Lean systems in services industry miba-ahmed m 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.

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Lean systems in services industry miba-ahmed m adel

  1. 1. iMaster of International Business Administration(MIBA)Lean System Adaption in Services IndustryProject Supervisor: Dr. Abd El Monem El SaiedSubmitted by: Ahmed Mohamed AdelAcademic Year: 2012
  2. 2. 2AbstractNowadays, in highly competitive marketplace, satisfying the customer isbecoming more challenging and the service industry is struggling for betterquality and costs reduction. Gaining or losing a customers can be due toadministrative processes that go along with services transactions and it isbecoming a must to maintain costs (or reduced) with maintaining the same levelof service (Tapping, 2005). Remarkably, in spite of processes automation,intervention of information technology and training, the level of service qualityis actually declining, with year-on-year service declining by significant amounts(Acland, 2005) (D. Dickson, 2005). Multi-national enterprises has tried toenhance its processes in order to maintain the quality measures originallydefined by customers as well as decreasing its cost to maintain its profit growth,accordingly many of these MNEs has adapted Lean Systems.Lean Systems has been broadly used in MNEs manufacturing processes and hasshown great success especially in the last 4 four decades, now there are effortsfor it to be implemented in services industry to assist in increasing the value addduring product delivery processes. There is no doubt that of lean systemphilosophy application in services industry will increase productivity, quality,capacity and decrease cost leading to positive impact on customer retention andenterprise profitability.
  3. 3. 3Table of contentsABSTRACT 2TABLE OF CONTENTS 3TABLE OF FIGURES 4INTRODUCTION 5LEAN SYSTEM EVOLUTION 7LITERATURE REVIEW 8LEAN SYSTEM PRINCIPLES 8Step 1: Define Value 8Step 1-i: Value Add and non-Value add: 9Step 1-ii: Waste 9Step 2: Value Stream 10Value Stream Mapping 10Current state value stream map 11Future/Desired state value stream map 11Service Value Stream Management 121- Commit to lean 122- Learn about lean 123- Choose Value stream 134- Mapping the current state 135- Set Improvement Targets 136- Map Future state 14Step 3: Creating Value stream flow 14Step 4: Implementing the pull system 14Push system 14Step 5: Perfection 14Empowerment 15LEAN SYSTEM IMPLEMENTATION 15BENEFITS OF LEAN SYSTEMS: 16Disadvantage of Lean System 16LEAN SYSTEM APPLICATION IN SERVICES INDUSTRY 17Critical Benefits of Lean in Services Industry: 17Service View for Lean Principles Application: 18Value identification from Services view 18Identify the Service Value Stream 18
  4. 4. 4Making the Value flow from Service view 18Supply at the Pull of the Customer Service View 18Pursuit Perfection Service View 19Application Examples in Services Environment: 19CONCLUSION 21WORKS CITED 23Table of FiguresFIGURE 1 LEAN PRINCIPLES 8FIGURE 2 VALUE STREAM MAP (CURRENT STATE) 11FIGURE 3 VALUE STREAM MAP (FUTURE STATE) 11
  5. 5. 5IntroductionLean manufacturing genuinely is management philosophy that focuses onreducing the wastes throughout a specific tools and concepts in order to magnifythe overall customer value. This is done by quality enhancement; reduction ofproduction time hence, costs decreased (Jordan, 2001). It is also described asphilosophy that when implemented reduces the duration from customer order todelivery by eliminating sources of waste in production flow (Liker, 1996). Toreduce waste, the lean manufacturing is based on a set of tools including regularprocess review & analysis, value identification, customer’s involvement andpull production. More information can be seen further afterwards.Taking into consideration Lean System success in manufacturing process and itsparticipation in enhancing some production metrics cost, productivity, qualityand profitability , adapting same philosophy in services industry is seen to bevery important knowing that the participation of services industry in Worldeconomy and Global GDP is 63.4% (CIA, 2012), more details is shown in table1 below.Country 1960 1970 1980 1985 1990 2011(estimate)Canada 46.2% 52.4% 53.8% 55.7% 69.7%Germany 45.8% 45.6% 49.4% 50.6% 53.7% 70.6%France 