Insight 1 Apr. 2022

Lean Management for the Services Industry: Why and How

Established within the industrial world for decades, Lean management is now deployed within the services companies. This approach, aimed at achieving operational excellence, has many advantages: increased efficiency, better involvement of internal teams, and increased customer satisfaction.

Lean Management History

To fully understand the principles of Lean Management, it is essential to go back to the roots of this organizational system. This one was born in Japan at the end of the 1940s, within the Toyota firm.

In a post-war context, the car manufacturer invented a new system called the Toyota Production System to cope with time constraints. The TPS is based on collective intelligence by relying on the knowledge of the work teams within the plant. The method then focuses on where value is created, i.e., on the ground, by implementing Just-in-Time. Production is streamlined according to customer expectations, while waste that slows processes and costs the company money is reduced.

In the 1970s, the method put in place by Taïchi Ohno began to attract European and American companies. The notion of “Lean” then made its appearance, and the global success in 1990 of the book “The Machine That Changed the World,” co-written by Daniel Jones and Jim Womack, ended up establishing the reputation of Lean Management.

Why and How to Opt for Lean Management in a Service Company?

Lean Management is a managerial method that advocates a continuous improvement approach to optimize all business processes. This method calls for the involvement of all employees, regardless of their department.

Collective participation is at the heart of the Lean Management approach because employees know the company best and contact customers, suppliers, etc. Therefore, they are in the best position to identify areas for improvement.

Such an approach aims to highlight waste, actions with no added value, and reduce or eliminate them.

In theory, Lean Management is aimed at all companies, regardless of their activity or size. Companies in the industrial sector are particularly concerned by the Lean management method, but all sectors can implement this system. It is the case for services companies, whether in real estate, travel agencies, companies specializing in accounting, banks, or even the public sector.

What Are the Benefits of the Lean Approach for Service Companies?

Implementing a Lean Management strategy in a service company allows to identify the brakes within the work process.

These brakes prevent teams from working smoothly, which has a real impact on customer satisfaction and business performance.

First of all, employees at the heart of the process benefit from more remarkable power of action in their daily work
Managers also have the opportunity to test new processes to improve their teams’ workflow

All these efforts that have a positive impact on the company’s performance also end up improving the customer experience and therefore increasing their satisfaction.

Finally, the Lean method makes it possible to reduce the company’s costs by optimizing each stage of the work process. Therefore, taking an interest in this method is essential for companies in all sectors, especially services. It is possible to follow some critical steps to achieve this.

The 5 Steps of the Lean Approach

Implementing a Lean Management approach in a service company requires following the five steps proposed by James P. Womack and Daniel T. Jones in their book “Lean Thinking: Banish Waste and Create Wealth in Your Corporation” released in 1996.

These steps aim to optimize processes by identifying and eliminating waste. They also make it possible to understand customer expectations better and set up an efficient organization to satisfy them.

Identify Value

This first step is to identify the value of your offer, that is, all the characteristics that make the customer willing to pay to obtain the product or service that meets their needs. Therefore, the value of your offer concerns the solution provided to the customer. It must be identified as a priority to eliminate all waste subsequently.

Map the Value Stream

Once the offer’s value has been identified, you need to map all the actions and people involved in delivering the product or service in question to the customer. By clearly visualizing this workflow, you can begin to identify which steps generate value and which are more wasteful. To identify waste, you can, during this second step, rely on the list of 7 mudas detailed below.

Create Flow

Since you have identified each step of your value stream and eliminated waste, you can now improve your flow. The goal is to achieve a much smoother continuous workflow for your teams. Therefore, this flow must no longer experience interruptions, waiting times, or obstacles.

Establish Pull

Ensuring the stability of the workflow requires the production to be indexed to customer demand. In other words, work is only produced when the client requests it. when non-essential actions are considered wasteful and therefore eliminated, the company’s resources are used optimally.

