Manufacturers need to maximize their speed and efficiency to satisfy customers, cut costs and enhance their margins will succeed. How? By fully driving their front-end business processes, rather than having their processes drive them.
Manufacturers are continually seeking ways to increase productivity and cut costs for competitive advantage. Today, one opportunity for manufacturers to gain margin improvements is in the front-end of their business: the sales, customer service and engineering processes required to transform inquiries into orders.
The complex products and channels of many manufacturing applications have given rise to equally complicated front-end processes. Often characterized by slow response, waste and errors, front-end activities are among the least optimized of manufacturers' business functions, consuming 30 to 40 cents of every customer dollar spent. While many companies have successfully applied lean thinking and tools to streamline their back-ends, the lack of effective front-end solutions has left them struggling with rampant inefficiency.
Additionally, leading manufacturers increasingly rely on mergers and acquisitions to help them drive revenue growth in an overall stagnant market. However, the inability to rapidly integrate front-end processes, channels and systems with those of newly acquired companies frequently prevents manufacturers from realizing strategic value and benefits from their acquisitions.
To solve these problems, manufacturers need a solution that addresses their unique requirements and allows them to reduce cycle times, eradicate waste and increase margins so they can achieve a truly lean front-end. As James Womak and Daniel Jones point out in the Harvard Business Review article "Beyond Toyota: How to Root Out Waste and Pursue Perfection": "For any product more complex than a toothpick & value must flow across many companies and through many departments within each company & Lean thinking always works when applied in a comprehensive way."
But what exactly is "lean thinking?" Lean thinking helps manufacturers cut costs and cycle times, boost productivity, drive benefits to their customers and establish continuous improvement by:
* Eradicating internal waste Analyzing activities and mapping processes to clearly define value streams enables companies to root out unnecessary activities and rework.
* Establishing a continuous, one-piece workflow Identifying and eliminating bottlenecks within front-end processes allows manufacturers to reduce waiting, downtime and inefficiency within and between steps.
* Relying on customer pull By expending effort and resources only on actual customer requests rather than guesswork, manufacturers can minimize product proliferation, unnecessary inventory, and order complexity.
Today's Front-End Challenges
Most manufacturers understand the need to improve their front-end processes, yet face significant challenges in trying to do so. The lack of lean thinking on the front-end leads to a "too many/too much" problem: too many people, processes, tools and products, which take too much time and create too much waste and cost.
Too Many People and Processes
The typical assembly-line approach used by many manufacturers to respond to customer inquiries is highly time-consuming and labor-intensive. Information required to create quotes and orders is gathered from a wide variety of sources in a sequential, "batch-and-queue" manner that involves multiple hand-offs among sales, distribution, customer service/order entry and engineering personnel, frequently disrupting process flow. Jack Welch, former CEO, General Electric Co., said, "Today, 30 to 35 percent of a salesperson's face time is spent with the customer. Salespeople spend too much time on administrating, expediting orders, arguing over receivables and finding late shipments."