I don't suffer from the illusion – the delusion – that anyone at Walmart or Amazon spends much time mapping value streams or "looking at the time line, from the moment the customer gives us an order to the point when we collect the cash and … reducing that time line by eliminating the non-value adding wastes." But the result is the same as if Amazon were – maybe just blind sows finding the inevitable acorn, but more likely a collective blinding flash of the obvious. Regardless, Walmart is finding that Amazon is starting to eat their figurative lunch. The real competition is not the other bricks and mortar guys – Target, Sears, Kmart – but the guys who sell the same stuff without bricks and mortar at all.
We are a week shy of the six year anniversary of our pointing out the absurdity of the government productivity data that has served as the rationalization for looking the other way while American manufacturing slipped and slid steadily down the drain. While the 'experts' still struggle with the harsh reality of narrowly defined manufacturing productivity, they (and many, many others) are missing the dawning of a huge productivity boom that is only apparent to those who can, as Dan Jones and Jim Womack put it, "See the Whole".
Whether it is the Dollar Shave Club, the demise of Borders and Blockbuster,the disappearance of record and CD stores, it is all the same – a huge boon to productivity. Same – often superior – customer value, but without busloads of material handlers, retail sales clerks, bosses to ride herd on the handlers and retail folks, and extend it further – people to build and take care of all of the brick and mortar shrines to non-value adding waste. The rapidly dawning productivity explosion is not happening so much among the value adding people within the narrow confines of factories, but in the broader supply chains – but you have to "see the whole" to notice it.
To be sure, paper mills and CD facories are rapidly falling by the wayside, as well as packaging plants and people – but looming the sea change is much more in the service sector folks who pile cost onto factory output without increasing the value of it.
For management this means putting down "Learning to See" and picking up "Seeing the Whole". You can optimize the factory all day long, but if an Amazon or Dollar Shave Club comes along and renders the entire supply chain in which the factory operates obsolete you will find you have been improving value streams to nowhere. On the positive side, it means fantastic opportunity for those wise enough to see logistics, marketing, retailing, warehousing and the rest for the non-value adding waste it is.
If you are making and selling something for $5 while the final customer is paying $20 for it way down the chain, you need to get out of the rut of believing that whatever is so severely trashing the value propositon of your product is 'necessary' or somehow an inescapable reality in your business. If you don't, someone else will.