I work for a manufacturing company. In my organization we talk a lot about how to create products that are the same each time we make them. Variation is often seen as the enemy in manufacturing. If one worker performs a task in a different way than another worker, the quality of the product can sometimes suffer.
Does this mean that variation is always a bad thing? No, I don’t believe it is. In my department, variation is often something that helps us sell more of our products. We divide our product into two primary categories. Standard products and custom products. We think about these categories in terms of the 80/20 rule. 80% of what we make are standard products, and the remaining 20% are custom orders.
We did not always see it this way though. We use to treat each order as a custom product. This caused a lot of issues. Since we discovered the 80/20 rule we have been talking a lot about variation as well as the creation of standards.
My goal in this post is to talk about the variation piece. Where it comes from, when it can hurt your product, and when it can help your product. In the next post we will use the same questions to think about the other side of the coin which is standardization.
A few sources of variation:
Multiple hat syndrome. My team experienced this early on in our products development stages. The strategy at that time was to hire really capable people who could accomplish anything needed on a given day. This left each team member to essentially run their own company. It was not uncommon for new team members to express extreme frustration with the varied direction they were receiving from senior staff members on how to do things.
No standards in place. This is a fairly obvious but important point to make. When new innovative ideas are developed into actual products, there are a lot of unknowns to work through. These unknowns often are the seeds of variation. Left undefined they can sometimes grow into nasty weeds that infest every aspect of your operation.
Customers’ expectations. In today’s day and age customers are more educated about the products they consume than ever before. After spending hours online researching companies and their products, customers hone in on the solution to their needs with exact precision. This often tempts companies to offer mass customization in order to provide any potential solution that might be desired.
No direction. When an organization is missing a leader with a clear and unified vision, the mid-level leaders are often left to argue with each other as to the direction of the company. Disagreements can boil into apathy as captains resolve to simply focus on their own squadrons. An operation attempting to function in spite of such chaos can only dream of producing a consistent and dependable product.
Some consequences of variation:
- Everyone is always stressed out because there is no consistency. Each time a customer places a new order, project managers start to pull their hair out because they have to build the wheel once again.
- Team members don’t know what to expect from each other. Because project manager ‘A’ does their work different than project manager ‘B’, worker guy ‘C’ is left trying to fit a square peg in a round hole.
- Varying levels of product quality. The customer can only hope that the product they purchased was produced by a competent project manager.
- In a manufacturing setting, if each version of the product is unique then each part must be purchased unique. This means that you miss out on the cost savings associated with economies of scale.
Some benefits of variation:
Customization = product differentiation. When my product line was starting out, what set us apart was the fact that we were willing to custom make every job. Our competitors were much larger and had long ago standardized their offering. This gave us the ability to penetrate the market by offering a customized product. Now that our market share is increasing, we are starting to also offer standard products.
When every product has to be unique. The example I think of are the robotics and process machines used by many manufactures. Another example is large scale software deployments such as ERP systems. These products are created unique for each application because each customer has unique needs. In these types of business to business transactions, variation is a key aspect of the product offering. Many times this expectation for a custom product equates to a high sell price for the supplier.
Team member diversity. Another example of when I believe diversity is a good thing is when you find it in the development team. Because developing new products and new innovative ideas is such a creative endeavor, a multitude of viewpoints can prove very helpful.
What are some other sources, consequences, or benefits of variation? Please let me know your answers in the comments below.