Lean Consumption meets Lean Provision

Lean Consumption Meets Lean Provision

Daniel T. JonesChairman, Lean Enterprise Academy

Frontiers of Lean Summit October 31, 2005

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

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

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 supportConsumers are drowning in a sea of brilliant objects

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 baseManaging household consumption takes more time

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

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 partiesThere is a yawning gap between the last two

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

Principles of Lean Consumption

1. Solve the consumer’s problem completely 2. Don’t waste the consumer’s (or the

provider’s) time3. Provide exactly what the consumer wants4. Deliver it where it’s wanted5. Supply it when it’s wanted6. Continually reduce the consumer’s time

and hassle in solving their problems

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?

Learning to See Consumption and Provision



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

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

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

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

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

“Don’t Waste My Time”



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.

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 theopportunities for win-win collaboration to cut this wasted time and cost for both parties

• And create a better future state

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

Education

Lean Consumption meets Lean Provision