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Lean system in services industry presentation ahmed adel


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Lean Systems is described as a managerial philosophy which enhances the value perceived by the customers, by adding product and/or service features and by continuously removing non value added activities (i.e. wastes), which are concealed in any kind of process.
To reduce waste, the lean manufacturing is capitalizing on various tools at its disposal including regular process review.

In particular the five Lean principles proposed , these 5 principles are Define Value, Value stream, Flow, Pull and perfection.

Published in: Education, Business, Technology

Lean system in services industry presentation ahmed adel

  1. 1. Master of International Business Administration(MIBA)Lean Systems Adaption inServices IndustryProject Supervisor: Dr. Abd El Monem El SaiedBy: Ahmed Mohamed AdelAcademic Year 2012
  2. 2. What is Lean Systems?Why Lean systems?Why in Services industry?The Debate Between Man.And Services industryHow does it work?Service Value StreamManagementLean Systems disadvantages.ConclusionContents
  3. 3. Lean SystemWhat is Lean System?• Lean Systems is described as amanagerial philosophy which enhancesthe value perceived by the customers, byadding product and/or service featuresand by continuously removing non valueadded activities (i.e. wastes), which areconcealed in any kind of process. To reduce waste, the lean manufacturing iscapitalizing on various tools at its disposalincluding regular process review. In particular the five Lean principlesproposed , these 5 principles are DefineValue, Value stream, Flow, Pull andperfection.The ProcessDefineValueIdentifyValueStreamMake thestreamflowImplementpullsystemStrive forPerfection
  4. 4. Lean SystemHow did it evolve? (Historical Background)• Toyota production system (TPS) isconsidered the base stone of LeanSystems, introduced by Toyoda Sakichi(1867-1930) and Toyoda Kiichiro (1894-1952).• TPS is described as an integrated socio-technical scheme that systematizesindustrial and logistics for the automobilemanufacturing companies, includinginterfacing with suppliers and consumers.• According to Taiichi Ohno, the Japanesebased production technology principlecontributed most to the world in the latterhalf of the 20th century.Toyoda Sakichi
  5. 5. What is Lean Systems?Why Lean systems?Why in Services industry?The Debate Between Man.And Services industryHow does it work?Service Value StreamManagementLean Systems disadvantages.Conclusion
  6. 6. • It is well perceived about thelean system, that it greatlyimproves customerservice, feedback, quality andprofitability (Standard etal, 1999).• It has been adapted by manymulti-national manufacturingenterprises and shownsignificant positive impact onquality, cost, productivity andprofitability.Increase QualityDecrease CostIncrease productivityIncrease ProfitabilityWhy LeanSystem?
  7. 7. What is Lean Systems?Why Lean systems?Why in Services industry?The Debate Between Man.And Services industryHow does it work?Service Value StreamManagementLean Systems disadvantages.Conclusion
  8. 8. Services Industry ImportanceWhy Shall it be applied inservices industry?• Services industry application isparticipating in the global GDP by 63.4%.• Its participation in some countries GDPreaches almost 80%.• Services industry needs of increasingquality, profitability , productivity anddecreasing cost is as much essential as inmanufacturing industry.Services Output as a Share in GDPCountry 1960 1970 1980 1985 1990 2011(estimate)Canada 46.2 52.4 53.8 55.7 69.7Germ. 45.8 45.6 49.4 50.6 53.7 70.6France 49 50.3 52.4 54.2 56.8 79.5UK 54.9 57 59.9 63.1 77.8Italy 59.4 57.5 58 58.8 73.4Japan 57.8 59.7 58.5 59.4 71.6
  9. 9. The Debate about difference betweenServices and Manufacturing Industries• There is a debate initiated that there is fundamental difference betweenmanufacturing and services industry and whether they shall be treated inthe same manner,• The four major difference points (Grönroos, 1990)1- Services are more or less intangible,2- Services are activities or a series of activities rather than things,3- Services are at least to some extent produced and consumedsimultaneously, 4- The customer participates in the production process at leastto some extent.However:1- Dealing with a good or a service it is considered to be a demandfor the client that should fulfill his needs and ensure his satisfactionvia an organized set of processes.2- Lean System shall adapt and mutate to serve the service industry.3- Lean system has to redefine some of its steps to succeed.4- Service Value Stream Management has been introduced.
  10. 10. Types of WasteIn Services (Bicheno and Holweg, 2009)1. Delay on the part of customers waiting for service.2. Duplication. Having to re-enter data, repeat details on forms, copyinformation across, etc.3. Unnecessary Movement.4. Unclear communication, and the wastes of seeking clarification,5. Incorrect inventory.6. An opportunity lost to retain or win customers,7. Errors in the service transaction, product defects in the product-service bundle.In Production(OHNO, 1988)1. Overproduction,2. Unnecessarytransportation,3. Inventory,4. Worker motion,5. Defects,6. Over processing,7. Waiting
