The Continuous Improvement Blog

Reduce costs and improve customer satisfaction with lean services

Written by Colin McArdle on 09 May 2018

lean_services

Lean has a long history in manufacturing, but over the last couple of decades, we’ve seen it increasingly applied to the service industry.

Lean is about looking at processes from the customer’s perspective and taking out ‘waste’ - activities that add no value for the customer. And companies investing in Lean have benefited from reduced costs and happier customers.

In this blog post, we take a closer look at the ins and outs of applying Lean to the service industry.

How does Lean differ in services vs manufacturing?

Lean is easy to apply in the manufacturing industry. You have a product that is being produced over and again, going through the exact same process. And all the customer sees from placing their order, is the finished product right at the end of the process.

In the service industry it is slightly trickier, as there is no physical product going through the process. Instead, it’s the customer who goes through the process. And the process isn’t ever exactly the same, as each transaction can be very slightly different from one customer to the next. This means the customer sees everything. If there is a defect in the manufacturing process, the customer won’t see it as it will be reworked before it gets to them. But in the service industry, if there are defects or delays, the customer will know about it.

For example, in the healthcare industry, an error in processing the results of a blood test may mean a much longer wait time for results. Or in the hospitality industry, if the chef gets your food order wrong, you may not get your food until long after everyone has eaten. The point is, the processes are much more visible and have a greater impact on the customer.

The last point to make here is that in the service industry, waste is much harder to spot. So companies have to really map out the value stream to see how the processes work.

Why should service companies care about Lean?

Today’s marketplace is marred by intense competition and changing consumer perceptions. People have been conditioned to expect high levels of service, so it’s crucial that your company is responsive to their needs. This requires being flexible and adaptive.

The issue is that many service organisations, both customer facing and back office operations, aren’t responsive to the needs of customers. They can be slow and error prone, leading to customer dissatisfaction. Think about your own experience of interacting with the healthcare system or with your bank.

The beauty of Lean is that it looks at your processes from a customer perspective. So you can eliminate waste and be more responsive to customer needs.

What are some examples of Lean services in action?

Let’s take a look at a couple of examples.

First, think about a busy call centre of a retail bank. The volume of calls goes up and down on a cyclical basis. If the company doesn’t handle the extra capacity at peak times, customers can get frustrated. How many times have you tried calling one of your own service providers (your bank, utility provider, broadband provider...) only to be put on hold for an excruciatingly long time?

One solution is for the company to staff to peak so you never miss a beat. But what about when volumes are low? People won’t be doing much. The Lean solution would be to cross-train different departments to bring them into the service when the volume is high. You have less staff overhead costs, more efficient processes, and most importantly - customers who can get through to you when they need to.

Here’s another example from the back office operations of a car rental company. A customer fills out an application form, this gets processed by the team and moves through to the rest of the back office process. Now imagine application forms were long, requiring duplicate information and signatures to be processed. They would take too long to process and be subject to errors or missing information.

The Lean process analysis would be to simplify and remove duplicates from forms and introduce a digital solution where application forms are autofilled, error proofed and dynamically created. This would lead to increased ‘right first time’, reduced delays and reduced labour time required to process. The result? A much quicker, more productive and smoother process for customers.

These are just two examples of Lean services in action. To find out more you may wish to read one of our recent case studies:

What are the most common obstacles of implementing Lean?

The first challenge is finding the Lean opportunity. Waste can be subtle, so it takes a little bit of work to find the waste and determine how to tackle it. This is where lean tools like Process Mapping are invaluable. Process maps illustrate how processes work, they show upstream and downstream activities, decision points, failure points and resources, so you can spot opportunities to improve quality and productivity.

Another challenge is getting buy-in from the organisation. Getting people to change isn’t easy, but can be achieved with clear communication and by involving and empowering your employees to join in with change initiatives.

Then there’s the obstacle of sustaining changes. Just because a change to a process has been implemented doesn’t mean workers won’t slip back into old ways of doing things. This is where consistent monitoring, tracking, and encouragement is key.

How do you get started with Lean services?

Clear objectives are the foundations of any change initiative. You need to start with a clear idea of what you’re trying to do and why. What is the business goal you are trying to achieve?

It’s then important to assess how you’re going to tactically implement Lean. Piloting projects can be invaluable here. Take a couple of processes and test out Lean tools.

Once you’re confident you can effect change with Lean, design a clear roll out programme for the wider organisation.

Throughout all this, communication is key. You need to ensure you have support from everyone at all levels of the business.

Lean is a powerful process improvement tool that can be successfully used by organisations in a diverse range of service sectors. If you want to learn more about how Lean can help your company achieve lower costs and happier customers, get in touch here.

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Topics: service industry, lean services

Colin McArdle

Written by Colin McArdle

Colin McArdle, the Founder and Managing Director of Kaizen Kulture is a Lean and Six Sigma Master Black Belt who has over 30 years industry experience. Kaizen Kulture's mission is to be true to the ethos of continuous improvement.