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Ii 1 Iess1 0 2010


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Lean Manufacturing in Public Services: Prospects for Value Creation
Ayham Jaaron and Chris Backhouse
Manufacturing Organisation Research Group
The Wolfson School of Mechanical and Manufacturing Engineering
Loughborough University, UK
Presented at:
IESS1.0 , Geneva, Switzerland
17-19 February 2010

Published in: Education
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Ii 1 Iess1 0 2010

  1. 1. Lean Manufacturing in Public Services: Prospects for Value Creation Ayham Jaaron and Chris Backhouse Manufacturing Organisation Research Group The Wolfson School of Mechanical and Manufacturing Engineering Loughborough University, UK Presented at: IESS1.0 , Geneva, Switzerland 17-19 February 2010
  2. 2. List of contents   Research Background.   Mechanistic vs. Organic Structures.   The Concept of “Affective Commitment” (AC).   Affective commitment significance to manufacturing.   Creating lean thinking call centre (organic).   Research Case Study.   Findings.   Comparative study.   Conclusions. 2
  3. 3. Research Background   There is an excessive focus on statistics and regulations to satisfy government targets. This has caused an entrapment to ineffective call centre’s management and design by focusing on statistics and targets.   This causes the system to hide many repetitive tasks and procedures that is considered as waste.   Due to the current economical pressures, the government expectations from local authorities included a demonstration for Value For Money for the operations and services they run, this alarmed managers with the need that substantial cashable efficiency savings will be required, ideally without impacting upon service performance.   This was built upon in local authorities quest for ways to achieve its aim to save the government’s money, eventually through the application of transformational reviews of systems and managerial regimes. 3
  4. 4. Research Background   A shift has been noticed in public services to utilize lean manufacturing systems for potential added value.   Many studies have studied the need for implementing lean manufacturing in service department, but many have failed to link this implementation with the effects on employees affective commitment and its role in creating a high quality service.   Therefore, this paper aims to investigate the impact of the lean manufacturing systems on the added value to the public services departments in terms of employees' affective commitment leveraging. 4
  5. 5. Research Background Mechanistic/Traditional Structure:   Call centres are Mechanistic Structure (Mass Production) models (Burns and Stalker, 1961).   They are represented by close monitoring of words, stressful working loads, emotional exhaustion and burnout, and less empowerment of employees.   The consequences are: High employee turnover, lower service quality and ultimately low customer satisfaction. 5
  6. 6. Lean Manufacturing virtue:   Respect for Human abilities and capabilities.   Employees are given the ability to make work decisions   Have a sense of freedom and ownership   Tasks are not governed by rigid rules and procedures   Team shares the responsibility of the work  It creates an organically structure department.
  7. 7. Mechanistic vs. Organic Structures   As a result of Mechanistic structures, employees lack the AC which is more effective than Job Satisfaction in influencing the service quality. Mechanistic structures are inward oriented structures that must be shielded from the environment but call centres are outward-facing entities (Robey and Sales, 1994). 7
  8. 8. Mechanistic vs. Organic…..Continued   This firmly implies that call centres must be given a certain form of Organic Structure through the implementation of lean manufacturing (enabler) that will stimulate the Affective Commitment building among employees and improve work conditions (Jaaron, 2009). Mechanistic Organic Structure Call Lean Principles Structure Call centre centre 8
  9. 9. The Concept of “Affective Commitment”   AC is “the employee's emotional attachment to the organization” the person strongly identifies with the goals of the organization and desires to remain a part of it because he “wants” to (Meyer and Allen 1991).   AC is more effective than job satisfaction in influencing the service quality of customer-contact employees.   Antecedents: employee’s personal characteristics, organizational structure, job-related characteristics, and work experiences. 9
  10. 10. Affective Commitment Significance to manufacturing Lack of affective commitment causes high levels of turnover. This has two types of costs:   Direct costs (i.e. quantifiable): advertising and recruiting cost, interviewing cost, orientation or training cost, and employment application processing cost.   indirect costs (i.e. unquantifiable): reduced quality assurance, increased sick time and decreased morale. This has invaluable effect on call centre environment and customer retention (Krenzelok and Dean, 1994). Affective commitment and Customer retention:   highly affectively committed employee is more willing to exert more efforts on behalf of his employer to do exceptional job of delivering a quality service that retains customers.   The longer the customer stays with the company, the more the profits gained would be (Reichheld and Sasser, 1990). 10