  11. 11. What is Lean Systems?Why Lean systems?Why in Services industry?The Debate Between Man.And Services industryHow does it work?Service Value StreamManagementLean Systems disadvantages.Conclusion
  12. 12. Lean System StepsDefine ValueIs about providing thefull value thatconsumer’s desirefrom their goods andservices, with thegreatest efficiency andleast painValue StreamIs a sequence ofactivities necessary todesign, produce ormanufacture andprovide a specific goodor service anddescribes as wellwhichinformation, materialsand worth flows.FlowWork should flawlesslyflow from one valueadded process toanother.All the efforts shouldbe concentrated ineliminating &preventing anybottlenecks that mayrise during the flow.PullThe goods should bedriven by thecustomer demandwhich pulls the workthrough the systemand not pushing thegoods to the customerthat not needed.PerfectionLeverages the processknowledge of frontlineworkers Lean principles proposed, these 5 principles are Define Value, Value Stream,Flow, Pull and Perfection.
  13. 13. 1- Define Value• The customers are the oneswho define what they valuein specific products and/orservices.• It is about providing the fullvalue that consumer’s desirefrom their goods andservices, with the greatestefficiency and least pain.• Specifying Value must becarried out on a continuousbasis as customers changetheir mind with time.ValueAddcan simply be distinguished as the activitiesthat changes the form or function of a productor service and this is what the customer iswilling to pay for.NonValueAddare the activities are those which don’t addvalue to the process and will not impact thespecifications required by the customer.EssentialNonValueAddis designed to insure that the value addactivities are implemented correctly andcompleted to reduce waste (ex. QualityControl).Waste Is the unintentional use or consumption ofresources or during the process, leading tolose(time, money, materials, machine, manpower,etc…), cost increase will be a significantoutcome of this loses.
  14. 14. 2- Value Stream• The Value Stream is asequence of activitiesnecessary todesign, produce ormanufacture and provide aspecific good or serviceand describes as wellwhichinformation, materials andworth flows.VSM This approach1- Implements Visual Management as a way tocommunicate organizational goals and2- Documents the relationships between theshop-floor processes and the control policies(such as production scheduling and productioninformation), used to manage these processes.CurrentState MapA “current state” map is created to illustrate anddefine the flow of the current process and itsperformance levels.Futurestate mapThe “future or desired state” map is designed toshow the desired flow of the process and itstargeted performance levels.• Consists in the definition oftwo maps, being agraphical representationof both materials andinformation flows within afacilityValue Stream Mapping (VSM)
  15. 15. Value Stream MappingCurrent state Map Future State MapValue stream mapping uses group of previously defined icons that indicates activitiesand process flow.
  16. 16. 3,4 Creating Value Stream Flow &Pull SystemValue Stream Flow Implementing Pull System• The products should be driven by thecustomer demand which pulls the workthrough the system and not pushing theproducts to the customer that notneeded.• Under the lean concept work shouldflawlessly flow from one value addedprocess to another forming a streamlinedbatches moving along from one stepthrough the another one,• All the efforts should be concentrated ineliminating and preventing anybottlenecks that may rise during the flowPush system:A production method based on keeping up with presetinventory levels or with due dates for customer ordersrather than customer demand.
  17. 17. 5- Perfection• Leverages the process knowledge of frontline workers.• Management shall view all employees as intellectual assets capable ofimproving the flow of value to customers.• The flawless flow is 100% quality compliant at the pull of the customer.• Every asset and every action shall have value add for the end customer.Empowerment:Systems and polices in place that is helping eachemployee to take the relevant necessary data &information in order for him to take the right decision.This increase employee engagement in the businessand on the other hands promotes the ownership ofeach employee to what he is doing and fostersemployee citizenship to the given enterprise.
  18. 18. What is Lean Systems?Why Lean systems?Why in Services industry?The Debate Between Man.And Services industryHow does it work?Service Value StreamManagementLean Systems disadvantages.Conclusion
  19. 19. 2.1 Service value stream mapping(SVSM)• SVSM tackles some critical points to adapt lean system in service industry.• A detailed map of a service a new set of icons shall be created;• Most of the lean approaches were adapted/modified• Concepts such as Takt-Time were redefined in a more suitable way.• SVSM follows a step by step procedure made of six points(Bonaccorsi, Carmignani, & Zammori, 2011):1. Commit to lean;2. Learn about lean;3. Choose the value stream to be improved;4. Map the current state;5. Identify the impact of waste and set the target for the improvement;6. Map the future state.
