Managing complexity

The result is inefficiency. Managers need to stress simplicity and to ensure that the business focuses on increasing profitability.

We take a top-down view of a company’s complexity and decide whether it is justified from the customer’s perspective.

The priorities are:

• to remove unwanted product lines, unnecessary services and redundant processes
• to simplify products and services and focus on customers’ needs
• to integrate expensive resources more efficiently
• to recognise when complexity provides a competitive advantage
• to manage production and the whole supply chain aggressively to contain costs.

When a business produces too many products or services, the performance of the supply chain suffers and manufacturing and distribution costs become excessive. It may appear tempting just to eliminate ‘the tail’. But the answer lies in understanding the inter-dependencies within the portfolio and pinpointing the trade-offs between the requirements of the market, revenues, costs, and stakeholders’ ambitions for growth.

We helped a large consumer goods manufacturer to save millions of pounds at its UK factories by carefully streamlining the portfolio of products and the range of materials that go into them. Although materials appeared to be the biggest driver of variation, investigations showed that the main culprit was further down the process during the filling operation, where a wide variety of formats was having a crippling effect on line efficiencies. We worked with the commercial teams to select those products that it would be acceptable to cull and, by standardising packaging and materials in the remaining range, opportunities for huge savings were created. We then did the same for the group’s businesses in Europe.