoped would be a founding sponsor. I explained to the senior leadership that a lean enterprise was far more than a brilliant production organization, as had they assumed. It was also a brilliant product development organization including a brilliant production process design team.
The Gift of Yokoten
In this article originally published in Planet Lean, after a visit to Goshen, Indiana, Jim Womack shared thoughts on the gift of lean thinking and the obligation that individuals learning this way of thinking feel about sharing what they've learned with others.
The Escalator of Issues
A daily management system with daily performance metrics gives caregivers the sense that managers are really paying attention, that problems really are being addressed, and that over time this will mean stability and a lower level of stress for all staff, says Jim Womack.
- Learing to See the Whole Value Stream: The Power of Value-Stream Mapping
- Sustaining Lean Goals by Taking a (Gemba) Walk
- Forward to Fundamentals
- Managing to Learn: Part 1 - How Lean Leaders Create Productive Problem-Solvers
- The Power of Purpose, Process, and People
- Lean Management & the Role of Lean Leadership
- Lean Solutions