Sales & Marketing Management - November/December 2008 - (Page 11) MARKETING STRATEGY [By Richard J. Schonberger, Ph.D.] THE SKINNY ON LEAN MANAGEMENT Learn why this process falls flat in marketing … and why it matters L ean management doesn’t resonate in marketing and sales. Nor does it among boards, senior executives and investors. Reasons relate to where lean tends to do most of its work—in operations—and its usual presentation as an attack on waste. Obscured are its much greater potential in the distribution pipelines and its strong customer focus. What lean does, above all else, is provide quick, flexible response to customer demand. But muddling that message are perverse accounting practices that discourage quick delivery well matched to customer usage. Marketing’s valued role is in collaborative lean planning, first within the company and then taken to customers in the external value chain. Why the shift toward lean as an attack on waste? Three reasons: Waste reduction is easily taught, lends itself to measurement and does lead to quicker response. But so do other methods, among them simplifying product designs; culling lesser, capacity-gobbling products, components, suppliers and customers; and collaborating up and down the value chain. But all methods are hampered by how conventional accounting distorts decision-making. Lean costing/pricing Accounting treats inventory as an asset. And it is—if the right product at the right time, and if processed and delivered with dispatch. Under lean, inventory reduction occurs only as causes of long, problematic lead times are resolved so that right items and quantities can flow both smoothly and quickly. Of greater concern are accounting’s averaging methods: Long lead-time specials get under-costed and priced, while standard models get the opposite. Companies lose money both ways. Activity-based costing provides partial redress. It assigns extra costs, and the accompanying higher prices, to products/orders bogged down in engineering, the Getting lean There are various ways to get slim and justifications for doing so. The lean community tells us the way to do it is to cut waste. Moreover, in marketing’s view, it should stay there. From its perspective, being slim suggests meager supplies of product to sell and a skimpy budget for selling them. Further, we are told that reducing waste is not only lean’s methodology, but also its objective. The reasoning sounds circular: Lean reduces wastes in order to reduce waste. To gain traction, lean needs to present itself broadly and correctly. Its mandate, providing flexibly quick response, translates into fewer back orders, higher availability of what’s selling and fewer gluts of unpopular product models. Lean’s customer focus once was well understood. When its basics were unveiled in the early 1980s, lean (formerly just-in-time) quickly became the rage in Western industry. With JIT, Japan had shown an amazing ability to mop up via market speed, flexibility and quality—and at lower cost. www.salesandmarketingmanagement.com What lean does, above all else, is provide quick response to customer demand. But accounting has muddled that message. supply chain, production or in transit to paying customers. High-volume items, blowing past much of the overhead organization and through cellular production modules, benefit from lowered costs and prices. Richard Schonberger, Ph.D., is president of Schonberger & Associates, Inc. He is the author of Best Practices in Lean Sigma Process Improvement, along with numerous other books and articles. E-mail him at sainc17@qwest.net. istock photo NOVEMBER/DECEMBER 2008 SALES &MARKETING MANAGEMENT 11 http://www.salesandmarketingmanagement.com
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