Understanding of service

'Service in this context is not limited to the office or administration that have been the focus of several publications, but also wider service situations that are not necessarily repetitive, where takt time is not applicable, and where task times may be both long and variable. Service in this context could mean anything from a hospital to a university, from an office process to a consultancy, and from a warehouse to field service maintenance. It is important not to confuse 'service operations' with the economic definition of service sectors (as distinct from manufacturing sectors), since many service sector organisations have manufacturing-like operations in that they produce regular outputs along value streams. Instead, service refers to the service concept or product service bundle, which are all the activities that provide value to the customer along a value stream.

Characteristics of a Service
Services have been shown to differ in many respects from goods production processes,however the provision of a service can still be described as a process.The primary differences between services and goods production are: Intangibility Inseparability Variability Perishability The intangible flows in service processes contrast greatly from the physical flows the Leanproduction system was designed to handle. A change to the approach of creating continuousflow, pull systems and performing inspection is therefore required.The high degree of variability in services poses a particular challenge to the application of Lean to services. Methods for introducing stability and coping with variability will need to bedevised.Finally, services are characterised by a high degree of inseparability and perishabilitymaking them vulnerable to demand variation. However, in some cases the customer can berepresented by customer surrogates that allow the production process to continue without thephysical presence of the customer.

Aspects of Lean service

Lean Service has its origin in the Toyota Production System. Lean in the Service sector is subject itself to continuous improvement, and as such there are an increasing number of concepts that may or may not be included as part of Lean Service.

Lean services is the application of the lean manufacturing concept to service operations. It is distinct in that Lean services are not concerned with the making of hard products. To date, Lean principles of Continuous Improvement and Respect for People have been applied to call center services, health care, higher education, software development, and public and professional services. Conceptually, these implementations follow very similar routes to those in manufacturing settings, and very often make use of the same tools and techniques. There are, however, many significant distinctions.

Difference Between Manufacturing and Service

There is considerable interest to apply the principles of Lean Manufacturing in the Service Industry sometimes called Lean Services. The motivation comes from the fact that the Toyota Production System also known as Lean Manufacturing has been very successful in transforming manufacturing. The popular thought is that those same lean principles that has transformed manufacturing could do the same for services. I have applied the principles of Lean Manufacturing in both services and manufacturing and Ive learned the subtle difference in both contexts and also how one might apply lean to one versus the other. What is unwise is the blind copying of the tools of lean manufacturing, thinking that they will work in services. The fact is that manufacturing and services are very different. Let me attempt to highlight how a service business is different from a manufacturing business. Service Business Manufacturing Business

simultaneous production and consumption consumption and production at different (co-creation between producer and stages consumer) many critical aspects are intangible many critical aspects are tangible

concept of inventory may not be material, but can be virtual such as requests and, in healthcare, patients waiting for service can be considered a type of inventory considerable variability in service delivery open universe in variety of service cases

usually has inventory and buffers

some variation closed set in variety in product manufacturing mainly substantive product benefits

substantive and peripheral benefits

Lean in service Industry : Scenario

Lean, as a concept or brand, has captured the imagination of many in different spheres of activity. Examples of these from many sectors are listed below. Lean principles have been successfully applied to call center services to improve live agent call handling. By combining Agent-assisted Automation and Lean's waste reduction practices, a company reduced handle time, reduced between agent variability, reduced accent barriers, and attained near perfect process adherence. [24] Lean principles have also found application in software application development and maintenance and other areas of information technology (IT). More generally, the use of Lean in information technology has become known as Lean IT. A study conducted on behalf of the Scottish Executive, by Warwick University, in 2005/06 found that Lean methods were applicable to the public sector, but that most results had been achieved using a much more restricted range of techniques than Lean provides. A study completed in 2010 identified that Lean was beginning to embed in Higher Education in the UK . The challenge in moving Lean to services is the lack of widely available reference implementations to allow people to see how directly applying lean manufacturing tools and practices can work and the impact it does have. This makes it more difficult to build the level of belief seen as necessary for strong implementation. However, some research does relate widely recognized examples of success in retail and even airlines to the underlying principles of lean. Despite this, it remains the case that the direct manufacturing examples of 'techniques' or 'tools' need to be better 'translated' into a service context to support the more prominent approaches of implementation, which has not yet received the level of work or publicity that would give starting points for implementors. The upshot of this is that each implementation often 'feels its way' along as must the early industrial engineers of Toyota. This places huge

importance upon sponsorship to encourage and protect these experimental developments.