49% 50.3% 52.4% 54.2% 56.8% 79.5%UK 54.9% 57% 59.9% 63.1% 77.8%Italy 59.4% 57.5% 58% 58.8% 73.4%Japan 57.8% 59.7% 58.5% 59.4% 71.6%U.S. 57.2% 58% 61.4% 62.2% 63.2% 79.6%Table 1: Services Output as a Share in GDP (Source: OECD, 1994 International Sectoral Database), 2011estimate results by CIA world Fact book)Although there is a debate introduced that there is major difference betweenmanufacturing and services industry and whether they shall be treated in thesame manner, this debate has been briefed in four major difference points1)Services are more or less intangible, 2)Services are activities or a series ofactivities rather than materialized products, 3)Services products to some extent
  6. 6. 6produced and consumed at the same time, 4) The customer is involved in theproduction process itself to some extent (Grönroos, 1990). Nevertheless eitherdealing with a good or a service it is considered to be a demand by the clientthat should fulfill his needs, meets his required values and ensure hissatisfaction via an organized set of processes.Lean system uses Value Stream Management (VSM) as a key towardssuccessful implementation in several industrial cases and recently it has alsobeen used to understand the flow of information and materials in officeactivities (Holmes, 2007). However, its direct application to the service field issomehow doubtful. Definitely, due to the lack of process clarity and ownershipthat might exist, the concepts of both value stream and waste removal are lesstangible for a service than for a manufacturing process (Juroff, 2003).The detailed literature review is focused on understanding the core principles ofLean systems and its tools based on Value Stream Management (VSM), and itsmutation to Service Value Stream Management (SVSM) which leads topossibility of increasing service performance by highlighting and tacklingcritical points. The need of this study is initiated by the increasing need toextend the lean concept beyond manufacturing business environment to theservice business environment triggered by its dominant share in the worldeconomy.
  7. 7. 7Lean System EvolutionJapan production technology principle that contributed most to the world in thelatter 50 years of 1990s century was the Japanese-style production systemnamed the “Toyota Production System, TPS”. (Ohno, 1988) TPS is consideredthe base stone of Lean Systems, the most important objective of TPS has beento increase production efficiency by eliminating waste. This concept and theequally importance of humanity that has been introduced by the venerableToyoda Sakichi (1867-1930) founder of Toyota Inc. and master of inventions,to his son Toyoda Kiichiro (1894-1952), Toyota Motors company first presidentand father of the Japanese passenger cars. (OHNO, 1988) TPS is described as anintegrated socio-technical structure that systematizes industrial and logistics forthe automobile manufacturing companies, including interfacing with suppliersand consumers. TPS states that to have an effective production system you needto produce a production line that runs efficiently in order to deliver to thecustomer in the quickest amount of time. The TPS includes nonstopimprovements, people respect, and work practices standardization (Heizer &Render, 2008). TPS stresses on the significance of entirely eliminating wastefrom the production line to increase its efficiency.Based on that and according to (Hines, Holweg, & Rich, Learning to Evolve:AReview of Contemporary Lean Thinking, 2004), lean thinking can be defined asa managerial philosophy which develops the value received by the customers,by adding product and/or service that resembles a value for them and bycontinuously removing non value added activities (i.e. wastes), which arehidden in any kind of process.Lean system is also described also a set of tools of methods for practical use atthe operational level that have been developed to support lean thinkingapproach. These tools include, value stream mapping which is used to analyzethe flow of resources, indicate activity areas that consume resources but do notadd value from the customer’s perspective.’ (Radnor, Walley, Stephens, &Bucci, 2006). The application of lean system to the service industry could be apossible solution to tackle quality and cost concerns (Maleyeff, 2006) (Abdi &Shavarini, 2006).
