Lean services is the application of the lean manufacturing concept to service operations. It is distinct in that Lean services are not concerned with the making of ‘hard’ products.
To date, Lean principles of Continuous Improvement and Respect for People have been successfully applied to call center services, health care, higher education, software development, and public and professional services. Conceptually, these implementations follow very similar routes to those in manufacturing settings, and very often make use of the same tools and techniques. There are, however, many significant distinctions.
'Service’ in this context is not limited to ‘the office’ or ‘administration’ that have been the focus of several publications, but also wider service situations that are not necessarily repetitive, where ‘takt’ time is not applicable, and where task times may be both long and variable. Service in this context could mean anything from a hospital to a university, from an office process to a consultancy, and from a warehouse to field service maintenance.
It is important not confuse 'service operations' with the economic definition of service sectors (as distinct from manufacturing sectors), since many ‘service sector’ organisations have manufacturing-like operations in that they produce regular outputs along value streams.
Instead, ‘service’ refers to the ‘service concept’ or ‘product service bundle’, which are all the activities that provide value to the customer along a value stream.
Lean Service has its origin in the the Toyota Production System (see Lean manufacturing). Lean in the Service sector is subject itself to continuous improvement, and as such there are an increasing number of concepts that may or may not be included as part of Lean Service.
The original seven wastes (Muda (Japanese term)) were defined by Taiichi Ohno, the father of the Toyota Production System. These wastes have been often been redefined to better fit new organisations, industries, or external pressures.
One redefinition of these wastes for service operations by Bicheno and Holweg (2009) is as follows:
For Lean to be successful, HBS professor Kent Bowen and Steven Spear (HBS DBA '99) have defined a framework of 4 principles, based on the Toyota Production System :
Rule 1: All work shall be highly specified as to content, sequence, timing, and outcome.
Rule 2: Every customer-supplier connection must be direct, and there must be an unambiguous yes or no way to send requests and receive responses.
Rule 3: The pathway for every product and service must be simple and direct.
Rule 4: Any improvement must be made in accordance with the scientific method, under the guidance of a teacher, at the lowest possible level in the organization.
One of the central concepts that distinguishes lean services from lean manufacturing is the concept of value demand and failure demand (Seddon, 2003).
Value demand is the demand for service from customers, while failure demand is the demand caused by a failure, to do something right for the customer. Failure demand is thus demand that only exists because initial demand was not satisfied properly. For example, a large proportion of calls that call centres receive are either chasing up enquiries made earlier, or to correct earlier work that was not done properly. As one of the key aims of "lean" is to eliminate waste, failure demand represents a first and obvious type of waste in service organisations.
By treating failure and value demand alike in statistical analysis, failure demand can help give a quite false impression of greater productivity. This merely reinforces the need to look in, from the customer's perspective, and ask what he or she might think of the service.
In recent years, some major practitioners have combined Lean and Six Sigma principles to yield a methodology commonly known as Lean Six Sigma. One of the earliest and most successful adopters of this is Honeywell, which calls its program Six Sigma Plus. Like some other major practitioners, GE has developed a very rigorous lean six sigma training program in which certain employees are chosen to become certified in this area.
5S has been widely and successfully applied in office environments, however this has received some criticism for resulting in workplaces that are too clinical or impersonal.
Critics of Lean Service have suggested that problems arise when companies try to apply "Lean principles" to areas where creativity, ability to react to rapid external changes, need to spend an extensible amount of time to convince external parties (typically lobbying) or ability to successfully negotiate are needed; and that downsides of Lean are reduced / eliminated creativity and ability to cope with the unexpected.
Proponents of Lean Service, however, suggest that these criticisms are a response to attempted Lean implementations that have failed properly to address customer purpose or need, and where tools from Leans manufacturing have been applied inappropriately.
For a case study of Lean in transaction-intensive services, see also: Swank, C.K. (2003). The Lean Service Machine. Harvard Business Review 81 (10), 123-129