Lean has brought about amazing changes on the factory floor. Many U.S. firms recognize that in today’s markets, the speed of response to customer demands is a key competitive advantage. These firms have worked continuously to reduce their manufacturing cycle times. By applying lean concepts, companies have transformed the factory and made considerable reductions in manufacturing throughput times; reductions in cycle time in excess of 50 percent are not uncommon.
The principles of Lean Process Improvement can be applied to service processes as well as manufacturing processes. By rethinking and streamlining service processes, some companies have cut expenses by 10 to 30 percent and made steep improvements in internal and external customer satisfaction.
With a few exceptions, companies have been slow to apply lean process improvement principles to service processes such as finance, human resources, accounting, health care and customer service. The problem stems from waste being invisible in service processes. Unlike on the factory floor, where idle workers and stacks Eradication chenilles processionnaires of inventory are clear signs of broken processes, waste is usually hidden when it comes to services. It tends to lie in wait between functions and departments, so companies only see a small portion of the problem.
Service processes usually lack standardization. Every employee may have a different method for completing the same task. This lack of standardization and consistency is costly. Complex, inefficient processes are slower, have higher error rates and decrease overall responsiveness and customer satisfaction. There is also a human cost when employees are underutilized by spending their time on low value tasks, they have less time for more rewarding – higher value-added tasks.
Identifying the Problems
Service providers need to embrace the end-to-end process philosophy
Adopting this philosophy is critical to seeing and eliminating waste. Process waste in the form of excess steps, redundant activities, and non-value-added tasks cannot be pigeon-holed. Inefficiency in one part of the process spill over into other activities and other processes.
Inconsistency is a problem for many service processes
For example, during an assessment of a prospective client we observed that each customer service representative (CSR) in the same transaction center handled identical customer lab requests differently. The processing times for each CSR was highly variable as much as 50% difference between CSRs. Further analysis revealed that some CSRs were using short cut methods that decreased their cycle times. The company did not engage in cross-training or knowledge sharing that would improve the overall process and reduce the time in handling lab requests.
Another typical observation of service processes reveal the Pareto principle effect:
A small proportion of the work eats up a large percentage of the total time. A brief sampling of the transaction center processing time for lab requests indicated that approximately 80% of the transactions took about 40% of the total time, the remaining 20%, the more complex ones, accounted for about 60% of the total time. Exceptions like these are an enormous burden on productivity and are typical for most service processes.