A recurring theme in my blogging over the years has been to blast the blindly accepted, insanely anti-lean thinking practices of the big publicly traded companies. The purpose is not just to make sport of them (although there is often great fun in that). No, it is to try to dissuade the smaller and medium sized manufacturers who actually have a fighting chance of becoming extraordinary and highly successful lean companies from blindly imitating them. Too often the managers of smaller companies make the assumption that the practices of the big companies must be the best practices – that simply because they are loaded with Ivy League talent and other assorted smart folks what they do must be very, very well thought out. In fact, quite the opposite is true.
All of that high priced talent is more often distinctly sheep-like. They all pretty much manage themselves the same, and they generally get similar, mediocre results. Big means big headquarters where the big kahunas hang out, and much like big government, the headquarters is filled with folks who pursue control and complexity in order to increase their stature and influence … and as a result, increase their paychecks. Their management is the polar opposite of the Simple Excellence that characterizes the extraordinary, lean companies; and the polar opposite of the servant leadership, empowerment focus which is the hallmark of the best.
While Lululemon is, in many ways, the poster child for absurdly poor management I haven’t written much about them. They are so poorly run that there never seemed to be much need to point it out. Staggering wealth for the founder and Wall Street, insulted and abused customers, a gang of well paid narcissists at headquarters, factory folks out of work and those still working doing so because they will work for pennies … the usual publicly traded company story.
This particular Lululemon story is worth telling, however. First Lululemon had an ERP system. Typically, ERP is a colossal driver of non-value adding waste and wholly unnecessary, but it makes perfect sense to control freaks, naïve believers in the accuracy and validity of standard costs, and other assorted folks whose thinking is twenty years or more behind the lean world. So fair enough, Lululemon was no worse than the rest and they had ERP.
But ERP didn’t help them with their product development cycle times because … well, because ERP is designed to increase cycle times, not reduce them. So their answer was not the obvious one – to get rid of ERP. No, the answer at Lululemon was to install another comparably complicated IT solution – Product Lifecycle Management, or PLM.
But, predictably enough, PLM and ERP didn’t talk to each other. “… once a designer had finished and received approval for a product, they would send an e-mail or print a report from the product lifecycle management system and hand it to another person, who would manually update the data in the enterprise resource planning system generating a time lag of three to five days from the time a product was approved until the information was entered into the system.” Never a good thing when one has to take a print out from one software application and key it into another; and it must have been printing out a report comparable in length to War and Peace for it to have taken three to five days to enter it (or perhaps the problem was old fashioned silo management where the PLM folks, although part of the same value stream, were in a different department from the ERP folks and were operating according to different sheets of music).
Now all of this is rather confusing. Enterprise Resource Planning (ERP) doesn’t seem to include the resources needed to manage product life cycles; and Product Life Cycle Management doesn’t seem to include the life of the product while it is being globally sourced or managed by the resources of the enterprise; and global sourcing seems to be something completely unrelated to products and enterprise resources; hence the need for all of this software to manage that which is part and parcel to a basic value stream management, but … oh well.
Be all that what it may, the proof of the pudding is in the eating. And how does this particular pudding taste? Not so good, it seems.
“Lululemon Athletica Inc inventory issues scare investors again” Thus shouts the headline in the Financial Post. It strikes me that the fundamental measure of all of this ERP, PLM and SPS is inventory planning and control. Obviously it isn’t working too well. Smart folks would take a big step back and come to the conclusion that all of these systems and all of the complexity might not be the right path. They might look at bigger lean companies with far more complicated products and supply chains that are managing inventory far more effectively with an excel spreadsheet and a deck of kanban cards.
But these aren’t people very often described as smart. No, these are folks who have publicly blamed product defects on overly-fat customers; claimed products were made of seaweed when they were actually cotton (hard to tell the difference I suppose); printed the philosophy that women do their best thinking when they are stoned or immediately following orgasms; and that they are doing the children in child labor factories a favor.
My money is on the bet that they will decide that the missing piece of their supply chain is big data. That would be in keeping with their history.