How To Understand Just-In-Time vs Just-In-Case In A Service Business

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Sunday, 8.50pm

Sheffield, U.K.

how do you identify wasteful transaction costs or coordination activities? I believe that you ask yourself, “If this activity is truly value-adding, would we do more of it? When?” – David J. Anderson, Kanban

I was reading The Toyota Leaders: An executive guide by Masaaki Sato which talked about how the management there were introducing just-in-time (JIT) in the early fifties.

The idea of JIT makes perfect sense – don’t do anything until it’s needed by someone else for something they have to do.

It’s also fundamentally at odds with our human nature and how we think about things.

Imagine you wanted a coffee but had forgotten your wallet and suddenly say that there were two five pound notes in front of you – with no owner in sight.

Would you take one to pay for your coffee and leave the other one for someone else?

It’s ridiculously hard to stop ourselves hoarding things – from keeping things when we don’t need them to buying more than we need just in case.

The place where you see this most is in the weekly supermarket shop where the clever people who design the experience seem to have worked out how to make sure we always come out having bought 40% more than we had on the list.

So it’s ironic that the insights of JIT came to Toyota at the same time supermarkets came to Japan.

They saw that each customer at home had a small fridge and would make a trip to the supermarket to buy only what they needed.

And the reason the customer would only buy what they needed was because they could trust the supermarket to never run out of stock – so the customer didn’t have to hold any just in case.

In fact the ideal situation for a supermarket would be that whenever a customer took an item off a shelf a little factory right behind the item would make a new one.

So the main point about just in time was that if you could trust you could get what you needed when you needed it then you wouldn’t need to worry about keeping a stockpile just in case.

Now, the way in which you’d implement this is by having the people doing each activity ask for what they needed when they needed it.

This request was like an order form – and that’s where the term kanban comes from – from these order forms and Toyota saw that they could link activities together using these order forms and create a just in time system that pulled what was needed to where it was needed.

Now, as most of us don’t work in manufacturing what would that look like in a service environment?

In the model above everything starts with the customer.

The consultant’s job is to work with the customer, understand their situation until the customer is ready to sign a proposal asking the consultant to do something – that’s the first equivalent of a kanban or order form.

The consultant might need resources for the project – let’s say it’s going to involve an analyst, a subject matter expert and a programmer.

So now the consultant needs to engage with his or her colleagues to get them to work on the project.

Now, this is where it gets a little interesting.

Let’s say you’re the consultant and want the cheapest possible service then what you might do is go onto upwork or fiverr and try and get someone cheap.

The chances are, however, that you won’t get the kind of work you need because it’s a transactional relationship and the one thing that we know about customers is that they change their minds – which cheap outsourcers find has an impact on their costs.

What you probably need is to work with colleagues that you know, like and trust – people with whom you have a long-term relationship.

And that means committing to them, having one preferred supplier for that element of the service.

And, in return for always giving them the business, when you send them a signal asking for help they’ll respond.

But that doesn’t mean you can shortcut the time it takes to get them briefed and ready to start working.

For example, I sometimes use something like this to manage that process and, unsurprisingly, it does take a couple of hours to get everything going.

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The thing is that you can’t simply fire off a request and forget about it – it takes time to understand what’s going on from the point of view of the client and the consultant’s job is to make sure the client gets what they need.

And, of course, we can’t forget the job of billing.

That’s another request through to accounts to send an invoice and get paid.

If you put this kind of model in place you’ll find that you have meetings only when you need to have them.

The point is to manage the client’s expectations, to explain to them how this process works.

If they take six months to agree a proposal and want a deliverable the next day you should probably suggest they talk to someone else.

Because no one can, and you shouldn’t, maintain the capacity in your business just in case a client walks through the door.

It makes much more sense to arrange things so that you can draw on the capacity when you need it.

As the quote that starts this post says – when you look at your day what would you do more of and what would you not do at all?

Perhaps you’ll find you’re most satisfied when you can take an hour off just for a nap or just because you feel like it – because you know that what you’re spending your time doing is what matters when you’ve awake.

If nothing else, you’ll spend a lot less time in pointless meetings.

And a lot more time getting your client results and keeping them happy.

Cheers,

Karthik Suresh

p.s. Another Sunday article on the same theme is How To Think About And Improve Service Design which may also be of interest if you’ve made it this far.

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