Wastes In Service Industry

Defining Waste As it Applies to Service Organizations

Anything that does not add value to the customer is a waste. Waste only adds to time and cost. And the definition of waste in a service organization is quite similar to its Lean manufacturing definition. When you look at a process, this customer could be an external customer/end user (consumer) for a process that has an impact on customers. For an internal process of an organization, this refers to an internal customer. Examples of the process of the former types include: sales, marketing, production, etc. The examples of the process in the later bucket include training, recruitment, administration, etc.

The 8 Wastes of Lean Manufacturing

The original seven wastes (Muda (Japanese term)) were defined by Taiichi Ohno, the father of the Toyota Production System. These wastes have been often been redefined to better fit new organisations, industries, or external pressures. His 8 wastes of Lean manufacturing have a universal application. Despite what some practitioners may say or write, the 8 wastes of Lean are applicable not just in a Lean manufacturing system but also in services. Take any context and you'll see for yourself the applicability of the wastes as expressed by Ohno. Table 1 8 Wastes of Lean Manufacturing with Examples From Service Organizations

Type of waste

What is it?

Processing too Waste of Oversoon or too much production than required

Examples Information sent automatically even when not required Printing documents before they are required Processing items before they are required by the next person in the

process Rejections in sourcing applications Incorrect data Waste of Errors, mistakes entry Defects and rework Incorrect name printed on a credit card Surgical errors Files and documents awaiting to be processed Excess Holding inventory promotional material Waste of (material and sent to the market Inventory information) more Overstocked than required medicines in a hospital More servers than required Too much paperwork for a mortgage loan Same data required in number Processing more of places in an than required Waste of Overapplication form wherein a simple Processing Follow-ups and approach would have costs associated done with coordination Too many approvals Multiple MIS reports Movement of files Movement of items and documents more than required from one location to Waste of resulting in wasted another Transportation efforts and energy Excessive e-mail and adding to cost attachments Multiple hand-offs Customers waiting to be served by a contact center Waste of Employees and Queue in a Waiting customers waiting grocery store Patients waiting for a doctor at a clinic

 System downtime Looking for data and information Looking for Movement of people Waste of surgical instruments that does not add Motion Movement of value people to and fro from filing, fax and Xerox machines Limited authority and responsibility Employees not Waste of Un Managers leveraged to their utilized People common own potential Person put on a wrong job

In Conclusion of the 8 Wastes of Lean Manufacturing

The above definition of the 8 wastes of Lean should be looked at as something that is directional and should always be kept in mind while taking up a Lean optimization project. These are also called Non-Value Added activities, and processes in service business wherein up to 95 percent of the time is spent on these Non-Value Added activities. Appreciating waste in a service business can be quite challenging as many of the activities do not happen before ones eyes. What is needed is the usage of value stream mapping, which helps bring out the tacit wastes in a process. This has to be supported with sharp judgment of the change agents that are catalyzing the process improvements.

One redefinition of these wastes for service operations by Bicheno and Holweg (2009) is as follows:

1. Delay on the part of customers waiting for service, for delivery, in queues, for response, not arriving as promised. The customers time may seem free to the provider, but when she takes custom elsewhere the pain begins. 2. Duplication. Having to re-enter data, repeat details on forms, copy information across, answer queries from several sources within the same organisation. 3. Unnecessary Movement. Queuing several times, lack of one-stop, poor ergonomics in the service encounter. 4. Unclear communication, and the wastes of seeking clarification, confusion over product or service use, wasting time finding a location that may result in misuse or duplication. 5. Incorrect inventory. Being out-of-stock, unable to get exactly what was required, substitute products or services.

