Paying for Skins along with the Bananas!


    Dr.Shigeo Shingo in his book Key Strategies for Plant Improvement talks about
    paying for the Skins along with Bananas!

    He recounts buying bananas from the fruit vendor by weight like everybody else. He also
    notices that nobody complains about the weight of the edible banana only being
    about 60% of the total weight of the banana. Yet nobody insists that the fruit vendor
    peel off all the skins so that you can buy only the edible part!

    He uses this example to drive home the point that in any activity there are two kinds of

    1. Value-Adding – Only these activities add value directly to the end customer.

    2. Non- Value Adding – These activities could be Mandatory (need to be done because the
       law requires it or the company requires it for audit purposes or to keep fraud from
       happening) or Adding value to the vendor (like accounting purposes). The key here is that
       these activities do not matter to the end customer one way or the other. They don’t add any direct value to   them.

    The key in Business Process Outsourcing or IT Outsourcing is the opportunity it affords
    both Buyers and Vendors of these services to reduce waste in these activities.

    It pays to always ask the question, why should we do this this way, just because we have always
    done it that way?

    If you take the typical software development cycle, there is so much waiting time between
    a release of a requirements document, design document or a product release when the seller of such services
    is waiting for feedback from the buyer?

    That’s where the buyer is probably paying for the skins, not the bananas.

    In a typical Business process, transitioning a business process as it exists today may be a good first
    thing to do till it stabilizes when moved to an outsourcing vendor. However once the seller of such services
    gets experience executing the business process, there is no excuse for not looking for the
    proportion of skin Vs bananas in their business processes. No matter how nimble you think you are,
    there is always waste that can be eliminated and there can always be continuous improvement!

    Even in a simple Help Desk example, when you measure how long it takes to close a help desk call on
    an average, do you know for sure if you could have avoided that call altogether? Could that have been
    a Frequently asked questions page that is available on your web site (intranet or open to the general public)
    that could have been consulted 24/7/365. The Outsourcing vendor may think that it is not in their interest to avoid calls since most get paid by FTEs (Full Time Equivalent people count).

    This is very shortsighted thinking. With even major Outsourcing vendors like IBM, EDS, Accenture, Wipro or Infosys having software development services units alongside business process outsourcing services units, they could actually generate new software projects that could more than compensate what they lose by streamlining and improving business processes! Even with better margins and more business overal! They are effecting process improvement and saving their customers money while probably making the customers’ customers even happier!

    So how much are the skins compared to the bananas that you are selling or buying?

    It may be very worthwhile thinking about bananas and their skins!

    Waste is worse than loss. The time is coming when every person who lays claim to ability will keep the question of waste before him constantly. The scope of thrift is limitless.

    Thomas A. Edison