Wednesday, September 16, 2015

If You're a Service Based Company You're Full of Waste

Service industries mostly ignore lean's tremendous transformation potential. This is because it's very difficult to differentiate the difference between work product and waste.  For many service organizations (e.g., insurance and banking) as well as some office functions within manufacturing supply chain organizations, information is the work product. In any case, because information enables behavior, there is direct bottom-line impact from improvements made to information systems when these changes reinforce appropriate behaviors.  However, with some tweaking of the tools, lean principles and concepts apply equally well in service settings.

There is often substantial resistance to change in service organizations.  I would argue this is multiplied in service/office environments because often lean failures occur in large part because of management's lack of patience for the the proper growth along the maturity curve.  The inability to physically see waste makes managing it's elimination even more difficult.  The answer is to create patience and visibility through events such as kaizen workshops which can break through cultural barriers and help nudge change along.  Another obstacle is that customers are often part of the process. Stopping a process in its tracks to apply lean with customers can be difficult. But, events can make it easier by pulling people off the front line and placing them into the transformation process where they can be invisible to customers. For example, a customer should not be told by order fulfillment to wait an extra week for shipment while improvements are being made. Similarly, a restaurant does not expect to drag its patrons into the kitchen to participate in its redesign.

Direct observation of work is one of the most challenging lean skills to master when dealing with service based firms. Practitioners must be able to observe a process and truly understand how the activities, connections, and flows of the process are linked to the results. A manufacturing environment lends itself to the practice and development of direct observation. The process comes alive like a ballet with the motion of people, equipment, and material. But it is much harder to observe processes for service tasks, such as accounts payable, requisition fulfillment, or evaluations. Tools such as process mapping can help develop observation skills. However, in service organizations, what people do and the product, information, or service are often on different tracks. Instead of leading to a better process, putting two distinct processes on the same map only causes confusion. Separate maps can be used to explore different aspects of the process. An activity map captures people's actions. A product/process map captures what happens to a product or service. As an organization captures current reality, it needs to look at how it designs and executes activities, connections, and process flows.

According to Hitchicker's Guide to Lean "applying lean in a service environment is just plain harder. Service processes, which are cross-functional by their very nature, can be difficult to see, and documentation and measurement are sparse. However, the results can be astounding. To get a sense of the potential, here is a simple value-added test. A value-added activity is defined by three strict criteria: 1.  The activity must be valued by the customer who is willing to pay for it. 
2.  It must change the product or service. 
3.  The activity must be done right the first time.

In a service organization, problems are less visible. That is because the buffer, the thing that shields the organization from little problems, is not a tangible element, such as inventory, but something more elusive: time. Instead of working around problems a service organization must make them visible and create structures to force workers to solve problems as they occur."

Flinchbaugh, Jamie; Andy Carlino (2006-01-02). The Hitchhiker's Guide to Lean: Lessons from the Road

Let's take an office environment as an example in this case.  Overprocessing waste can sometimes be hard to detect, because it is often disguised as "we are doing more for the customer." But processes that exceed what customers value, yet offer no benefits are, indeed, waste. In a manufacturing environment, people can readily discover and eliminate overprocessed features. In a service setting, however, overprocessing examples are subtler and can seem insignificant; but small improvements can add up to major savings.

As we continue to find faster and better ways to manufacture products, deliver services, process information, etc., the knowledge workr will increasingly be required to process data more accurately and faster than before. Therefore, information must effortlessly stream cross-functionally throughout an organization. Additionally the focus must be not to create waste within these functional groups. The knowledge workers in these groups will need to learn and adapt new software applications to meet the ever-changing business related requirements. A “Lean” power user is someone that does that but also incorporates Lean tools and concepts while learning and working with new applications. Many organizations are ‘drowning’ in how to manage all of this and at the same time meet customer demand (internal or external) while ensuring the employee is not stressed. Furthermore, many employees may not have had adequate training on the suite of products or other applications that may dramatically improve information flow, and subsequently office productivity. 

The following are some common data and information flow questions and situations that today’s employees struggle with that can be an identifier of waste in the office process: 

“My Inbox is drowning in emails. How do I establish standards that will reduce email traffic?” “I often double or triple handle a single report because I don't have all the information when I need it.” 

“It seems I spend half my time requesting information from one department or another because access rights are not granted or no one has trained me on how to obtain the needed information from their system. It’s frustrating that we are not all integrated.”

