Businesses around the globe are looking at new ways of decreasing lead times while increasing quality and decreasing risk. There are numerous approaches and methods that are proposed in different scenarios but only one that has consistently proven itself to improve both the speed and quality of business.
Getting it right first time
Its a simple statement but its testament to its challenge that its often not the place that businesses start when looking to reduce the lead times. What makes being right first time so difficult?
Firstly there is the problem of recognising the impact of delayed correction. Yes it might be possible today to create a new customer in 5 minutes or a new product in 10 but what is the delayed impact of that customer record being incorrect or that product Bill of Materials being wrong? The answer is normally extremely large, often accounting for 30% of the organisations operating costs. Many businesses haven’t analysed the actual cost of poor information, instead looking to optimise after the fact to reduce the impact rather than mitigating it at source.
Secondly there is the issue of business information maturity. While most business leaders and economists agree that a major differentiation in today’s information driven economy is how you exploit your information to your advantage its also the case that most organisations haven’t set up the robust processes to actually deliver this as a quality base for decisions. Investments in business technologies such as analytics are on the rise, but often without the business investing in the quality information base that ensures it isn’t just a case of “Garbage In, Garbage Out”.
So what does this mean for the modern business? Well firstly it means that before investing in various complex or process driven exercises to reduce lead times while increasing quality its actually important to get the basics right and drive change once those basics have been done. Here at Capgemini we’ve worked with a lot of clients on instituting this sort of change, both in our technology delivery and consulting businesses as well as in our Business Process Outsourcing unit. The key to “right first time” is having actual control of your master data.
By instituting a strong MDM approach within the each of the three Master Data Areas (Customer Centric, Enterprise Centric, Supply Centric) it becomes possible for an organisation to significantly reduce lead times. As an example one company found that by setting up a shared service centre that delivered a 100% right first time approach to product management it was possible to significantly reduce the time required to create products, by over 30%, and to reduce the down stream impacts of incorrect product and BOM information.
So MDM and its role in getting information right first time should be considered the basic first step in reducing lead-times while reducing risk. Without strong master data there will always be risk and there will always be inefficiencies.