You create a finished product out of raw materials. You’ve paid for it, and usually have a little wiggle-room to add margins based on possible differentiators.
If you add something extra to a widget that matters to your customer, they’ll pay more money. If you add something that doesn’t, they won’t. The money you waste by adding something without value is Over-Processing Waste.
In your Processes:
Let’s look at it like mixing coffee. A few twists of the stir-stick is usually enough, but we often add another ten. While five seconds wasted per cup isn’t world-ending, it’s wasted time that could be spent elsewhere.
Walk through your processes with several trusted team members; one isn’t enough. Over-Processing is often buried in personal habits (like excessive coffee stirring) and varies by person.
The good news is that if Over-Processing is built into your manufacturing, improvements aren’t difficult.
Again, get involved in the processes:
- Are you painting areas that won’t be visible or exposed to corrosion?
- Are you polishing a surface that doesn’t require it?
- Are your guidelines excessively tight, requiring wasteful levels of detail and scrutiny?
If Over-Processing exists, the customer will likely not notice or care if you change it. If it adds value, however, you’ll hear about it. Before trimming Over-Processing, sleep on proposed changes and make sure you strongly consider the customer, their needs, and your MVP (see below).
In the world of efficiency, there is the most efficient way, and all other ways. It’s like how one, and only one, car can win a race.
If two people are performing the same function in different ways, one is more efficient. Document the better process and train everyone to do it that way.
Keep your standardization organic, especially if just starting out. The next person may have a more efficient way, and so might the person after them. The more empowered your team feels to share their ideas, the more efficient your standardized processes will become.
Pricing a product is one of the most delicate things you could do. There’s the best practice of using competitive products to benchmark, but to find a margin, you’ll likely add some differentiating features.
Finding the right balance between what customers are willing to pay and what you’re willing to charge is difficult, and you never know for sure if you’ve gotten it right. When we’re unsure, many of us start adding to our products to improve sales.
Try this: write down all the features of your product, no matter how small. Separate them between what your customer needs and what they would like.
The first column (Needs) is your Minimum Viable Product (MVP). It’s the essential core to your product. These features are untouchable.
The second column (Wants) are your added value features. Here’s where to get critical. Does your customer want each of these features enough to pay for them to increase your margins? Or are they frills that won’t give you visible ROI?
With each new product and feature you want to add, repeat this exercise. If the customer isn’t willing to pay, don’t add it.