  11. 11. Creating lean thinking call centre (organic) Stages in the process
 Stages Definition
 What does it do?
 An analysis of the what and Provides a sound understanding of the system as it is and identifies why of the current system.
 potential causes of waste.
 ‘Check’ asks:
 • What is the purpose of this system?
 • What is the nature of customer demand?
 • How does the work flow?
 Exploration of potential Provides a framework to establish what the purpose of the system solutions to eliminate waste.
 should be and how the flow of work can be improved to meet it.
 ‘Plan’ asks:
 • What needs to change to improve performance against purpose?
 • What action could be taken and what would be the predicted consequences?
 Implementation of solutions Allows for the testing and gradual introduction of changes whilst incrementally and by still considering further improvement.
 ‘Do’ is concerned in:
 • Developing redesigns with those doing the work.
 • Experimenting designs gradually.
 • Reviewing changes.
 • Working with managers on their new role. 
  12. 12. Creating lean thinking…….Continued Lean Thinking Adapted from: (Seddon 2003) 12
  13. 13. Research Case Study Research Background:   A case study was conducted at the Information and Communication Technologies (ICT) department of Stockport Council in England. The council has a call centre that supports 6000 customers across the council departments for their IT needs and problem solving.   The call centre has a total of 18 employees working on phones and emails.   The ICT department was a part of a transformation programme followed lean manufacturing principles and covered all functions of the ICT department.   The case study aimed at answering the following research question: How does lean thinking for call centre service operations affect front-line employees’ affective commitment ? 13
  14. 14. Research Case Study.......Continued Activities of Case Study:   In depth interviews were used to explore the relationship between improving the service operations using lean manufacturing and the affective commitment level of frontline employees.   Studying employee’s working experience after the project.   Organizational Commitment Questionnaire (9-items Version) was used to measure employees’ affective commitment level. 14
  15. 15. Findings The In depth interviews analysis revealed the following central themes: Theme 1: working experience Employees enjoy Wider scope of demand, authority to make decisions, share responsibility of the work, informal communication, no monitoring or scripts were used. Theme 2: performance measurement Evaluation is on the basis of sticking to working principles of meeting customer demands. They are evaluated on the number of calls that have been met one stop (value demand). Theme 3: departmental integration value Open channels of communication were initiated at managers and departmental levels. As a result, employees were given quick feedback and support from other departments when needed to serve a customer. Theme 4: operational value Cutting down waste, save resources, 85% of calls are done one stop, focus on customer service rather than maintaining the system. 15
  16. 16. Findings   Results from the Organizational Commitment Questionnaire (OCQ) provided a net mean of 3.77 out of a maximum score 5, this reflects a high level of Affective Commitment. 16
  17. 17. Findings.......Continued Item No. Minimum Maximum Mean Std. deviation Q1: I am willing to put great deal of effort beyond that normally 18 3.00 5.00 4.0588 0.8726
 expected to this company be successful. Q2: I talk up this company to my friends as a great organization to work 18 2.00 5.00 3.8125 1.0740
 for. Q3: I would accept almost any type of job assignment in order to keep 18 1.00 4.00 2.9375 1.0289
 working for this company. Q4: I find that my values and this company’s Values are very similar. 18 2.00 5.00 3.8125 1.0178
 Q5: I am proud to tell others that I am part of this company. 18 2.00 5.00 3.8750 1.1143
 Q6: This company really inspires the best in me in the way of job 18 1.00 4.00 3.6250 1.0416
 Performance. Q7: I am extremely glad I chose this company to work for over others I 18 2.00 5.00 4.0000 1.0226
 was considering at the time I joined. Q8: I really care about the fate of this company. 18 3.00 5.00 4.2500 0.7859
 Q9: For me, this is the best of all companies for which to work 18 2.00 5.00 3.5625 1.0431
 Overall mean 3.77 Internal Reliability (coefficient α) 0.94 17
  18. 18. Comparative Study Organic call centre 76% 18
  19. 19. Conclusions   A correlation between the use of lean thinking in call centres and the Affective Commitment of employees has been demonstrated.   The manufacturing enterprise has achieved a significant value added (the emphasis was on one stop calls).   The main feature of work under such condition is that the general moral system of the workplace will control the human resources behaviour and not the traditional technology surveillance. 19
  20. 20. Thank you 20