The popular statement is that if you control the language you control the conversation. McKinsey Quarterly Extranet published an interesting article on lean supply chains (“Lean supply chain in low volume industries” – you will need to register but it is free). I find it especially interesting because I am not sure what’s new here, beyond the attempt to reinvent the terminology.
The article presents the challenges faced by low volume firms when trying to apply lean operations tools:
Every product is unique, they argue, with considerable new engineering content, new suppliers to find and qualify and new problems to solve.
The article then suggests an approach that may alleviate these challenges
Lately, a small number of low volume, high complexity manufacturers have adopted a different approach. Rather than thinking of each item they manufacture as single project, they are working hard to identify the common elements in their products. They then apply two parallel sets of supply management processes: “project” processes for elements that are unique to each item they make, and “product” processes for elements that are common to many items. To the product supply chain they then apply many of the same cost saving and quality improvement levers that have transformed performance in high volume manufacturing.
While I agree with the ideas, they are clearly not new, and bear close resemblance to two settings. Similar ideas have been already used in applications of lean operations to service such as hospitals. While every patient is unique, it does not mean that you cannot develop common processes and procedures that can be used and thus improved.
It also builds on the concepts of component commonality and delayed differentiation, which have been used already for several decades in manufacturing (as well as services). Delayed differentiation is a strategy in which a common platform is produced in (relatively) large quantities utilizing economies of scale and risk pooling. It is then differentiated by assigning to it certain customer-specific features, only after demand is realized. In manufacturing, it means that production occurs in two stages, (i) a make-to-stock stage where one or more undifferentiated platforms are produced and stocked; and (ii) a make-to-order stage where product differentiation takes place in response to specific customer orders. This is strikingly similar to the idea of “products” and “projects,” suggested by the article. The key here is not only to merely identify the common elements, but also design the products and the processes so they contain common components that can be improved through repetition.