Seek Perfection

The four previous steps make it possible to set up the lean management system within the company. As it is neither isolated nor static, changes and problems can occur at any time. Therefore, for the approach to be as sustainable as possible, it is necessary to monitor the workflow to improve it continuously. The continuous improvement of all work processes is an essential point of Lean management in the service sector. Different tools can be put in place to achieve this, such as the 5S method (clearing, tidying up, cleaning, ordering, and being rigorous) or even AIC (Short Interval Animation).

Mudas in the Services Sector?

Identifying waste is an essential step in Lean Services Management. The founding father of the Toyota Production System, Taïchi Ohno, defined three types of waste within companies:

Muda: tasks without added value but which are accepted
Muri: excessive, too tricky, or even impossible tasks
Mura: irregularities or fluctuations

The notion of Muda is the one that must focus all eyes on a Lean Management approach. It corresponds to an activity carried out within the company which does not bring any added value. Yet everyone accepts this activity without questioning it. Although without added weight, some tasks are mandatory, such as document archiving. Therefore, in a Lean Management approach, it is essential to identify waste or Mudas to reduce or eliminate them. This is how the company can optimize its processes. For this, it is advisable to rely on the list of 7 wastes grouped in the abbreviation “TIMWOOD” in English for:

Transport
Inventory
Motion
Waiting
Over-processing
Overproduction
Defects

Initially developed for the industry sector, the list of 7 Mudas can be transposed to other areas such as health, IT, or services.

Seven Commonly Identified Mudas

Transport: all unnecessary movements of materials or information are listed here. It can be the sending of e-mails in excess or without real interest, the loss of time-related to the search for files or their storage, the difficulties encountered in the context of the sending of documents, etc

Stock: the concept of stock can, in the context of a service company, refer to files waiting to be processed, projects in progress, emails waiting to be read, the queue never empty at reception, etc.

Gestures: these are the movements of people that represent a waste, such as unnecessary trips to obtain signatures or to attend meetings, trips between two remote offices, searching for documents in catalogs etc.

Waiting: Waiting refers to the time lost when materials, information, people, or decisions are not available in time or are delayed.

Processing: this type of waste refers to tasks that do not add additional value. It is the case when functionality is added to a platform or a product but no one is going to use it or when non-essential data is entered or stored.

Overproduction: this muda refers to the overproduction of information the client does not necessarily need. This can be creating reports or catalogs that no one reads or copies of documents made in large numbers.

Defects: here are listed the errors, alterations, or lacks that waste the company’s time. These can be price errors, errors during data entry, missing information on a document, etc.

The seven types of waste mentioned above differ from one company to another but permanently harm the company’s activity. On the other hand, they become a real opportunity to improve the workflow once identified.

Out of this academic list but essential, an 8th MUDA: the loss of human potential, less factual than the others, is terrible because it leads to demotivation, resignation, and depression. In doing so, it must be treated among the priorities.

By transposing Lean to the specific constraints of Service companies, we create a more fluid and stable environment. The Lean system becomes a pillar conducive to increasing the company's overall performance. The main consequence of this approach is an increase in flexibility within the teams and better involvement.

Auteurs

Edouard Alquié

Director

Edouard graduated from Kedge Business School before joining Orange & Autoliv Supply Chain teams. He has more than ten years of experience in consulting. He specializes in industrial…

Edouard Alquié

Edouard Alquié

Director

Edouard graduated from Kedge Business School before joining Orange & Autoliv Supply Chain teams. He has more than ten years of experience in consulting. He specializes in industrial diagnosis and transformation planning for the Manufacturing and Retail sectors.
Yannig Le Roux

Director

Engineer with a degree from Mines Paris – PSL and certified CSCP by APICS, Yannig Le Roux has over 18 years’ experience in the FMCG industry, where he occupied operational…

Yannig Le Roux

Yannig Le Roux

Director

Engineer with a degree from Mines Paris – PSL and certified CSCP by APICS, Yannig Le Roux has over 18 years’ experience in the FMCG industry, where he occupied operational positions in Production, Procurement and Product Development before moving into consulting and joining KEPLER in 2019. Yannig has a 360° vision of industrial challenges, and is involved in global diagnostics and transformation plans, as well as in missions more focused on his areas of expertise.