Your Competitors Use Systems. You're Still Managing Situations.

I’ve been working with two manufacturers on their bill of materials. They each have two different ways to generate them:

1. Manufacturer A works with their software vendor, who turns generates BOMs for every size variation of their SKU, resulting in hundreds or thousands of variations.
   

2. Manufacturer B’s software lets them use formulas and expressions to calculate BOMs.

Manufacturer A can make tweaks to the BOM for specific sizes, but they always need to stop and think, “What other sizes will be affected by my changes?” They also might not notice discrepancies until the manufacturer a large number of a certain variety of SKUs.

Manufacturer B requires a lot more thought—they need to handle different conditions based on the size and other factors. But once it’s built, those rules are clearly documented for the future.

Here’s the hidden problem with Manufacturer A’s approach: you can miss a detail and never found out about it, because it’s buried amidst the thousand variations.

Here’s the hidden upside with Manufacturer B’s approach: it surfaces all of the strange one-off situations in their manufacturing, giving them a chance to simplify the business processes.

The downside of Manufacturer B’s approach? It takes a bit of extra brainpower—but it’s brainpower that’s easily reused.

This approach is often reflective of different ways of thinking:

• The first approach is easiest when you’re used to thinking and dealing with specific situations.

• The second approach is easiest when you’re used to thinking and dealing with logic and systems.

Both ways can work, but I think systems-thinking often enforces the highest level of standards in the business, gives the greatest opportunity for simplification, and often provides the highest leverage.