Lean has brought about amazing changes on the shop floor. Many American companies recognize that in today’s markets, speed of response to customer demands is a key competitive advantage. These companies have continually worked to reduce their manufacturing cycle times. By applying lean concepts, companies have transformed the factory and achieved considerable reductions in production times; reductions in cycle time in excess of 50 percent are not uncommon.

The principles of Lean Process Improvement can be applied to both service processes and manufacturing processes. By rethinking and streamlining service processes, some companies have reduced expenses by 10 to 30 percent and have seen big 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, healthcare, and customer service. The problem is that waste is invisible in service processes. Unlike on the factory floor, where idle workers and stacks of inventory are sure signs of broken processes, waste is often hidden when it comes to services. It tends to lurk between functions and departments, so companies only see a small part of the problem.

Service processes generally lack standardization. Each employee may have a different method of completing the same task. This lack of standardization and consistency is costly. Complex and inefficient processes are slower, have higher error rates, and lower overall responsiveness and customer satisfaction. There is also a human cost when employees are underutilized by spending their time on low-value tasks, having less time for more rewarding, higher value-added tasks.

Identification of problems

Service Providers Must Adopt 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 pigeonholed. Inefficiency in one part of the process spreads to other activities and other processes.

Inconsistency is a problem for many service processes

For example, during an evaluation of a potential customer, we observed that each customer service representative (CSR) in the same transaction center handled identical customer lab requests differently. Processing times for each CSR were highly variable, with up to 50% difference between CSRs. Further analysis revealed that some CSRs were using shortcuts that reduced their cycle times. The company did not engage in cross-training or knowledge sharing that would improve the overall process and reduce lab request handling time.

Another typical observation of service processes reveals the effect of the Pareto principle:

A small proportion of the work consumes a large percentage of the total time. A brief sample of transaction center processing time for lab requests indicated that approximately 80% of transactions took about 40% of the total time, the remaining 20%, the more complex ones, accounted for about 60% of the time total. Exceptions like these are a huge drain on productivity and are typical of most service processes.

Many service organizations lack the ability to analyze workarounds, exceptions, and reworks that impact productivity:

On the factory floor, production and capacity utilization targets are set and measured, but most service companies cannot measure these performance metrics.

In manufacturing, the customer does not see or care about the production process itself, whether the product is of acceptable quality and delivered on time. But in healthcare, banking, insurance, and other service industries, the customer is the product that moves through the process and experiences the frustration of inefficiency firsthand. Satisfaction is crucial, whether the customer is internal or external. Dissatisfaction is costly when it drives customers to take their business to a competitor.

Overcome Lean Service Challenges

Making services lean has its challenges. It requires creative thinking to adapt lean methods to a service environment. To be successful in implementing Lean process improvement in the service industry, it is necessary to rethink how work is currently done. Being successful in your lean service initiative requires the following six components.

Select and map your cross-functional processes

Most processes often cross functions and departments, not many people involved in them have a complete picture of the end-to-end workflow, interdependencies and hidden interfaces. This often results in costly inefficiencies and high error rates. Before a service process can be improved, its steps must be transparent. A detailed analysis of the process and its sub-processes often reveals inefficiencies, workarounds, and complexity, as well as significant opportunities for performance improvement. Look for non-value-added steps and analyze information flows to identify silos and constraints.

Reduce complexity wherever possible

Complexity is a major contributor to process inefficiency. Rethink and redesign the process to eliminate elements that undermine efficiency. Set up a subroutine for exception handling. This allows employees to work faster and more productively with fewer interruptions.

Define and standardize work.

Focus on reducing variation and increasing process awareness by gathering information from the people doing the work to arrive at the best-known way of doing the work. Once the best known form is determined, document the methods so that the process steps are repeatable.

Harness the power of big data

Dramatic advances in computing power and processing speed allow companies to collect vast amounts of data and perform data analysis to minimize waste, reduce costs, and improve overall process performance.

Set and track performance metrics

Establish a set of measures. These measurements will help continually monitor how well the process is performing against customer requirements and provide data to help you identify and resolve process issues.

Cross-training to increase productivity

In some service processes, the workload is uneven at different times of the day, resulting in periods of high activity mixed with periods of inactivity. Cross-training employees to participate and assist in areas with high workloads can increase productivity and customer satisfaction while reducing these periods of uncontrolled activity.

Implementing the lean process improvement commitment in service processes requires continuing from the top, but lean is driven from the bottom up. In other words, service workers are the best source of customer insight and process improvement, so it’s important to engage them from the start of the Lean initiative.

For the past 50 years, manufacturers have used lean tools to improve productivity, eliminate waste, and improve efficiency. The same lean tools can be applied to the service industry, where inconsistency and lack of standardization increase errors, slow response times, and hurt customer satisfaction. By adopting the six components outlined above, service businesses can increase productivity and customer responsiveness.