Lean Manufacturing

Keeping Things Simple

One day just before Christmas, I was watching the local late night news; they were doing an article on SKY BUS. SKY BUS apparently not only one of the latest, it is in direct competition with all the “ECONOMICAL” airlines; Southwest et al. They’re working on the concept of keeping it ‘CHEAP, SIMPLE, BUT ON TIME’.

Their CEO: Bill Diffenderffer put it this way; “When I was first contacted about serving as the CEO of Skybus Airlines in early 2005 I wondered why anyone would want to start up an airline, when airlines everywhere were losing boatloads of money and the price of jet fuel was going sky high. However when I learned that very highly regarded business leaders with national reputations were behind it, I decided to take a closer look. That was one of the best decisions I ever made in my life. Skybus Airlines is going to become an amazing business success story.

Great success stories usually grow out of doing something that everyone thinks cannot be done. Nowadays that usually involves developing a brilliant new technology or discovering a miracle cure or re-energizing a Fortune 500 company. But Skybus isn’t going to do any of those things. Instead what we want to do - what we can do - is make things simple. Specifically, we know how to take the complexity out of air travel while making it very affordable – amazingly affordable! We’ve developed a very simple operating model that produces a dramatically lower cost structure to fly people safely and reliably from where they are to where they want to go. Our cost structure allows us to be profitable while offering dramatically lower fares in previously untapped or underserved markets.

What this means for you, the Skybus passenger, is that you’ll be able to fly on large brand new airplanes to major cities across the country without stopping in cities like Chicago or Atlanta to change airplanes before you can go on to your destination. It means that you will almost always arrive on time, your bags won't get lost, and the experience will be easy and friendly.

To be sure, there is some “secret sauce” involved. We only fly into airports that do not suffer from severe congestion – after all, airplanes only make money when they are flying. We use the Internet for everything from sales to customer support – like Amazon.com. If you want a sandwich and a coke during your flight, you’ll pay for it – just like you do in any other business. But mostly we just keep things simple.”

The whole concept of Lean Enterprise is to keep things simple. While mentoring future entrepreneurs, I found myself explaining the difference between “Cash Accounting” and Accrual Accounting” when I realized that it is the principles of accrual accounting that glamorizes the accumulation of inventory. Inventory in accrual accounting is an asset. But if we look at the making and purchasing of inventory under the “Cash Accounting” rules we find that all we did was to spend money with no ‘REAL’ inflow of cash.

I am not proposing that we change over to a cash accounting system, but I am suggesting that we look at the operating and manufacturing area using the cash accounting principles; don’t purchase or make what you cannot immediately sell.

For more information about Keeping your operating and manufacturing simple give us a call or send us an e-mail.