6. An opportunity lost to retain or win customers, a failure to establish rapport, ignoring customers, unfriendliness, and rudeness. 7. Errors in the service transaction, product defects in the product-service bundle, lost or damaged goods.

Lean Principles and Concepts

Bowen & Spear's 4 principles

For Lean to be successful, HBS professor Kent Bowen and Steven Spear (HBS DBA '99) have defined a framework of 4 principles, based on the Toyota Production System : Rule 1: All work shall be highly specified as to content, sequence, timing, and outcome. Rule 2: Every customer-supplier connection must be direct, and there must be an unambiguous yes or no way to send requests and receive responses. Rule 3: The pathway for every product and service must be simple and direct. Rule 4: Any improvement must be made in accordance with the scientific method, under the guidance of a teacher, at the lowest possible level in the organization.

Value Demand and Failure Demand

One of the central concepts that distinguishes lean services from lean manufacturing is the distinction between Value Demand and Failure Demand (Seddon, 2003). Value Demand is the demand for service from customers, while Failure Demand is the demand caused by a failure to do something right for the customer. Failure demand is thus demand that only exists because initial demand was not satisfied properly. For example, a large proportion of calls that call centers receive are either chasing down enquiries made earlier, or to correct earlier work that was not done properly. As one of the key aims of "Lean" is to eliminate waste, Failure Demand represents an obvious type of waste in service organizations. Failure demand can also be defined as "the delivery or production of products and services downstream as a result of defects in the system upstream."(Shillingburg, 2011) This would include administrative rework, audits, inspections and enquires. This non value-added work can account for the majority of administrative work performed.

By treating failure and value demand alike in statistical analysis, failure demand can give the quite false impression of greater productivity. This merely reinforces the need to look at what is really going on, and ask why the service is being rendered.

The DEB-LOREX Model

In 2007, Author and Service Lean thought leader Debashis Sarkar proposed the DEB-LOREX model. Targeted towards service companies, this management system is based on the philosophies of Lean and Systems Thinking. The components that make up the DEB-LOREX Management System are: Leadership Functions Value Streams Anchors Lean Thinking Results

For Lean to deliver sustained benefits, it is imperative that all the components of the Lean Management System function in harmony to deliver desired results. During Lean transformation, it is imperative that each of the elements of DEB-LOREX management system is looked at closely and taken up for improvement. Inadequacies in any of them will impair the overall expected performance of organization. The components comprising Leadership, Functions, Value Streams, Lean thinking and Anchors are the enablers in DEB-LOREX Lean Management System. The adequacy of each of the enablers will have direct impact on the performance (Results) of the organization. For example, an organization may have great processes but without leadership commitment cannot expect the management system to deliver value. As the implementation of Lean matures in the company, leaders will be in a position to clearly say which of the enablers (or causes) need to be acted upon to get the desired results.

Lean Six Sigma

In recent years, some major practitioners have combined Lean and Six Sigma principles to yield a methodology commonly known as Lean Six Sigma. One of the earliest and most successful adopters of this isHoneywell, which calls its program Six Sigma Plus. Like some other major practitioners, GE has developed a very rigorous Lean Six Sigma training program in which certain employees are chosen to become certified in this area.

Lean Process Management in the Service Industry

Lean process management in the service industry is a relatively new concept, and has yet to gain industry-wide support. It has been carried out successfully in select cases, although the traditional model for lean manufacturing cannot be followed exactly; lean can and must be modified in order to use it in the service sector. Applied Example of Lean Service At the life insurance provider Jefferson Pilot Financial (JPF), the lean model was applied successfully to their service organization in 2000. By treating the processing

of insurance policies as a "manufacturing" process, lean manufacturing concepts could be more easily applied. The progression of an insurance policy could be broken down into several steps: application, underwriting, risk assessment, and issuance. By focusing on these main items and reducing all other wasteful steps in the process, the company saved substantial amounts of time and money. Reported in The Harvard Business Review: JPF reduced time from application to policy issuance by 50%, labor costs dropped by 26%, and reissues due to errors fell by 40% (Swank 124).

