Lean in Service - Chapter 1

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Service operations are rapidly growing around the world. Indian Service Sector has emerged as a prominent sector in terms of its contribution to national and state incomes. Around 80% of India's total exports are dominated by high-skilled services, such as software business services, financial services and communication services etc., may be this is the case for every country. I consider even in manufacturing there are broadly two segments of processes. Pure manufacturing processes and non-manufacturing processes like procurement, sales, dispatch, stores etc.,

Why this blog? Every industry feels they are unique especially service sector and they carry a perception that Lean is applicable for manufacturing or at least not for their organization and they claim that they are unique. They also go to the extent of thinking that service industry problems can be solved using common sense.

In this blog series, am going to share my experience of Implementing Lean in Service Sector as below.

1. Background and nature of service industry / sector.
2. Uniqueness of Service Sector.
3. Contrasting Manufacturing Vs Service Sector.
4. LEAN applicability in Manufacturing and Service Sector.
5. Approach of Lean in Service Sector with a Case Study
6. Digital Transformation to deliver Customer Value thro Lean
7. Industrial Revolution 4.0 and Digital Transformation for Service Sector.

10th Dec, 2019 Update

• Background and nature of service industry / sector:
  • Highlights of Service Industry:
    • In service major invested capital is cost of people.
    • Customers expect instant gratification
    • Primarily dependent on people to run the processes
    • Customer and service provider work very closely throughout the value chain
  • Challenges faced by Service Industries:
    • Longer cycle time of processes  
    • Departmental priorities than customer focus
    • Lack of clarity in departmental interfaces / responsibilities
    • Lack of proper inter and intra departmental communication
    • Inadequate Quality of information exchanged
    • Too many activities which are not value adding
    • Inadequate or nil measures to evaluate efficacy of the processes
  • High level of Process Disconnects as depicted below:

• Uniqueness of Service Industry at a broader level:

• Hidden Wastes: For example, In Manufacturing , inventory either RM inventory or FG inventory, visible to everyone and it’s a symptom of inefficient system and a waste as per LEAN.  In service the waste as defined by Lean not visible as much as visible in a manufacturing.

• Customer Dissatisfaction: Instant customer gratification is one of unique nature of service industry. Hence the customer dissatisfaction will be very high even a small mistake by the service provider. Unlike in manufacturing where product will fail then the customer satisfaction starts.

• Lack of Standardization: standardization is one of the important factors for producing consistent output. Since dependency on people to run the processes the element of standardization is weak in Service , that doesnt mean it is not possible.

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