free java barcode reader api How Complexity Silently Kills Profits and Drains Resources in Software

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How Complexity Silently Kills Profits and Drains Resources
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Suppose that your business starts out like Ford in 1914 when it was producing only black Model Ts: offering just one product or service to customers, with each employee performing only one task Employees have to learn about only one set of components or one set of service instructions There s no reason to expedite one order ahead of another because each product or service is exactly the same as the one before it and the one after it Now, in response to some new marketing data, you decide to add a second offering And you find that going from 1 to 2 offerings has a dramatic impact You now have Setup (or changeover ) time: Even if the new product/service (let s call it Y ) is just a variant on the original offering ( X ), staff
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2: Exposing the Silent Killer
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will have a learning curve because workers will have to deal with two sets of instructions, and switch between the two at the drop of a hat The more different Y is from the original X, the greater the loss of productivity If the switch requires a changeover of equipment, materials, computer programs, etc, there may be a period of zero output In manufacturing, learning curve effects and changeover delays are all called setup time (service functions have similar delays but no one calls them setup time they re usually just accepted as part of the process required to deliver multiple services) Delays: Once any process has to handle more than one type of product or service, the natural tendency is for people to perform the work based on convenience not customer demand For instance, say that the changeover from service X to service Y takes a long time What we would all do is produce a lot of Y before going back to X so we didn t have to do that setup very often (Lean Six Sigma for Service gives an example of this situation at the Lockheed Martin MAC-MAR procurement center See 2, p 42) If we re working on Y, that means orders for X are sitting around waiting to be worked on Inventory: If you have delays, you also have inventory, which in manufacturing appears as piles of physical components, parts, assemblies, or materials, and in service functions shows up as filled in-boxes and email overload You ll need physical or virtual space to store the inventory (Of course, you could add a separate production line or work group to deal with offering Y, but then you d have the extra cost of people, materials, equipment, etc) Demand for scheduling capability: Unless you have a Pull system, where the process is paced to pull work along at the type and rate demanded by customers (see Lean Six Sigma for Service, 2, p 31), you need to develop more complex scheduling systems that will tell an operator how much of X to produce, how much of Y to produce, how much extra product to put in stock, how much to send on, where to send it, etc
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Conquering Complexity in Your Business
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Greater opportunity for errors or defects: While it s unlikely that people would make many errors with just two offerings, it s more likely than it was with just one offering The chances of making errors increases rapidly as the number of different tasks increases Various collateral impacts: You ll have to create and update all your marketing media (print, website, packaging, etc), work instructions, test procedures, field service training, warranty procedures, and customer satisfaction procedures And the list goes on In short, adding even a single additional offering adds time and non-value-add cost to your delivery systems, which are likely operating at low efficiencies already! You have to invest in systems You have to train staff You may need to add staff If an order for product or service Y comes in while everyone is involved in X, you need to be able to expedite the new order or run the risk of alienating customers who have to wait None of these costs adds a form, feature, or function of value to the customer (If the additional gross profit generated by the new offering more than offsets the non-value-add cost created by complexity, well and good But as we will see in 4, cost accounting procedures need to be modified to correctly estimate these costs) Extrapolating this impact to the real world where you need to manage dozens, hundreds, or even thousands of products, services, features, options etc, and you can begin to appreciate the ubiquitous costs that complexity imposes on a business Each additional feature, each new service option, each component or new set of instructions adds more stuff that your company has to deal with and manage In manufacturing it leads to complex and expensive tracking systems and a hidden factory that diverts energy away from process improvement and productive functions The net impact is that the unit costs for multi-line items can be 25% to 45% higher than the theoretical cost of producing only the most popular item of the family1 This doesn t mean you should never add complexity to your business, it just means you should know if customers are paying enough to earn more than your cost of capital
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