The ambition for most process engineers, interaction designers, and just plain, smart, business people is to create the perfect flow — whether it is flow of material in a supply chain, flow of information in a network, flow of patients in an emergency room, flow of user gestures in a software environment, or flow of products and monetary flow in a transaction.
But, sometimes, things don’t flow. Today, we’ll be looking at a simple Buyer Flow on Amazon.com as a case study.
It’s a fact that there are interruptions in the flow of value in the value chain. As a product or service scales broadly, entropy can set-in and it becomes more and more important to remember the following:
For your service or product, what is the perfect value stream? What does it look like? What does it feel like? What are the minimum product “touches” or steps, from the customer’s perspective? What are the ONLY steps the customer is willing to pay for?
Once answered, then it becomes easier to see the waste and then we can surgically put-in-place countermeasures or outright remove the waste we’ve allowed to enter the value stream. Let’s take a typical Buyer Flow on a site like Amazon.com as an example.
Assuming that there is no up-sell and that all a customer on Amazon.com 1 wants to do is:
- Receive Item
Then, we’re looking at 6 discrete steps in the entire click-to-ship-to-receive value chain2. Arguably, then, any steps, touches, or interruptions above-and-beyond these six steps, we can consider to be waste and interruptions to the flow of value — from a customer’s perspective.
Value, Flow, and Entropy
Once value is understood in a process — from a customer’s perspective — then it is much easier to see the waste. Let us go back to the Amazon.com example above:
Any steps or interactions above-and-beyond the 6 steps I highlight above we can, confidently, consider to be waste. This is an important point because this worldview remains true to the notion of “value”, from the customer’s eyes.
Value as Energy
In physics, Entropy is understood as energy that is not useful — useful, in the sense that the energy used transforms the product or service from one thing to something else. When energy is used to augment a service or product but does not transform the product or service for the benefit of the customer, then that is what I consider to be entropy for business processes. For our Amazon.com case above, any additional steps above 6 we can consider to be energy that is not useful and, hence, entropy. Entropy is Waste.
Examples of Business Entropy
Extending the Amazon.com Buyer Flow, what are some addition steps that is not useful energy — process steps that take away from what the customer really wants to do?
- Help Files: If during any of the above six steps above, the user has to receive help, search, find, or has a question on something related to the transaction, then that is an instance of energy that is not useful.
- Customer Service: If during any of the above six steps above, the customer has to contact customer service, then that is energy the customer is expending that, most likely, he or she would have rather not spent.
There are clearly others, but the 2 items above stand out. Let me clear, however, that the Customer Service function is not waste — in fact, it can be a huge competitive advantage for the firm. But, if we were to ask the customer, most likely he or she would rather not have contacted Customer Service.
- Disclosure: I was employed at Amazon.com and am a minor shareholder. ↩
- ecommerce fulfilment, e commerce fulfillment, pick and pack fulfillment, fulfillment warehousing, fulfillment services, online fulfillment, fulfillment and distribution, inventory management, assembly, kitting, returns, refurbishes, fulfillment center are other terms related to our discussion today. ↩
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Um, re Amazon’s value stream, the Customer doesn’t WANT to wait…. The wait is forced on them because they are not picking up the book from the local bookstore. It does not add value.