  20. 20. 2.2 Service value stream mapping (SVSM) Steps1- Commit to LeanUnless theneed of achange issponsored(financiallyand in timeand spirit) bythe topmanagement& transferredto all theemployees,implementinglean conceptsis doomed tobe a failure.2- Learn about LeanConsists in theorganization oflearning/trainingsessions onlean concepts.This has theobjective toincreasecommitmentand to developthe skills toidentifyoperationalweaknesseshinderingorganizationaleffectivenessand efficiency.3- Choosing ValueStreamIt can be easilyselectedmaking a (SQ)analysis andorganizingdata.. Collecteddata should besufficient to:1) clarifycustomersneeds; 2)ascertain thecorrectness ofthe defectcategories; 3)give animportanceweight to eachdefect and 4)classify interms ofcriticality4- Current StateMappingThis is a basicstep of theleanproject, as itdefines theproject’sbaseline andforces theteam to getacquaintedwith theprocess and toinvestigate andquestion howand why it isperformed in acertain way.5- Setting TargetedImprovement- It is advisableto classifyactivitiesfollowing twopoints of view:a process anda customerorientedperspective.- In case ofmismatch, thecustomerorientedperspectiveshould bepreferred.- The serviceCycleEfficiency isthe main leanmetric and isdefined as theproportion oftime6- Future stateMappingThis is a visualtool thatshows how avalue streamcan look afterimprovementshave beenimplemented
  21. 21. Lean System Implementation PhasesPhase Steps Involved Time frameGet Started Find a change agentGet lean KnowledgeMap value StreamsSix monthsCreate a new organization Reorganize by product familyCreate a lean functionDevise a growth strategyInstill a perfection mindsetSix months to two yearsInstall Business Systems Introduce lean accountingRelate pay to firm performanceInitiate policy developmentIntroduce lean learningFight right size toolsYear three and fourComplete the implementation Apply previous steps to suppliers/customersDevelop global strategyBy end of the fifth year
  22. 22. What is Lean Systems?Why Lean systems?Why in Services industry?The Debate Between Man.And Services industryHow does it work?Service Value StreamManagementLean Systems disadvantages.Conclusion
  23. 23. Lean System Disadvantage• Naturally, any system subjected to criticism regardless the stability, efficiencyand effectiveness of the system, the same applies on lean system as well.• The main criticism under focus is the human dimension of the system.• It was argued that it is not helping the job development any more, it’s moreleaning towards some activities and technical processes that affectsdramatically worker disempowerment.
  24. 24. What is Lean Systems?Why Lean systems?Why in Services industry?The Debate Between Man.And Services industryHow does it work?Service Value StreamManagementLean Systems disadvantages.Conclusion
  25. 25. Application in Service industry• South West Airlines, after applying Lean system findings:1- the ONLY US airlines to make profit in 1990s.2- SWA can turn around a flight in 17 minutes Vs. 45 minutes for its competitors.Large U.S. Retail Consumer Company1- Response and resolution compliance for support calls increased to 97%+ from 70%.2- Adherence to schedule for enhancement requests increased to 95%+3- 4,728 working hours are saved per month on reporting due to improved flow ofinformation.4- 45 backlog enhancement requests only after 6 months of lean implementation, from 1,440before Lean
  26. 26. Conclusion• The core objective of Lean system is to remove waste.• Lean system is broadly adapted in the last thirty years in almost all kind ofindustries involving service, manufacturing and agriculture fields.• Lean system has to change/adapt some of its basic steps to serve services industry,as services industry’s business nature and processes is different from manufacturingindustry.• Lean is a philosophy or a set of tools, specifically designed to serve its purpose byeach type of product emphasizing the customer requirements and maintaining hisneeds as the main driver.• The disadvantages of lean were mostly concerned on the dehumanized and missingempowerment; not taking into consideration communicating and adaption on allcorporate levels specially the first line.
  27. 27. Conclusion (Cont.)• Lean system needs management believe in, understanding and guarantee to adaptbefore proceeding with implementation.• There was indication that Lean system has negatively affected product quality orprofitability which are considered corporates main concern, on contrary, all thereviews emphasized remarkable positive change in profitability by the organization.• Lean system shall be applied on phases, starting by a pilot run before applyingacross the whole organization; it shall consider while implementation the employeeresistance that has been has been described earlier as one of the disadvantages ofthe whole system.
  28. 28. Finally“We are what we repeatedly do. Excellence, then, is not an act, but habit.”Aristotle“Costs do not exist to be calculated. Costs exist to be reduced.”Taiichi Ohno“Make only what is needed, only when it is needed”Kiichiro Toyoda