Startups: “TPS” is a major growth driver

The ability to consistently deliver what customers want on time is the problem of all companies, not just industrial SMEs. In the world of digital scale-ups (which are now present in all areas of activity and are reshaping our economies), supply chains are not as impacted by material shortages. However, these companies are having difficulty delivering for similar reasons:

• Variability of customer demand, both in volume and in the type of product or service
• Delays and other supply problems from their many service providers often scattered around the world, and
• Inability of employees to do their job right the first time

The variability of demand in these companies is often the result of desynchronization between sales and production because the watchword is rapid growth. The salespeople sell everything they can to meet the ambitious objectives without really taking into account the capacities and the know-how of production.

This is the case of a French company specializing in software development for various industries: their main difficulty is having the right people at the right time to work on a new client project. Oftentimes, salespeople commit to customers to start their projects with a team of developers and agile coaches before they even know the availability of people in the company. This creates delays in the start-up of projects and dissatisfaction among customers who discover a little late that they had been sold three experienced developers and that they ultimately only have two juniors. The reaction is then to convince developers already engaged to join the team and the latter are not always happy to do so at the last moment. To avoid this problem of "talent shortage" and employee frustration, sales should come to an agreement with the "staffing" team by discussing the needs much more upstream and by setting up a pull flow between the two teams to be able to anticipate and plan the recruitment of the right talent.

Tech scaleups often use suppliers to perform one or more activities in their production and/or delivery process. They generally focus on the tech part and outsource the rest. This can create major supply issues, such as Uber depending on its fleet of drivers to meet customer demand. In this kind of context, it is difficult to control the quality and speed of deliveries. However, each new bad experience with a driver degrades the reputation of the company a little more. It is therefore important to develop close collaboration and a relationship of trust with its suppliers to maintain control of the entire value chain. It's the same problem with Amazon's delivery services or private sellers.

A French scaleup specializing in the production of photos for online ordering platforms faces the same challenge. It has developed an innovative digital system to process and track assignments to organize remote photo shoots but has chosen to outsource all photo production to thousands of freelance photographers around the world. They can choose missions from the platform, make appointments with restaurateurs, travel to perform photo shoots, copy photos to the company's platform and notify when the mission is complete. Just like Uber, it is necessary to have a large geographical coverage but above all to be able to motivate photographers so that they want to take the proposed missions and carry them out, even when they encounter difficulties. Appropriate remuneration is necessary but also rapid support in the event of problems with a restaurateur via a kanban and andon system. Missions are sorted by lead time and the company's operational teams process the oldest ones first, allowing them to unblock the flow of customer orders. Then, when a photographer encounters a problem, he or she “pulls the andon” to inform the Ops team who must react immediately to help unblock the situation rather than letting the computer system relaunch the photographer automatically every month.

Variability can also come from within. By wanting to grow very quickly, scale-up bosses tend to focus on sales and not enough on execution, which deteriorates over time. The business slowly slows down, the quality leaves something to be desired, and sales eventually drop. This situation is very common in the world of scaleups. This week, I was visiting two companies in the US and the UK, whose bosses have chosen to learn about TPS to remedy the slowdown problems in their business. They work hard to learn from every quality issue generated: by transforming the work environment to reveal issues with a kanban system, by implementing training programs in the company to continuously develop people on key operations, and by giving them the means to propose innovative solutions.

By synchronizing sales and operations, developing trusted relationships and close collaborations with their suppliers, and improving internal execution through people development, scaleup bosses are better equipped to succeed in their growth, even in times of crisis.