Lean Six Sigma in Service Industry
While Lean Six Sigma (LSS) originated from the manufacturing industry, it is equally applicable to the service industry. The key to successful implementation of Lean Six Sigma is to understand the foundational differences between the manufacturing and service industries.
Some of the key differences between the service and manufacturing industries are as follows:
1. Services are intangible
2. Services are activities or series of activities rather than things (i.e. processes)
3. Services are generally produced and consumed simultaneously
4. Customers generally participate in the service production process
5. Service organizations generally experience high degree of uncertainty
Once we know the differences between service and manufacturing industries, we will be able to customize Lean Six Sigma according to the specific requirements of the industry or organization.
The objective of Lean Six Sigma in service is to have “factory thinking” in the service industry, in which the service delivery process can be more predictable and smooth, and hence improve quality and efficiency of service. A good example is the McDonalds restaurant chain, in which processes are highly standardized and efficient.
Relevant Industry: financial services, insurance, healthcare, government, public sector, educational institutions, hotel, airline, food & beverage (F&B)
(References:
1. Christian Gronroos (1990): Service management and marketing
2. Bowen and Jones (1986): Transaction cost analysis – customer exchange
3. Theodore Levitt (1972): Production Line Approach to Service, Harvard Business Review)
Examples of LSS Applicability:
– Ensure service conforms to customer requirements (Voice of Customer, VOC)
– Remove non value adding steps from processes
– Reduce cost of poor quality
– Reduce defects (ie. erroneous service delivery / transaction)
– Reduce lead time
– Delivery correct service / product right the first time
– Reduce hands-off, loop back, rework due to inefficient business processes
– Re-balance of work load
– Remove bottleneck processes
LSS has been implemented in many different industries with great success. Some of the industries are as follows:
- Lean Six Sigma in Manufacturing
- Lean Six Sigma in Shared Service Centres (SSC)
- Lean Six Sigma in Continuous Process Industry
- Lean Six Sigma for Research & Development (R&D)
- Lean Six Sigma in Government / Public Sector
There are many useful Lean Six Sigma tools within the LSS toolbox. However, for LSS implementation to be successful, do not focus only on the tools but instead strike a balance between two important components of LSS – technical tools as well as soft skills.
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