Adaptation to Lean Service

Many of the concepts of lean manufacturing can be used within the service industry. A pilot project to experiment on the small scale and refine the process is a good way to begin implementation of lean. Automation can take the form of computer programs, set up to do menial tasks, assigning rules to incoming email and using auto forward options in email, and having reports automatically generated and sent to appropriate people. Organizing sequential service processes geographically next to each other, instead of departmentalizing by specialization, or focusing on Takt, or the allowable amount of time per process in the sequence. Standardization can take the form of organizing files and the way forms are filled out. One of the difficulties in adapting lean concepts is related to the nature of the product of the service industry. As services cannot usually be "stocked" for times of high demand, like inventory in a manufacturing environment, an area of concern is service output "smoothness". This can leave human resources unused at times, and possibly requiring a flexible workforce. It was suggested by Bertels that in the case of a service industry such as an insurance company, "stabilizing the process requires that the first process to act as the pacemaker and to release new work in fixed quantities" . Here he is referring to insurance applications being released at a steady rate to the staff to try and maximize the "smoothness" of the work flow. This process could apply to any service that requires sequential steps be taken to obtain a finished product.

Criticisms of Lean service

More recently it is being argued that the application of lean manufacturing tools and techniques have seriously damaged the service organizations that Lean has been applied to. John Seddon (visiting professor Sheffield University) has been especially vocal and critical of lean in his paper 'Rethinking Lean Service' The application of Lean Tools and techniques has led to serious problems in many service organisations, including Her Majesty's Revenue and Customs (HMRC) and even Starbucks. Opposition to LeanService

Employees may not like the lean adaptation of their work environment, some simply for the fact that "Things were fine the way they were." Some may view one of the "perks" of their job to be the variable demand for service, especially during periods of low volume. Many people choose not to work in a manufacturing environment for a reason. Others in the service industry may take pride in their ability to work autonomously. Treating service workers as steps in a "manufacturing" process could prove problematic; the idea of Takt may seem particularly inhumane, by setting standard times for completing a task, making one feel like a production robot. 5S in the office 5S has been widely and successfully applied in office environments, however this has received some criticism for resulting in workplaces that are too clinical or impersonal. Service Lean leader Debashis Sarkar has done pioneering work in the space of application of 5S to improve performance of a large financial conglomerate which can be read in his book referenced later. Application of Lean in creative environments Critics of Lean Service have suggested that problems arise when companies try to apply "Lean principles" to areas where creativity, ability to react to rapid external changes, need to spend an extensive amount of time to convince external parties (typically lobbying) or ability to successfully negotiate are needed; and that the downsides of Lean are reduced / eliminated creativity and ability to cope with the unexpected. Proponents of Lean Service, however, suggest that these criticisms are a response to Lean implementations that have failed to properly understand Lean as a holistic, action based management and implementation system to provide enhanced customer value, a "Tools" mentality instead of an outcomes orientation and an inadequate knowledge of how to utilize and adapt Lean Manufacturing methods to the service environment.

Conclusion
As you can see, just about all the concepts of lean can be adapted for use in the service sector, but since it is not extremely popular, it is slow to be adopted. Many organizations would prefer to wait until someone else has used and perfected a new technique, and just copy the example. As with any new management or operations approach to be adopted by an organization, care should be taken to integrate it fully with current practices, or eliminate contradictory approaches. If lean is simply added to the current service management style, chaos can ensue, and management buy-in

will never come to fruition. In order for lean services to work, a balance must be struck between standardization and automation, and the freedom to make decisions as an individual; ultimately, attention must focus on the elimination of wasteful steps in the process, and the efficient completion of value-added steps, not turning the service organization into a manufacturing plant.