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Lean principles for services :

Unlike in factories, waste is usually hidden when it comes to services. The principles of lean production, if applied to service functions, can cut error rates and increase overall responsiveness and customer satisfaction

Why have companies been so slow to apply lean principles and techniques to service processes such as finance, human resources, accounting, healthcare, and customer service? One reason is that the waste and inefficiency that can interfere with services are rarely obvious.

Unlike in factories, where idle workers and stacks of inventory are clear signs of broken processes, waste is usually hidden when it comes to services. It tends to lurk between functions, departments or regions, so companies see only glimpses of the problem. Another obstacle lies with the white-collar workers themselves, who may be resistant to the idea that their work could be standardised.

This lack of standardisation and consistency in service processes is costly. Complex, inefficient processes are slower, have higher error rates and decrease overall responsiveness and customer satisfaction. They also increase risk and jeopardise compliance in regulated industries such as healthcare and financial services. There’s a human cost too: when people spend too much time on low-value tasks, they have less time for more rewarding, higher value work.

The principles of lean production and industrialisation can be applied to service functions as well as manufacturing lines, with one big difference: the costs to be tackled stem from labour, overhead, and low customer satisfaction, not physical inventory. By rethinking and streamlining service processes, most companies can cut expenses by 10 to 30 per cent and improve the satisfaction of internal and external customers.



Understanding the problems
Inconsistency is a problem for many service functions. As an experiment, a company we worked with sent identical customer-service tickets to 10 different operators in a call centre for technical support. We were surprised by the huge variation in processing times among the operators: the quickest one was about six times faster than the slowest. Further analysis revealed that some operators used simple computer shortcuts such as hot keys and macros to increase their speed. But the company had no training to improve performance, and no incentives to encourage operators to work more quickly.

Another typical observation with service processes is a variation of the “80-20” rule: a small percentage of work typically eats up a disproportionate amount of time. In one internal-support function, 75 per cent of the transactions took less than five minutes to process. But the remaining 25 per cent, the more complex transactions, accounted for 60 percent of the total time expended every day. Exceptions such as these can be a huge drain on productivity and are typical for many service processes.

In healthcare, banking, travel, and other service industries, the customer is the product moving through the process and experiencing first-hand the frustrations of inefficiency. Satisfaction is critical, whether the customer is internal or external. And a lack of satisfaction is costly as it may prompt customers to take their business elsewhere.

Many service functions lack the ability to analyze and manage the factors that affect workforce productivity, such as exceptions and rework. In a manufacturing plant, targets for output and capacity utilization are set and tracked, but most service organizations are unable to measure performance in these areas. Intermittent cost reduction efforts tend to use high-level benchmarks, not process improvement, and sharing of best practices within companies is usually quite limited.

Getting it right: six success factors
Making service processes leaner presents a variety of challenges. It often requires creative thinking but old habits die hard. For instance, when paperwork moves online, the steps of a process may still be performed in a sequential order, even though they could now be done in parallel. Rethinking old ways of working can lead to fresh insights. Many companies also find that starting small, with a pilot in a key area, can be a way to build momentum and enthusiasm — especially among white-collar workers, who may be resistant to the idea that their work could be standardised in the first place. Our work with companies at the forefront of lean services reveals six factors that increase the odds of success.

1. Identify and map end-to-end processes

2. Reduce complexity

3. Standardise discrete work modules

4. Set and track performance metrics

5. Harness the power of big data

6. Cross-train to increase productivity

7. Creating a lean culture 

(Article is from : Business Standard)