In order to implement an optimal solution to your company’s product development, capacity expansion, cost reduction, continuous improvement, or other project objective, your project team must be able to evaluate alternatives on four key qualitative measures. Each qualitative evaluation is informed by quantitative and pseudo-quantitative measures and other qualitative judgments that will vary by project and objective. Interpretation of these measures is required to reach logical conclusions regarding the optimality of proposed solutions.
Upon completion of the initial evaluations of alternatives, there may be no clear winner, one determined to be best in all aspects. In this situation, another round of evaluation must be conducted to determine the best trade-off of benefits to pursue. It is imperative that the project team consider the potential motivations of influencers; interpersonal conflicts, personal agendas, or other “office politics” can provide perverse incentives that jeopardize the team’s success. Focusing on the merits of each alternative will limit undue influence on the final decision, providing maximum benefit to the company, its employees, and its customers.
Particularly prevalent among project evaluation shortcuts is to simply look for the alternative with the lowest initial cost. Unfortunately, that number is often misleading, misunderstood, or misquoted. Confidence in the accuracy of cost estimates is important, but initial cost remains but one criterion among many.
Four characteristics that form the basis for selection of optimal solutions are outlined in the following sections.
An optimal solution addresses a specific customer need in a specific target market.
For many, the default frame of reference for this statement will be the end user of a consumer product. As it is universally relatable, we will begin with a consumer product example before extending the discussion to manufacturing and service settings.
With a majority of the world’s population now using mobile devices, such as smartphones, there are a number of market segments that can be pursued. Customers in developing nations have different expectations than those in economically prosperous and technically advanced nations. Therefore, specificity to a target market is directly related to the degree of optimality a product offering can attain. For example, a device with a high-resolution camera, high-definition display, and maximum processing speed will not be popular in a market that requires only moderate performance and places a high value on battery life. That is, the high-performance device is a suboptimal solution!
Service providers face a similar challenge in defining their offerings. Focus must be maintained on the services that customers value most. You are unlikely to encounter a valet and a maître d’ at a fast-food restaurant – they do not make your meal more convenient and affordable. To the contrary, they would create a mismatch between customer needs (fast and affordable) and services provided (personalized and premium).
In a manufacturing setting, your “target market” may be a single person responsible for the financial performance of a department, process, or the entire organization. Production decisions – equipment procurement, staffing levels, scheduling, etc. – will be made to meet the prioritized objectives of the organization. The greatest need may be to limit capital expenditure, or to maximize plant- or department-level productivity, or other objective that establishes the trade-offs to be evaluated.
A command to “make more widgets” may lead to actions that increase production, but at what cost? The expression of specific needs will guide decisions that allow the operation to remain profitable. “Make X widgets annually at a cost of $Y per widget, with $Z maximum capital expenditure,” for example, has far greater potential to lead to an optimal combination of equipment, staff, and schedule.
An optimal solution is compatible with the market position pursued.
When a company that has historically offered mid-market products releases a new product, it will often be assumed to be mid-market. If a new product is launched to pursue high-end customers, it must be thoroughly differentiated from the mid-market offerings. Simply repackaging a mid-market product for a high-end market is unlikely to fool anyone for very long. You can park a Chevrolet in a Mercedes showroom, but it’s still a Chevrolet.
Similarly, it is unwise to reduce costs by offering an inferior (i.e. low-end) product expecting to retain mid-market customers. This can do irreparable harm to a company’s reputation, destroying customer loyalty and good will.
To avoid the damage a mismatch can cause, the product development team should acquire a thorough understanding of the features and characteristics that define each market level. This will result in a product that is well-suited for the desired market position without the detriment and expense of unimportant or inappropriate properties.
Manufacturing solutions can be viewed in similar fashion to the product itself. The processes, equipment, and inspection standards required can differ greatly between products targeted at low-end and high-end markets. Matching the quality, reliability, and other characteristics to the target market position is the key to an optimal solution.
Likewise, optimal service offerings are customized for the market position pursued. Choices ranging from highly-automated self-service operations to personalized concierge service will attract different types of customers; be sure to offer the types of services that are most attractive to the type of customer you desire.
An optimal solution is developed with an appropriate level of technical sophistication.
A product or process should not require greater technical expertise than absolutely necessary to produce or operate it. The ubiquity of internet websites provides an excellent example of this principle.
Numerous small businesses require an online presence to increase their exposure to the market, but have no skilled programmers on staff, nor the budget to hire one. The optimal solution for many in this situation is offered by website-building platforms (e.g. Weebly, Squarespace) that require no programming skills. The technical sophistication is built into the platform so that users need not possess it.
A manufacturing process can easily exceed the technical sophistication required. Fully automated processes, for example, are impressive and attractive; they can also provide interesting and fun projects. However, they require machine guarding, additional sensors, and safety protocols. The additional complexity and cost must be justified by the need for speed, precision, repeatability, or other benefit it may provide over less sophisticated alternatives, such as manual operations performed with hand tools or partial automation.
Service providers must also be careful to match technical sophistication to that which customers are likely to possess. Fully-automated self-service systems are particularly vulnerable to this type of mismatch. A system that is not intuitive and user-friendly exposes the provider to great risk of customer frustration and dissatisfaction that leads them to seek other alternatives – the competition!
An optimal solution can be implemented and maintained with available resources.
Resources required to implement and maintain a solution may include a budget, tools, skills necessary to install and operate equipment, knowledge of repair procedures, and many others.
Is a purchased or leased automobile an optimal solution to a person’s transportation needs? Many have concluded that it is not. Be it the initial cost, the recurring expenses, availability of parking, low utilization, the skills and tools required to maintain the vehicle, or other factors, alternative solution are becoming increasingly popular. Public transportation, car-sharing programs, on-demand services, and bicycles have supplanted the personal automobile to meet the transportation needs of many, primarily urban residents. The obvious solution is not always optimal.
For a manufacturing solution to be optimal, it must remain operational through all foreseeable – and some unforeseeable – conditions. This responsibility typically defaults to a maintenance organization. The maintenance department’s ability to sustain a system, however, is influenced by many decisions that are often out of its control. If input from this group is not incorporated during the specification of equipment and processes, the solution’s optimality may be jeopardized long before any physical assets are acquired. Installing a system that will require tools and skills not currently possessed by the individuals responsible for operating and maintaining it, without providing a budget and schedule for acquiring them, is far from an optimal solution, no matter how impressive the system may otherwise be.
It should be clear from this discussion that developing an optimal solution involves a great deal more than determining which alternative offers the lowest cost of implementation. Initial and recurring costs should, of course, be considered. However, there are other important considerations that should also be included in the decision-making process, from both short- and long-term perspectives. Personnel issues, such as staffing levels, turnover, and training requirements should be included in the analysis. Market trends, technological developments, and regulatory environments are also critical factors in an optimal solution. Considerations that are unique to your organization, product or service, or target market may require additional scrutiny. Keep an open mind to all influences, conduct a thorough analysis, and your optimal solution will present itself.
If I can assist you in identifying the optimal solution to an operations challenge you face, please feel free to contact me.
Jody W. Phelps, MSc, PMP®, MBA
JayWink Solutions, LLC
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