 “My Desktop filing system is a mess. I just save files to my C drive or Desktop.” “How do I categorize my files and emails, and then ‘automate’ where they are saved?”

 “My computer screen is littered with icons and junk I don’t use. It’s hard to find what I need.” 

“When staff go on leave, other staff in the same office do not know how to find the right document or information even though it is stored on a shared drive.” 

Applying Lean in an office environment will achieve reduce waste.  The problem with office waste is that it's everywhere.  In fact it's so common that if you were to parallel it with manufacturing waste you would likely need more warehouse space the hold the waste then your material.  

Value stream mapping is an essential tool for identifying and measuring the impact of information waste on process outcomes.

But for many service organizations (e.g., insurance and banking) as well as some office functions within manufacturing supply chain organizations, information is the work product. In any case, because information enables behavior, there is direct bottom-line impact from improvements made to information systems when these changes reinforce appropriate behaviors.

Lean organizations focus on providing value for the customer. In a manufacturing environment, the process does not directly touch the customer; it creates the products that touch the customer. In service organizations, however, value and process are often one and the same. The customer is typically the beginning, middle, and end of the process.

From the customers' perspective, value should be more than a design activity. It should be an everyday lens. A service defect is a major customer problem. But a service organization can not just inspect the end results of its processes. Because the customer is so close, every employee action is a chance to either provide or destroy value. Starbucks provides more value than a cup of hot coffee. Each store provides a comfortable, convenient, and reliable environment. And they can charge for the extra value. Not all coffee drinkers value or are willing to pay for the Starbucks experience, so they go somewhere else. Whatever the service, it is important to deeply understand how different types of customers have different needs. By understanding these different audiences, a business can customize its processes and services to offer the right kinds and amounts of value to each subgroup.

To design around the customer and give them what they want, an organization needs to consider what impact its processes have on customers. How much of customers' time does an organization waste by making them wait for service or rework? How many times does an organization ask its customers to provide the same information over and over? For example one major airline asks all of its qualified passengers that check in on-line or at a kiosk whether they would like to upgrade to First Class - before the reservations system checks to see if First Class seating is available or even an option. Each request only takes about 15 seconds; but each 15-second delay is a painful reminder that this airline does not value its customers' time.

For an organization offering products and services that are considered necessities, it is not as critical to infuse them with value. But an organization that provides necessities needs to pay particular attention to how it consumes its customers' money - and especially their time. Time is the currency of the 21st century. In designing around customers, it should be considered that, to a degree, time often has greater value than money. A person can always get more money, but lost time is gone forever. The moral: do not waste customers' time. "Factor Five: Events are Necessary

Lean is not about events, it is about everyday behaviors, skills, and thinking. But events help create the right environment and deliver results. There is often substantial resistance to change in service organizations. Events such as kaizen workshops can break through cultural barriers and help nudge change along.

It is usually difficult to deploy lean practices and skills in service settings. One obstacle is that customers are often part of the process. Stopping a process in its tracks to apply lean with customers can be difficult. But, events can make it easier by pulling people off the front line and placing them into the transformation process where they can be invisible to customers. For example, a customer should not be told by order fulfillment to wait an extra week for shipment while improvements are being made. Similarly, a restaurant does not expect to drag its patrons into the kitchen to participate in its redesign.

When customers can be involved in the improvements, there is a lot to gain. Not only will an organization's processes be improved, but the customers' experience can be improved as well. Working side-by-side in the war against waste can help an organization build camaraderie with its customers. The downside is that the organization could risk exposing too much of its inner workings and dirty laundry; if customers do not like what they see, they may not wait for improvements. An organization needs to balance both sides of the equation to see what works best.

A word of caution: while events are necessary, an organization should not over-rely on them. Otherwise, events may become the only mechanism for change, which severely limits an organization's potential for performance improvement. Some early events should focus on creating a living lean model. In a retail company, a single storefront may serve as the lean model. In an office setting, it might be one element or flow through the organization. To help explain lean and get employees on the lean bandwagon, living models are far more effective than theories, words, or training alone. By focusing on a small area or department of five to 20 people, an organization can quickly create a living example of what lean could look like across the enterprise - and thereby accelerate the journey for the entire organization. Living models also serve as laboratories to test applications, experiment with implementation options, and help anticipate issues the organization will face when it undertakes a broader transformation."

Flinchbaugh, Jamie; Andy Carlino (2006-01-02). The Hitchhiker's Guide to Lean

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