A difficult consultancy project

I recently visited a client in northern Finland with extreme issues. The whole issue started with demand planning. Virtually all of the demand seemed to centre around one day of the year - the 24th December. At least demand was spread across all time zones but it was still quite a spike to contend with. The next issue seemed to be around logistics. I could only see one delivery vehicle which seemed to me to be pretty old but the despatch guy assured me it could do the job. He outlined to me how the MD actually delivered the goods himself, overcoming considerable difficulty, with many premises being shut.

Manufacturing looked chaotic with little flow. It seemed like orders were arriving from mid-November onwards with no forecast and no smoothing of orders into the process. As soon as orders arrived, they were passed to the workforce who appeared to be working hard but there were some swear words flying around in a high-pitched language I couldn't understand. I assumed the workforce were contracted from another country as they looked very small compared to the business owner, who like most MD's looked well fed and watered. If demand was not being met, it appeared more workforce was recruited with no consideration of cost.

I did notice that some subcontracting of difficult orders was taking place, especially to the far east. There was much moaning that the quality of the goods just wasn't as good as those manufactured in-house but it was so difficult to compete on price.

I got the senior team together and came up with some proposals. I have to say there was much shaking of heads during this difficult meeting but I find this is not unusual when trying to change a broken process which the company owners wish to hold onto. The key ideas:

1. Spread the delivery dates throughout the year and hence smooth demand in the process
2. Subcontract delivery to a logistics company who are skilled at getting goods to the customer at the right time. There was some cynicism as to whether the demand could be met but I assured them it was a tried and tested method.
3. A complete cease in manufacturing to assembly and wrapping, where I felt value could be added. Upskilling of the purchasing department to be strategic rather than buying simply on cost.
4. Training of some of the taller workers to become team leaders and arrangement of the operation into cells with performance boards and team briefs.

I felt I'd pretty much got them in the palm of my hand then the MD, who had obviously been reading Lean Thinking in his many spare months during the year, said, "Haven't you forgotten about the first principle of Lean, understanding customer Value? My customers expect On Time In Full on the 25th December only - you ask them! I have to arrange my value stream to deliver this and it works pretty well as it is. My second cousin twice removed, Dan Jones, would give you a good talking to, melad." I have to say this pretty much floored me. I hadn't really thought about involving the customer in the discussion of Value before jumping to my conclusions.

Of course, in the real world, we would never implement changes without understanding customer value.


Would we?