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The importance of Lean Thinking in the service sector

17 April 2020
The production of services and immaterial goods has increasing weight in the Portuguese economy, representing 65.2% of GDP in 2019 and having grown on average 1.8% in recent years (World Bank Group data).

More and more industrial companies are investing in servitization as a form of differentiation and source of profitability, using it as a strategy to add value to their products through the offer of related services. In this context, it is increasingly difficult to completely distinguish "product" from "service", since, although the two concepts are different, they also have points in common, and are often interconnected.

Additionally, in an overloaded market, where many companies provide the same type of services, it is important to recognize that it is the customer who dictates the perception of value.

Following this idea, we encounter the Lean Thinking theory. A management strategy whose main principle is to create more value for customers with fewer resources (less costs, less waste, less defects, among others).

It is common, but erroneous, to think that Lean Thinking can only be applied to the industrial sector. Services, too, by improving their processes, can reduce costs (in some cases reaching 30%!) and increase the level of satisfaction of their customers, both external and internal.

It is true that Industry and Services are quite different sectors. However, these differences do not exclude the implementation of the Lean methodology. It is only necessary to analyze the reality of the sector, and adapt the strategies and tools used.

INDUSTRY AND SERVICES - WHAT ARE THE DIFFERENCES?

In order to understand how Lean Thinking can be implemented in the Services sector, it is important to know what differs from the typical production of products. At first glance, of course, the physical and mass-produced product stands out versus the intangible product in which each transaction is unique. But the differences do not end there.

In Industry, waste is visible, and it’s possible to detect defective products, excess inventory or operation failures. In Services, waste is not visible as the processes are essentially electronic, and it is necessary to map and analyze them in order to be able to identify the existing waste.

Also noteworthy is the fact that, in Industry, the process inherent to production is not shared with the customer (through quality control, defective products may not reach the customer). In Services, since production and consumption occur almost simultaneously, the customer is aware of the whole process and also of errors, such as the delay in performing the service, for example. Also, the product itself, in Industry, does not cease to exist when it is delivered to the customer, whereas the Service is extinguished after being experienced by the customer.

WHATEVER THE SECTOR, WASTE IS A TARGET

Lean Thinking dictates that to reduce waste, we must start by identifying waste. And as in Lean Manufacturing, it is possible to identify the 7 types of seedlings (waste) in Service companies, namely:


Implementing Lean Thinking allows the micro analysis of the various processes so that we can not only identify waste (everything that does not add value to the customer), but also monitor success in a clear and transparent way.

The VSM (Value Stream Mapping) tool, for example, can be used as a basis to analyze the action / decision and information flows of the various processes, analyze the load / capacity of resources, identify and eliminate inefficiencies, establish main and auxiliary lines to ensure deadlines adjusted to the execution of the processes, and directly involve the teams in the design of the future organization.

LEAN SERVICES, IS IT POSSIBLE? YES!

It may not be an easy task, but its possible!

Among the obstacles to its implementation, we highlight the difficulty in identifying the lean opportunity in the various processes, the need to convince (buy-in) all employees to implement the methodology in their day-to-day activities and, finally, to maintain the changes implemented.

In many cases, after the implementation stage, lean projects are no longer viable because there is no longer a person responsible for their maintenance. To avoid this, lean culture must be an integral part of the company.

If you work in a Services company, how often have you heard someone say "it is not possible to implement Lean in our reality, the processes are long and complex, each transaction is unique and our processes are mostly electronic. We are not a machine on an assembly line”?

Our experience in consulting projects allows us, however, to affirm that it is precisely for these reasons that the implementation of Lean Services is even more important for service organizations. Because they have variable, long, complex processes with several decision points, and these are the most susceptible to "invisible” waste.



Article by Lea Nogueira Lima, INEGI’s Industrial Engineering and Management consultant.

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