How Simplicity Accelerates Profit

“Simplicity is the ultimate sophistication.” ~ Leonardo da Vinci

Simplifying the complex creates speed, a critical component of competitiveness. Eliminating complexity in whatever form it takes – over-application of technology, excess process steps, physical motion, communication across time zones, long cycle times and lead times or the number of suppliers you deal with – improves your ability to keep your promises to your customers quickly, and with higher quality and lower costs.

Recently President Obama visited the Nike Campus in Beaverton, Oregon to tout the Trans Pacific Partnership, a trade agreement with twelve Asian countries intended to increase US companies’ ability to compete on a global stage, at least in Asia. As part of that event, Nike announced it would open a new factory in the US, creating 10,000 jobs. After years of making most of their products in Asia, why would Nike bring production back to the US?

The answer lies partially in a new Nike shoe technology called Flyknit, which allows the top of the shoe to be made in one piece. But that thinking isn’t new. For at least 40 years, companies have simplified design through parts elimination. When I was VP, Operations at Supra Products, we redesigned our product to use as few parts as possible by eliminating fasteners, using snap-together parts, designing products with fewer major parts and eliminating many raw materials SKUs, thereby reducing inventory and accelerating assembly time.

Designing your products, processes or services for speed is the first step to reducing complexity. Finding ways to go faster will lower the water and expose the rocks that represent improvement opportunities. By focusing on cycle time, lead-time and the Lean wastes of motion and excess processing, you can increase speed to market. In the 1990s these design processes were called Design for Manufacturability (DFM), Design for Assembly (DFA), and Design for Supply Chain Management (DFSCM), and these techniques still work today.

Getting Started

A great place to start is by reducing the number of items or steps in the process or system. Reducing parts and products, the number of suppliers, the number of people it takes to do something, and the space it takes to support all of those also increases speed. I worked on a project for Blue Cross of Idaho where the lead-time for issuing group medical cards was reduced from 45 days to just a few days by simplifying the review process and changing the flow of applications.

Sometimes just having people stand up helps improve speed. One company cut their weekly meeting times in half by having stand-up (rather than sit-down) meetings. Another company more than doubled the throughput of their repairs department by shifting from individual office cubicles to standing workstations.

Believe it or not, relying less on technology can also boost speed. Do you know of companies that have implemented enterprise resource planning (ERP) systems, only to realize they had to add people and transactions to make them work? Often, adding conveyor systems, barcoding, automated material handling and other technologies creates “monuments” that can’t be moved or changed as process improvement takes place. I suggest that clients “eliminate, simplify, then automate” before introducing new technology. Technology can have a great positive impact, but only when properly applied. Often I actually replace technology-based product replenishment with systems like Vendor Managed Inventory (VMI), Kanban and other systems that aren’t computer-dependent.

Measuring Simplicity

Measures are vital to simplification and increasing speed. Be sure to use measures that matter, which are ones that people understand, trigger changes in behavior, and help lead to the results you’re looking for. Alaska Communications set up a United Way-type thermometer chart to track their progress in reducing inventory. The visual measure helped encourage the employees, and they reduced their inventory from over $7 million to $4.5 million in just a few months.

Many companies measure only the basic financial changes, which most workers don’t have access to. It’s critical that employees know what they can do to move the needle. Set goals that put companies in the top 10% of performance for the industry, not just above the industry average. Beating the average makes you slightly better than average, but hitting the top 10% makes you world class. Be sure to measure cash flow and speed elements such as cycle time, lead-time and shipped on time.

Accelerating Customer Satisfaction

Speed through simplification can help you become a competitive force in the marketplace. A survey by Alix Partners found that the second biggest advantage of reshoring was speed to market, second only to reduced freight costs. Often customers desire speed over cost. Pursuing speed in your supply chains, manufacturing, sales and distribution, and serving your customers quickly puts your company on the leading edge, leaving your slower competitors behind.

© 2015 – Rick Pay – All Rights Reserved.

Leave a Reply

Your email address will not be published. Required fields are marked *