Instead of making ad hoc moves that lack
strategic thrust, companies in service industry must embark
on a holistic mission for the implementation of lean principles
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- The concept of ‘lean manufacturing’ can be applied to
service industries as well
- However, only a commitment to implement the lean concept
in a holistic and complete manner will bring sustained benefits
In recent years, several companies in service industries
have been attempting to leverage the concept of “lean
manufacturing”. However, barring a handful, others have
not been successful in identifying the right approach to ‘lean’
adoption. They are able to achieve only some minor gains but
are struggling to generate sustainable benefits.
Debashis Sarkar, Chairman of the ASQ (American Society
for Quality) Automotive Division – Team India, contends
that service companies can achieve operational excellence
only through holistic and complete implementation of the lean
concept. His recent book, “Lean for Service
Organisations and Offices: A holistic approach for achieving
operational excellence and improvements”, offers several tips
Value stream mapping
According to Sarkar, “Whether a company is in
manufacturing or in services, the principles of lean can be
applied across sectors, be it education, financial services,
hospitality, food services, aviation or healthcare”.
Even within service industry, the concept can be applied very
effectively, irrespective of whether a company is having a
mono-line business or a diverse portfolio.
Sarkar elaborates, “Wherever there are processes and
people, there can be inefficiencies, and therefore lean can
be applied. One of the tools quite effectively used is value
stream mapping which helps to identify wastes in processes
by capturing the material and product as the product moves
from order to delivery. However, the approach to value stream
mapping services should be done differently from the way it
is done in manufacturing”.
Sarkar is however unhappy that majority of corporations, particularly
those operating in competitive service economies, look at
the lean concept mainly as a cost-cutting tool. He asserts,
“To get full value out of it, leverage it for revenue enhancement,
customer convenience, complexity reduction, operational risk
control, cost leadership, combining scale with flexibility,
employee morale, and product development”.
Sarkar has proposed in his book a model, called
the DEB-LOREX model, for service companies to develop
a holistic approach in applying lean concept to their operations.
He explains, “It is a management system for achieving
organisational excellence using the lean principles. Built
around the philosophies of Lean and Systems Thinking; the
key components of this model are leadership, people, processes,
partners, promotions, problem solving, and value streams”.
A major challenge in taking a holistic lean approach is that
many of the service companies are organised functionally.
In firms with diversified product portfolio, managing processes
can be an enormous task. This is due to the complexity, size
and the span of the processes, mostly across multiple geographies.
To manage this enormous challenge, Sarkar recommends dividing
up the organisation into multiple ‘value streams’, around
the product groups. He explains, “The value stream is
nothing but casting an organisation around product families
with complete ownership of all the processes and its outcomes
with the value stream owner”. Use of metrics and end-to-end
process ownership would be a great help in this entire exercise.
Multi-skilling is the core technique adopted in lean manufacturing.
Hence Sarkar recommends that service industry should encourage
multi-skilling rather than multi-tasking. He elaborates, “Multi-skilling
helps to balance the workload among individuals and improves
the overall productivity of the organisation. With multi-skilling
the reliability of processes improves, as it is no more dependent
on a few people”.
Sarkar feels, “While specialisation will continue to
be required for high-end niche-jobs, multi-skilling will be
required for repetitive jobs wherein the skills can be imparted
within a few months’ effort”.
Though many service companies appear to be moving
in the direction of holistic approach, their efforts are mostly
ad hoc and lack a strategic thrust. Hence Sarkar urges, “As
a part of lean transformation, I strongly recommend that there
has to be a resource at a senior level who manages multi-skilling
from a strategic perspective”.
Sarkar lists out the following recommendations
to overcome various other impediments that can block the progress
service firms in truly achieving a holistic and complete implementation
of the lean concept.
- Senior management involvement: They must view
the adoption of lean concept as a strategic mission and
not merely as a waste-elimination technique.
- Culture: Bringing a lean culture across the entire
organisation is a gigantic task, which needs to be pursued
with determination and patience.
- Success stories: Companies needs to share success
stories with everyone, as otherwise it would be hard to
explain what lean organisational excellence is all about.
- Trained resources: As expertise available in
the domain of service lean is limited, companies need to
coordinate among themselves to develop such competencies
at industry-wide level.
- Accounting the benefits from lean adoption: Companies
would have to bring about a total change in the way they
do their accounting.
There is not even one service company that has achieved the
quantum of success in applying the lean concept, similar to
that of Toyota in the manufacturing arena.
However, many firms like Tesco, Jefferson Pilot Insurance,
Wells Fargo Mortgage, Washington Mutual, ICICI Bank and Wipro
can be cited for using lean for driving operational excellence.
Sarkar comments, “However, there are no shortcuts. Companies
have to be at it to see ‘lean’ becoming a part of the organisational
fabric over a period of time. Remember, partial adoption will
only lead to partial results and you cannot expect lean to
be a part of the organisational fabric”.
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