Lean concepts such as continuous improvement and waste reduction have long been used by manufacturing companies. Discuss how service firms can apply the same concepts. Why do you think many service companies are adopting these ideas?
Answer:
Lean is a concept used by manufacturing companies to reduce wastes,
the basic idea is to maximize customer value and minimize wastes.
Continuous improvement, a concept of lean is a method of
streamlining work and reducing waste.
Service firms can apply the same concepts in the following
ways:
Estimation of the current state: It includes analysis of the wastes
associated with each activity. For example, in a hotel industry,
mapping the process flow from registering a customer for room
service to check out of the customer will find out the inefficient
activity and wastes. Lean tools such as, Value Steam Mapping(VSM)
and training course can be helpful for this situation.
VSM analyzes problems virtually and find out all wastes throughout
the entire service process. It collects current data and map the
process of information flow that associated with customer
values.
Determining the target: Determining the target requires thorough
knowledge of the organization's business strategy and requirements
associated with the development of appropriate Key Performance
Indicators (KPIs) from different levels of an organization. Lean
tools such as VSM and Key Performance Indicator can be used here to
create accountability and continuous development of the
organization.
Type of wastes in service sectors:
Waiting Time: Long waiting times are waste both for the customers
as well as for the companies. Unnecessary waiting times arise due
to unplanned work flow, long processing times, lack of trained
staffs and lack of resources. Lean tools such as standardised
operations can be applied to reduce waiting time,improve service
quality and to maintain continuous work flow.
Repeated Operations: Occurrence of repeated operations may be due
to misunderstanding of customer requirements, communication gaps
and lack of standard operations. For exa, in an home appliance
service center, misunderstanding of customer complaints will result
in handling the same complaints again and again and this will lead
to wastage of time. Lean tools, such as, standardised operations
and problem-solving A3 report can be applied in this situation to
minimize misunderstanding and maximize customer value.
Inventory Mismanagement: Mismanagement in inventory results from
poor forecast, unreliable suppliers, unplanned orders, poor
communication and scheduling. Inventory forms the crucial part of
every business, for example, in software industry there most be
availability of antivirus softwares to protect the system,
otherwise there will be a great loss to programmers and companies.
In hospital industry life saving equipments should be always in
stock, again excess inventory results in a waste, this can be
handled by 5S. 5S is one of the lean tools to manage the inventory
in service industries and provide effective operation.
Underutilization of Talents: Lack of training, poor organization
culture and policy, poor performance appraisal, low salary and poor
communication, all results in lack of motivation among employees to
work and thus leads to underutilization of workforce. Lean tools,
such as VSM and training courses should be applied to control
underutilization of talents.
Yes many service companies are adopting these ideas to reduce
wastes. Information technology, telecommunication, healthcare and
finance sectors are using lean to provide better customer care with
good business process management.
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