Lean Manufacturing is Not for Service Organizations

Friday, April 24, 2009 by Tripp Babbitt
One thing I have learned from John Seddon (and Vanguard Consulting Ltd. my partners in the UK) is that that tools of manufacturing do not transfer very well to service organizations.  Personally, I have always started with concepts and principles before tools, but command and control thinkers want the quick fix . . . so to the tool kit we go to for immediate results.  The problem is that there are differences between service and manufacturing.  With more and more lean manufacturing people moving to service they don’t distinguish the difference.

So let’s establish the one big difference and it is in variety of demand.  The lean manufacturing folks love to start with 5S.  A tool that is used to provide a standard workplace environment, establishing standard work and the removal of waste.  The philosophy is comprised of order, organization, discipline, elimination of bad habits and wasted effort.  This leads to the standardization of work, wholly the wrong place to begin in service because of the variety of demand that customers bring to service organizations.  This creates failure demand when the standard process is unable to absorb the variety of demand that customers bring.  Command and control thinking managers love standardization because this allows them (typically) to blame the worker for the non-standard events, plus this allows them to do planning and resource management unaware of the need to separate the planning and operation management.

Requirements for workers to meet standard times and work measures known as targets give us plenty of examples for this misconception.  Dr. W. Edwards Deming showed us how to deal with variation and stood against the targets promoted by lean activities.  An understanding of variation is in order to avoid tampering with the systems they work in.  Unfortunately, this leads to increased costs and a drop in customer satisfaction that is a spiral adding more costs and decreased service to customers as the system becomes more burdened with command and control decisions.

Business process improvement and corporate cost reduction in service industry is best done without the influence of Lean or Lean Six Sigma manufacturing tools.  They miss the point of variety in demand in service industry and lock in costs with their standardization activities.  There is a better way.

Tripp Babbitt is a speaker, blogger and consultant to service industry (private and public).  He is focused on exposing the problems of command and control management and the termination of bad service through application of new thinking . . . systems thinking.  Download free Understanding Your Organization as a System and gain knowledge of systems thinking or contact us about our intervention services at [email protected].  Reach him on Twitter at www.twitter.com/TriBabbitt.

Comments for Lean Manufacturing is Not for Service Organizations

Tuesday, April 28, 2009 by Ganesh Srinivasan:
Tripp I would tend to disagree with you, as Lean, Six Sigma and similar ones are about OPTIMIZATION OF RESOURCES. I have International solutions selling and projects implementation – across various industry segments and in NA, UK, parts of Europe, Middle East and Far East – with SAP, Oracle Apps, and other niche solutions. They are essentially services – and as I stated, OPTIMIZATION OF RESOURCES WORKS, call it by any name – Lean / Six Sigma / TQM / ABC
Tuesday, April 28, 2009 by Tripp Babbitt:
Ganesh: Most will disagree. The problem is by blindly optimizing resources, we don’t reduce failure demand (mistakes, chase calls, etc.) and add more resources are needed. So OPTIMIZATION OF RESOURCES IS FLAWED THINKING! All the things you mentioned follow this command and control path, this thought process is over 100 years old and time has come to change. I am a LSS MBB (reformed) done them all there is a better way! Tripp
Thursday, April 30, 2009 by Ginny Dunn:
Tripp, I do agree with you. Once an organization decides on Lean, it’s carried too far. They lose sight of the customer values. Basically, it’s common sense. Eliminate the waste in your operation whatever it may be, standardize where & what you can and then leave resources to handle the issues that don’t fall into the cookie cutter mold. I’ve done that time and again and it’s always worked for me. Look for the efficiencies everywhere and determine what really needs the extra step and be sure to analyze its value before committing
Thursday, April 30, 2009 by Tripp Babbitt:
Ginny: What we lose sight of is before eliminating waste or standardization we don’t understand customer demand. How can we define waste without understanding what the customer wants or the purpose of the work. People start in the middle and run around with tools looking for nails to hammer. Bad place for servie, but is happening everywhere. Thanks for the comment, Tripp

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