Lean Service in the Public sector: a methodology to cut waste and to maximize services for citizens


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Lean Service in the Public: a methodology to cut waste and to maximize services for citizens

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Lean Service in the Public sector: a methodology to cut waste and to maximize services for citizens

  1. 1. Lean Service in the Public Sector A methodology to cut waste and to maximize services for citizens
  2. 2. Lean Service in the Public Sector 2 Shorter processing times and higher quality in the services not only means lower costs for the Government but also a better perceived service by the Citizens In the past years, the need to reduce waste, improve quality of public services, while reducing operating costs, has been growing and the Public Administrations (at Central and Local level) are adapting to apply some approaches in order to achieve these results. From a business point of view, this aim can be supported through the application of Lean Six Sigma. This methodology, although created for industrial environments, in the last decade has been more and more applied to the service sectors, based on several experiences of companies that, through these methodologies have been able to achieve significant results, both in terms of increased efficiency, effectiveness and quality. The Public Sector: doing more with less The Public Administration at all levels (Central and Local) must deliver better services (health, education, pensions, welfare, transportations, etc… ) because there is a growing demand and supply of same services provided by private services, which are often - but not always - able to offer better services (in terms of quality and timing) at a slightly higher cost. Thus, in order to cope with the competitive pressure of private offering of alternative services - although many services still can only be delivered by public companies - the Public administration is showing increasing interest in Lean Services Programs, to improve services speed and quality .
  3. 3. Lean Service in the Public Sector 3 Lean Six Sigma fundamentals The Lean Services in based on strengths of two approaches (Lean and Six Sigma) to create an excellence platform that create sustainable advantages in the future with an high impact on quality and costs. Lean: it is focused on radical reduction of process Lead Time and several typologies of waste, increasing overall process speed. Six Sigma: it is instead focused on quality improvement through a customer perspective, problem-solving approach and dedicated infrastructure. The Lean Six Sigma approach integrates proven a set of tools from the Lean (focus on speed and simplicity) and from the Six Sigma (focus on quality) methodologies, and these allow to create a fact based and a logical program execution platform that creates sustainable change in a Local and Central Public Administration. Why is the Lean Services helpful? The Lean Services approach is helpful to the Public Sector in several ways. It is not new and has been widely tested in several international companies in private and public sectors. Once considered particularly effective for manufacturing company, it is now increasingly being used to improve performance of transactional services. In the context of Public Sector, the advantages of Lean Service application are even more striking because of the strong focus on waste reduction, which is likely to be found in areas traditionally less exposed to the competitive pressure. Furthermore it is suitable to be applied effectively in the context of Public Administrations due to some characteristics of particular interest:  It is based on the full involvement and mobilization of employees, creating and disseminating a strong culture of efficiency and relying on people actually working on each single process. In fact specific training programs are provided for all staff on techniques and tools, thus transferring skills for future uses.  It doesn’t rely on automation programs that require a very long time for activation; vice versa it is based on the concept of "work better with what is available” and it aims at achieving real objectives in the immediate terms through gradual and steady steps.
  4. 4. Lean Service in the Public Sector 4 Process Start Process End Time Time 90 - 95% 5- 10% Execution issues are here Traditional improvements (BPR) focus here Value Add Time Non Value Add Time  It focuses on the identification and removal of waste and loss of time (of whatever origin) working on those aspects of the process and operations usually hidden in an analysis carried out centrally or from outside. Therefore it removes the costs "hidden" in the daily activities, such as: - Errors - Waiting times - Duplication of activities - Unnecessary shifts of papers - Backlog - Under-use of services and resources - Bottlenecks  It is focused, not only on efficiency gains, but also on improvements of services quality provided. Shorter processing times and higher quality in the services not only means lower costs for the Government but also a better perceived service by the Citizens. How much time is wasted on ... From our experiences of Lean Programs applications in Companies - both in the private and public sectors – they have achieved impressive gains in efficiencies and savings and are improving their position in competitive areas. Also from these application cases showed that only 5-10% of the time between the beginning of a process and of its completion is dedicated to work activities that create value for the “final customers”, while the remaining 90-95% of time is devoted to activities that do not add value or are absorbed by time waste (as exemplified by Exhibit I). For example, in a central Public Company, the average time to development a new tender was about 16 months. A preliminary analysis showed that there was a potential reduction of the process Exhibit I – Activities Value Add and Activities NonValue Add
