Conquering Complexity In Your Business: How Wal-Mart, by Michael L. George

By Michael L. George

While Thoreau's injunction to simplify, simplify, is translated into the context of commercial administration, the result's this labyrinthine treatise. George, writer of Lean Six Sigma, and "complexity specialist" Wilson contend that overcomplication is an insidious drain on companies. A proliferation of product and repair choices meant to spice up enterprise really imposes hidden charges and mask the unprofitability of stagnating traces, whereas shoppers are usually baffled and aggravated through the plethora of superficially specific recommendations. The authors' remedy for complexity, notwithstanding, turns out virtually as advanced because the illness. they provide a maze of arcane diagnostic instruments for assessing the complexity and profitability of goods, providers and buyers, besides suggestion on how one can simplify, standardize or dispose of them altogether, and pile on mathematical equations, byzantine flowcharts and hugely technical case experiences ("at 50KW the DC voltage doubled, slicing the present in half-which intended the layout for the reduce strength rankings might be used the entire method to 80KW"). they supply a couple of worthwhile insights, truly, even supposing lumping them less than the fashionable rubric of "complexity" does not upload a lot conceptual rigor. regrettably, the strategy of quantitatively studying the revenue influence of minute parts of bigger procedures turns out itself an hard layer of complexity so as to add to the undertaking of simplifying enterprise practices. The accountants and procedure layout engineers who could learn the ebook will locate a lot foodstuff for suggestion, yet also are prone to reserve it while it comes time to roll up their sleeves and get to paintings.

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In a market; undifferentiated competitors with higher cost will be destroyed. But there is room in each market for businesses that offer customer-driven complexity with a favorable value proposition. Conclusion: The competitive advantage of conquering complexity The stories above illustrate the importance of understanding the difference between two kinds of complexity: • Deliberate complexity: There probably isn’t any market in which customer power has not grown significantly in the last 20 years.

Then they focused their improvement efforts on the remaining systems and drove the lead time down to 3 days, resulting in a PCE near 17% and a doubling of gross profit margin. ) Largely as a consequence of removing complexity and then implementing Lean, work started moving directly from value-add activity to valueadd activity (think Model T efficient production). 1: Relationship of PCE and Gross Profit Margin Gross Profit Margin Increased By Higher Process Cycle Efficiency (Former United Technologies Hose and Fittings Division; Four Years Audited Statement) 22% Gross Profit Margin 20% 18% 16% 14% 12% 10% 3% 5% 7% 9% 11% 13% 15% 17% Process Cycle Efficiency This data from United Technologies shows how Gross Profit Margin increased as PCE increased.

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 Chapter 2, p.

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