Richard Bosworth, chairman of What If Forums, analyses the main differences in applying lean in a manufacturing site and a service environment, providing two case studies of companies that were successful in this endeavour.

With service industries historically falling behind manufacturing in key areas of operations and continuous improvement, it’s heartening to witness a growing number of them harnessing lean principles to add value to the end user and reap wide-ranging benefits.

The origins of the lean philosophy, which puts the spotlight on improving quality, standardisation, reducing costs and boosting efficiency, are attributable to the pioneering Toyota Production System, which was instrumental in the car manufacturer becoming a driving force in the automotive industry.

It is important to stress that references to ‘service’ in this context are not limited to ‘the office’ or ‘administration’, but to wider service situations that are not necessarily repetitive and where cycle time is not applicable and task times may be both long and variable.

Service spans everything from hospitals, universities, consultancies, through to warehouses to field service maintenance. The importance of not confusing ‘service operations’ with the economic definition of service sectors (as distinct from manufacturing sectors) is paramount, since many ‘service sector’ organisations have manufacturing-like operations in that they produce regular outputs along value streams.

MANUFACTURING VS SERVICE

In the adage that one size does not fit all, lean and six sigma specialist and author Pete Abilla contrasts manufacturing and service businesses, advising against the “blind copying” of lean manufacturing tools across to services in the belief that they will be as effective.

Whereas there are consumption and production at different stages in manufacturing businesses, he says services industries entail simultaneous production and consumption (co-creation between producer and consumer).

Critical aspects are more tangible in manufacturing than they are in service. There is also some variation in manufacturing compared to considerable variability in service delivery.

Additional differences centre on product manufacturing having a ‘closed set in variety’ compared with an ‘open universe in variety of service cases’. Another difference is that manufacturing businesses bring mainly substantive product benefits compared with service businesses having substantive and peripheral benefits.

In my role as a business strategist facilitating peer forums for small and medium sized enterprises, I’ve seen the lean principles applied with beneficial outcomes across wide-ranging service industries including a structural engineering consultancy, an award-winning hotel and events venue, a vending machine supplier and a provider of pension provision.

In addition to Abilla’s contrasts, another key differentiator between lean services and lean manufacturing is the distinction between value demand and failure demand.

Management consultant Professor John Seddon has been particularly vociferous in highlighting how 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.

He stresses that failure demand is therefore demand that only exists because initial demand was not satisfied properly. For example, a large proportion of calls that call centres 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 that must be tackled.

REDEFINING THE SERVICE WASTES FOR LEAN

The original seven wastes of lean thinking were defined by Taiichi Ohno, the father of the Toyota Production System. These wastes, widely accepted as being activities that do not add value for the customer, have often been redefined to better fit service organisations. Lean authors and specialists John Bicheno and Matthias Holweg re-defined them for service operations as below:

  1. Delay: on the part of customers waiting for service, for delivery, in queues, for response, not arriving as promised. The customer’s time may seem free to the provider, but when customers take their custom and commissions 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.

IMPLEMENTING LEAN IN A SERVICE BUSINESS

Irrespective of the differences outlined above between manufacturing and service, both industries require discipline to implement lean effectively.

Personal experience has taught me that asking for volunteers to form a lean implementation team of fiveseven people from different departments is a good start.

The next step is to teach the team the use of various lean tools and to adopt best practice in the truest sense of the phrase by visiting non-competing businesses that have implemented lean. Such companies who stimulate a culture of continuous improvement are invariably willing to share their learning’s with businesses that are hungry to learn and improve.

Next is looking at addressing as many visible waste problems as possible and seek to resolve downtime and other issues which cause instability.

Finally, there is selecting a pilot project to implement and run with it for up to three months before evaluating and reviewing activities and improvements as well as learning from mistakes. Roll out the pilot to other areas and continue to measure and evaluate progress while constantly encouraging feedback. It’s also important to celebrate ‘quick wins’ and successes.

SAVOURING THE BENEFITS OF LEAN

In November 2012, Refreshment Systems, a UK-based vending machine supplier and family business which employs over 100 people, embarked on a lean journey to address several issues in the machine refurbishment department.

Located in the company’s Bradford headquarters, the department remanufactures an extensive variety of vending machines to give them an eco-friendly ‘second life’ before they are placed in companies spanning small and medium sized businesses, NHS Trusts and corporations such as Thomas Cook and Unilever.

Over the last 12 months, accelerated sales growth conversely brought a series of challenges as the department became a bottleneck which impacted detrimentally on the effectiveness of the supply chain.

With the spotlight being placed on increasing throughput, a project team comprising Refreshment Systems managing director Alistair Balmforth, service manager Steve Wright and workshop supervisor Kevin Whittle conducted a comprehensive communications, processes and housekeeping audit – the latter including a 5S exercise in the 250 square metre department.

The team gave the area a spring makeover by injecting a minimal investment in reorganising the machinery and work flow with clearly demarcated areas as well as improving the lighting and the cleaning routines.

As a result, the department is back on track, the bottleneck has been eradicated and the area has a ‘feel-good factor’. The benefits of the pilot project are being constantly assessed with the aim of rolling out the lean initiative across the entire business.

A CHALLENGE

Specsavers’ corporate tax team in Guernsey commissioned a consultancy to improve their workflow and eliminate waste.

In a typical year, the team deals with approximately 1,300 tax files from stores across the UK. It takes around a day to work through each file and the number of files is classed as ‘work in progress’.

More than 300 of these ‘work in progress’ files existed before the consultancy stepped in and the lead time to process the files was over 50 days compared with a target of 18 days.

Aims and objectives of the lean exercise centred on removing waste, speeding up the lead time to process tax files, removing the backlog of files as well as minimising frustration that wasteful activities were creating in order to free up time to add value in other areas.

The project was also seeking to boost the levels of work satisfaction within the team.

The Specsavers team and the consultancy harnessed the four fields mapping tool utilised in traditional project planning to review the process in a way that was highly visible. This enabled the team to see significant areas of wasteful activity and to find the ‘quick wins’ where action could be taken to deliver immediate improvements.

Wasteful bottlenecks in the process, once visualised, were addressed and removed. The flow of the new leaner process was used to decide for a new office layout that would support, rather than work against, an efficient operation. Finally, new performance measures were set giving the team targets to work towards in improving their workflow.

The solution was to use visual management for the work stream, to identify and remove bottlenecks. All files that weren’t being worked on would be set aside and reallocated in workflow order. 5S was applied to give the team a clearer understanding of where files were in the process. Finally, visual measures were implemented to manage future performance.

The project sparked many benefits, the first of which resulting in a leaner process with wasteful activities removed and enabling 16 files a week to be processed compared to 10.

The second ‘win’ brought a redesigned workspace that supported the smooth flow of files through the process with work in progress files reduced from 300 to 25. As a result of introducing a more visual process of managing files, lead time was reduced from more than 50 days to approximately 16 days.