  5. 5. Lean Service in the Public Sector 5 time from about 16 to 11 months, equal to a 31% of overall time reduction. Therefore, the Lean Service Program works also where a traditional approaches already has been adopted, eliminating the time and labor with no added value and thus improving the quality of service combined with cost reductions previously unthinkable. How to obtain advantages from a Lean Service Program Through Lean Service application, the public sector can improve performance and productivity, but this is not effective unless it is flanked by a broader transformation program of people culture and every day working approach. To this end, Lean Service Program can be driven by a real application on every day activities but they also require an A case of Lean Services application on the Procurement Department of a Italian Public Company The Client, a central Public Administration’s Company, requested the Accenture support in order to apply the Lean Services approach to the Business Unit deputed to manage the "tenders" for supplies of goods and services. The internal unit was experiencing declining performances for tenders and agreement development especially in terms of increasing lead time, this was causing difficulties to achieve overall company goals. The aim of this project was to identify a set of interventions aimed at improving and rationalizing the purchases and tenders processes. The Lean Six Sigma methodology has been applied to the process of developing a tender in order to assess opportunities for improvement there. The instrument used to identify opportunity of time reduction was the Process Cycle Efficiency (PCE), which aims to measure the impact of “value added activities” (i.e. actual working time) on the completion of the activities (i.e. time length of a tender phase). In the first assessment's phase, the analysis conducted in the end to-end process of “New Tenders” showed a Process Lead Time equal to an average of 19 months (from the need identification of requirements to the contract activation). From the opportunity to reduce the time, quantified by the PCE, in the 30% (theoretical), the next project activities has been focus on finding of levers and actions to reduce the overall process lead time. For each actions of the Improvement Plan was defined the impact in terms of time reduction, - the total impact of actions was 22%, only one part of 30% theoretical. Through the application of tools and methodologies and Lean Six Sigma, Accenture has been able to design a number improvement solutions throughout the process, and provided a proof of concept for them on some pilot tenders obtaining the forecasted yet challenging results. At end, thanks to the introduction of those improvement solutions identified the Lead time was reduced by 30-35%, obtaining an average time of end-to-end process equal to about 16 months.
  6. 6. Lean Service in the Public Sector 6 overall training program to engage resources and to demonstrate them which are the true advantages and benefits of this kind of transformation program. Before beginning a Lean Service Program in a Public Administration, it is necessary to keep in mind the following significant issues that are generally present in the public sector and that these need to be addressed in order to avoid the potential failure of the project. Compliance with the rules: One of the most difficult challenges in Public Administration is the focalization to the aims of compliance with the rules and not to the results for customers. The focus towards compliance with the rules becomes a particular problem when a Lean Services project start within an organization. In fact, changes of processes - such as cuts and reduction - across different government institutions (central versus local) is not easy, and it required a share of a result focalization, trying to free the mind from rules complexity. Performance Measurement rejection: Another relevant challenge in the public sector is that performance measurement is not always acknowledged. This is often due to a incorrect perception of measurements tools – often seen as a form of control and not as a possibility to monitor the work results and consequently a way to identify area of improvement of services quality provided to citizens, it is the Lean Service perspective. Innovation and evolution aversion: Finally, another mind-set frequently encountered is the aversion to innovation and evolution. Traditionally, the introduction of innovations and changes - such as the use of visual management tools - often leads employees to reject because perceived as risks, and not as improvements both for themselves and for Customers. Lean Service programs require a long-term commitment levels of the organization. Firstly through a relevant sponsorship from the high level of the organization, added to a strong commitment of all employees, but once the program is initiated it enables Public Administrations to achieve cost reductions, waste elimination and quality services improvements. Luca Bondini Francesco Santoro Copyright © 2011 Accenture All Rights Reserved.