Deadly Wastes in Your Business – Services vs. Production
Today, we have more companies operating in services than in production. Especially in the past decade, service providers have increased significantly and even surpassed the production sector. What has been neglected throughout this development, however, is the new optimisation potential that has come along.
Lean management has evolved as one of the best ways to take advantage of this optimisation potential in the service sector. The goal is simple: to increase efficiency by eliminating waste.
Let’s face it: Services are hard. They’re intangible, highly complex and they’re difficult to monitor, so it’s no surprise that a lot of managers are deterred to pay detailed attention to the processes. But did you know that some large companies are now investing in secret shoppers to target their inefficient service procedures? That’s how much value is getting lost.
Here, some people have turned to the production sector to learn. The original idea is simple: Processes are tangible and easier to evaluate, so it’s also easier to find out where companies are losing value and how to stop doing so.
In production, we mainly speak about seven types of wastes, whose counterparts have to be identified in services. Even though they largely follow the same categories, wastes in production and services have to be interpreted differently.
The first waste of overproduction, for instance, translates to duplication in services. Having to re-enter data and repeat details on several forms is unnecessary and costs time. So is waiting for the next process step or machine due to a non-streamlined schedule, in services is equated to a delay in terms of your customers waiting for delivery or a response.
Another difference considers stock. In production, stock on hand waiting for further need is considered a waste, while in services it’s a lack of stock that leads to the inability to deliver and therefore becomes a waste. Lastly, making defective products that can’t be sold are a waste in production, while errors in service transaction are insufficient service deliveries based on, for example, poorly educated employees.
A few successful cases in the service industry have already shown that the implementation of lean management can be a very effective strategy to eliminate wastes and avoid their appearance in the future. In this process, all resources that aren’t delivering value from the customer’s perspective are either eliminated or optimised.
Broadly speaking, lean thinking has five guiding principles, which can also be seen as implementation steps:
- Specify your value – What unique problem-solving service are you delivering? Find out strengths and weaknesses through satisfaction surveys for customers + employees.
- Map your value stream – What value streams are you using within your services? How are you solving your customer’s problems?
- Create a flow – Is there anything unnecessary? Can you improve value-adding processes together with your employees? An example would be to form clusters of services with similar steps to enable resource flexibility and multiple use.
- Pull – Balance this work between teams and ensure a real-time flow of communication through IT-integrated information systems. Also, avoid loss of value by adopting a client-driven demand system.
- Strive for perfection – This is an ongoing process. Therefore, promote the exchange of skills and ensure a continuous improvement with all employees and mechanisms by starting this process from step 1 on a periodic or case by case basis.
Lean service has proven successful in many cases in the service sector. As a set of tools and principles, it develops the perfect process with three goals: identifying the right purpose/value, using the best fitting method, and achieving the highest degree of accomplishment. In other words, less (expense) should provide more (service).