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Lean Services: A Primer for Success

November 01, 2012 by Devesh Raj and Olaf Rehse

Why have companies been so slow to apply lean principles and techniques to service processes such as finance, human resources, accounting, health care, and customer service? One reason is that the waste and inefficiency that can interfere with services are rarely obvious. Unlike in factories, where idle workers and stacks of inventory are clear signs of broken processes, waste is usually hidden when it comes to services. It tends to lurk between functions, departments, or regions, so companies see only glimpses of the problem. Another obstacle typically lies with the white-collar service workers themselves, who may be resistant to the idea that their work could be standardized.

But the lack of standardization and consistency in service processes is costly. Complex, inefficient processes are slower, have higher error rates, and decrease overall responsiveness and customer satisfaction. They also increase risk and jeopardize compliance in regulated industries such as health care and financial services. There’s a human cost, too: when people spend too much time on low-value tasks, they have less time for more-rewarding, higher-value work.

The principles of lean production and industrialization can be applied to service functions as well as manufacturing lines, with one big difference: the costs to be tackled stem from labor, overhead, and low customer satisfaction, not physical inventory. By rethinking and streamlining service processes, most companies can cut expenses by 10 to 30 percent and sharply improve the satisfaction of internal and external customers.