June 30, 2015

Lean Manufacturing, v2

The concept of “Lean Startup” is pretty pervasive in tech. This idea comes from Lean Manufacturing, which argues the benefits of small batch production. Smaller batches enables manufacturers to eliminate bottlenecks in production, reduce waste, and continuously improve. Eric Ries applied this concept to software and coined the term “Lean Startup.” Release small updates, and release often. With each release, test hypotheses, learn, and iterate.

The search term "Lean Startup" now returns 4.7 Million hits on Google. The book has 800+ reviews on Amazon. 67,000+ students signed up for the Lean Startup Udemy Course. I think people like this thing.

But wait... what about manufacturing?

Manufacturing isn’t very lean when matched against the software industry. Bits and bytes are cheap. Atoms are expensive.

This is changing.

The Rise of Small Batch Manufacturing

The internet has made it easy to buy and acquire cheap electronic parts, prototyping boards, and raw materials. We now have access to prototyping and fabrication services like Shapeways for 3D Printing, Ponoko for Laser Cutting, OSHPark for PCB. All of these services have a minimum order quantity of one[1].

We are witnessing the growth of an ecosystem that supports smaller and smaller batch manufacturing.

So what does this "small batch" business enable?

1. Innovation

You have 10 users buy your first batch. You learn something from 10 users. You use that knowledge to make the next batch better. PROFIT!

Scratch that. In the earliest stage of product development, it doesn’t even take 10 users. It only takes one. You.

These can be simple things from where to put the power cord adapter to more complex design issues like the wireless receiver doesn't work when lefties use your device (ahem, I’m looking at you Apple).

2. Commitment

Small batches make production easier to commit to. One thing I don’t see enough of (or come to think of it, I don’t see ever) is the Kickstarter limit. Whenever Kickstarter projects run late, one of the root causes seem to be they were way more successful than anybody anticipated. The factories they lined up for production were more suitable for small batches. Their super awesome multi-million Kickstarter then threw the whole production plan out of whack. Annoying humble braggedness aside, it becomes a thorny problem for the backers of such projects.

Here's something crazy: more isn’t always better. I wonder if they just cap how much funding they can get (or how much funding comes with a promise of a product), whether they will end up with a better product, happier customers, and more fans. In the long term, it might even help their business and product if they just say “NO” to more money upfront.

3. Community

Speaking of fans, there's a new currency in the world, one based on social interactions. Community literally has value. Union Square Ventures based their own investment theses around community. Why? Because community is hard for competitors to rebuild.

Smaller batches enable improvements more often. This drives the community to participate. If I see my feature requests implemented, my itches scratched, I am incentivized to offer more feedback in the future. Community is important. The question of which 3D printer I recommend often boils down to which has the more active community.

There's a difference between community and customers. Customers buy, community does so much more. Community will also help improve your product. Some provide feedback; others contribute code (if we're talking about open sourced products). Often, the community takes the place of a customer support team. People help one another with their products.

Software took the concept of “lean manufacturing” from the manufacturing industry. And now, manufacturing is catching up to its own reputation.

Hardware speed and software speed are still orders of orders of magnitudes apart. I suspect that this gap will shrink more quickly than we can grasp.

I can’t wait to see how Lean Manufacturing will change how things are made.

  1. Well, technically OSHPark has 3 QTY, but it's still very cheap at 3. ↩︎