Wednesday, January 24, 2007

Prediction is for Wimps

Prediction is for Wimps


Pull vs. Push

I was in a small conference facility recently, looking for a cold soda during a break in the meetings. I saw vending machines, went to the Coke machine and looked for a Diet Coke. This machine was the type with the clear plastic front, through which you could see the various offerings. I looked and I looked; plenty of other sodas, but no Diet Cokes, though there were two empty “runways” right next to the regular Coke,

So I went to the Pepsi machine, content to have a Diet Pepsi if I could find it. Again, many offerings but only after scanning the entire machine did I see three Diet Pepsis remaining. I bought one and sat down nearby to continue a conversation with a friend.

A few minutes later, a trim, fashionably-dressed lady walked to the Coke machine and I noted that she was doing the same search I had just done. Hands on hips, she walked away from the Coke machine to the Pepsi machine. Scan, look, finally find the Diet Pepsi, which she bought.

Both machines were chocked full of various drinks; but not the one we wanted. I then wondered how much money the vending machine company was losing and how it could improve their offerings at this vending site.

What would happen if the company offered a simple set of rules to the person filling the machine, such as:

  1. If the machine is sold out of Diet Coke, fill one additional runway with Diet Coke. Take the lane from Coke.
  2. If the machine is not sold out of a drink, refill the existing runways
  3. If a drink is down to a single runway, leave it.
  4. If a drink on a single runway has sold zero items since the last refilling, put a small tag on the front.
  5. If a drink on a single runway has sold zero items and already has a small tag on the front of it, remove that drink from the machine and report it to HQ.
  6. If a drink on a single runway has sold some items and has a small tag on the front of it, remove the tag and refill.

In this way, the vending machine company would allow the customer to tell them exactly what they want to buy in this setting. The company could then supply the most inventory of the most popular items and stop using valuable cooler space for items that don’t sell.

This is pull vs. push. If the vending machine company presumes to “know” what the customer wants and fills its vending machines accordingly, they are pushing this on the public. If, on the other hand, they make an educated guess about what to put in the machine at its initial installation, then rapidly change the offering according to standard work as I proposed above, it is allowing the customer to pull what they want. This is nothing more than a series of rapid PDCA cycles that will, in short order, get to a place of maximizing cash flow through a fixed asset.

Put another way, it is silly to predict what the customer wants. Push is all about prediction. Far better to have a system which makes no attempt to predict but makes every effort possible to respond.


Anonymous said...

Joe -- can you please go back to my blog and repost your comment under the post about your story here? It ended up under the kaizen newspaper post.


Anonymous said...

Here's another story:
The peanut butter cups were very popular, and often ran out. After a few rounds of that, they were no longer stocked. Next time I saw the stocker, I asked him about it. "Oh yea," he said, "those were a problem; we couldn't keep them in stock [in the machine]." So I suggested that he stock *TWO ROWS*. He hadn't thought of that. So from then on he stocked two rows, and people consistently bought about a row and a half a week. Satisfied customers, in spite of the vendor. ;->