ChangeWise Quick Read: Lean Consumption

In this quick read, we offer a high-level overview of Lean Consumption, including where it comes from, its key principles and why it’s important if we want to achieve competitive advantage in the market place.

Where did the concept of `Lean Consumption’ originate?

Lean consumption has evolved from Lean Principles. In 2005, James P. Womack and Daniel T. Jones (authors of The Machine that Changed the World, 1991), published an article in the Harvard Business Review describing a new theory they called Lean Consumption. This article was significant because unlike discussing Lean in its traditional context of streamlining processes, Lean Consumption is centred around our ability to minimise the customer’s time and effort involved in using/purchasing our product or service. Therefore, improving our interactions with them.

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The theory is based on 6 simple principles.

Let’s take a look at each principle in turn…

1. Solve the customer’s problem completely by ensuring that all the goods and services work, and work together

To minimise customer effort, it is important to consider the number of times a customer is required to take action/complete a process to access our products or services.

For example, when calling to purchase pet insurance, I might have a query regarding a specific health condition for my dog. Nothing is more infuriating than having to continuously explain my needs/requirements to several generalists in order to obtain the information required. Having an expert with the appropriate training and knowledge available to the customer on the first call avoids unnecessary hand-offs, frustration and waiting – not to mention loss of confidence in your company’s ability to deliver a quality service or product.

A customer should be able to access the right type of knowledge first time.

2. Don’t waste the customer’s time

Understand your demand and its variation in order to reduce unnecessary customer wait time.

For example, many banks understand that customers pop out during their lunch hour to manage banking activities that require face-to-face interaction. However, this is also when the banking staff take their lunch, so during their busiest period they have the least staff. Therefore, it is important to manage staffing levels so that customers are not waiting in queues during regular lunch hours. To be truly Lean we must fit our process around the customer and avoid yielding the customer around what suits our processes.

3. Provide exactly what the customer wants

Lean organisations must adopt a pull not push process. This is particularly key in retail environments where demand management is paramount.

Let’s assume I need to redecorate a room at home. If I visit a hardware store, I want to purchase everything I need to complete the job; emulsion, gloss, decorator tape, furniture protectors, protective masks, paint brushes, paint trays etc…….even if I can get everything I need with the exception of one item, the process will significantly increase my effort, time and costs as I am forced to drive to another store or look online and wait.

Another issue we often face is having to compromise on what we really want. Perhaps I have to compromise on colour in order to get everything in one transaction because the blue I want is out of stock? This type of scenario can cause the customer to regret their purchase later down the line, resulting in a loss of loyalty and often causing them to look to a competitor.

Understanding our demand, suppliers, processes, outputs and our customer needs can help us to move towards a Lean future state where we work harmoniously with our suppliers to reduce, or even eliminate, the need for our customer to compromise or waste unnecessary time interacting with us – driving loyalty, customer satisfaction and revenue.

4. Provide what’s wanted exactly where it’s wanted

The growth of online shopping, express delivery and large supermarket chains positioning themselves where we would expect to find traditional corner stores, is a response to ensuring the customer has what they want where they want it. We can no longer expect our customers to purchase from us in a way that suits our geographical location or logistical set-up.

5. Provide what’s wanted where it’s wanted exactly when it’s wanted.

We don’t always purchase on impulse and we don’t always plan ahead – but we shouldn’t have to pay a premium because what we want isn’t ‘regular’ stock or a ‘standard’ item.

For example, if I want to buy a new car with a specific type of sunroof, I shouldn’t have to pay a premium or wait for months. Our processes should be agile enough to manage these needs and variations.

⚠️ Important Point! This isn’t encouraging retailers to stock pile goods en-masse. This would completely go against Lean principles! What we are saying, is that organisations need to work harmoniously with their suppliers to ensure customers can have what they want, where it’s wanted and when they want it.

6. Continually aggregate solutions to reduce the customer’s time and hassle

Reduce the number of steps a customer has to take to use/access your product or service. For example, consider a contact lens wearer who needs a sight test for new glasses. When booking the appointment for a sight test, the customer should be asked if they would like to attend a contact lens check at the same time. This would avoid the customer having to book and then attend two separate appointments, significantly reducing the time and effort it takes the customer to do business with us in order to achieve what they need.

Ok, I get it – but this all sounds a bit expensive…….

Not if you apply a Lean mindset and look at total cost. Understanding the principles of Lean consumption and applying them effectively can result in significant savings as you fix at source, reduce errors and work together with your suppliers to achieve a unified goal. Making the simple, cost effective changes first can free up more time and resources to tackle the more complicated changes required to provide your customer with exactly what they want, where they want it and when they want.

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How do I get started?

There are many Lean tools and techniques to get you started, but we recommend you kick-off your Lean journey by mapping your value stream and identifying the waste within your process. Using customer journey mapping and applying the kano model are also great tools in helping you to determine your customer needs and priorities.

In Summary

In order to acquire new customers, retain their business and secure their loyalty and advocacy we need to reduce the effort a customer needs to exert in order to use our products and services. Understanding the principles of Lean Consumption can act as a valuable tool in helping us to achieve this.

The first step to improving Lean Consumption is the desire to provide a better service to your customer.

Further reading:

Lean Solutions by James P. Womack and Daniel T. Jones (March 2005)

ChangeWise Quick Reads: The Seven Service Wastes

ChangeWise Quick Reads: Kano Model

ChangeWise Quick Reads: Customer Journey Mapping

Want to know more? Get in touch with the ChangeWise team at info@changewise.co.uk

ChangeWise believes employee engagement is the foundation for successful Change. Training and coaching your people to use simple continuous improvement techniques will enable your organisation to continuously adapt and stay ahead in a constantly changing and challenging environment.

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