  8. 8. 8Literature reviewLean system principlesIn particular Lean System has five basic principles proposed (James P.Womack, 2003), these 5 principles are Value definition, Value stream, Flow,Pull and perfection. It is very important to understand these principles as theyare considered the key milestones in the way to implement Lean Thinking, thusproviding a simple structure for building a detailed route map for anyonewanting to apply Lean to a business process (James-Moore & Haque, 2004).Figure 1 Lean PrinciplesSource: This figure was adapted from the lean thinking model created by: James Womack and Daniel Jones intheir 2003 book Lean Thinking, Free Press Publishing.Step 1: Define ValueDuring this step its critical to understand whos doing the definition and whatthey are valuing. The customers are the ones who define what they value inspecific products and/or services as stated by (KennedyCPA & BrewerCPA,2005), they added as well, in order to be a lean thinker; you must insistentlyseek to view your organization through the eyes of your customers.Value is about providing the full value that customer’s desire from their goodsand services, with the greatest efficiency and least waste (Jones & Womack,2005). Value identification and specification must be carried out and updated ona continuous basis as customers change their mind with time. Once the valuehas been defined it is essential that the organization confirms they have the right
  9. 9. 9process in place to deliver the product or service to meet the exact customerrequirements.” (Systems, 2012).Step 1-i: Value Add and non-Value add:Value add can simply be distinguished as the activities that changes the form orfunction of a product or service and this is what the customer is willing to payfor, while the and non-value add are the activities are those which don’t addvalue to the process and will not impact the specifications required by thecustomer, activities he will not have the desire to pay for.James Cowan, president and CEO of American Railcar Industries Inc. initiatedamongst his management during his efforts to decrease cost, the question aboutif the activities they are doing adds value to the customer or not, and that theyhave to make sure it is, highlighting that the company is getting paid for whatthe values they deliver to the customer through their products. Mr. JamesCowan has clearly stated that if the activities made in the internal process don’tadd value to the customer, it is considered a non-value add (waste) and shall beeliminated (SCOTT, 2011). Identifying those activities that add value and thosedo not is important to decision makers knowing that currently businessenvironment is getting more competitive and doesn’t allow cost increasebecause of unnecessary activities. (Collins & Shafer, 1992).Nevertheless, there are some essential non-value add activities that is designedto insure that the value add activities are implemented correctly and completedto reduce waste. For example, inspection does not contribute to the productdelivered to the customer, but it is necessary to minimize waste and reworkunless the process itself can be enhanced up to an optimum point whereinspection can be eliminated.Step 1-ii: WasteWaste is described as unintentional use or consumption of resources during theprocess, leading to lose (time, money, materials, machine, manpower, etc…),cost increase will be a significant outcome of this loses. There are "seven typesof wastes" that everyone in a manufacturing operation should attempt to
  10. 10. 10eliminate; these are 1) overproduction, 2) unnecessary transportation, 3)inventory, 4) worker motion, 5) defects 6) over processing and 7) waiting(OHNO, 1988).Waste is anything but the value add and essential non-value add activitiesduring the process of product deliver. For instance, waiting is a waste, defects,waste is something shouldn’t exist in the manufacturing processes, it should beeliminated, it’s profit enemy (Giannantonio & Hurly-Hanson, 2011). Onereclassification and identification of these wastes for service operationsaccording to (Bicheno and Holweg, 2009), 1) Delay on the part of customerswaiting for service, 2) Duplication, Having to re-enter data, repeat details onforms, etc., 3) Unnecessary Movement, queuing several times and lack of one-stop, 4) Unclear communication, 5) Incorrect inventory, 6) Lost opportunity toretain or win customers, 7) Errors in transaction of service and defects in theservice bundles delivered.Step 2: Value StreamThe Value Stream is a sequence of activities necessary to design,produce or manufacture and provide a specific good or service anddescribes as well which information, materials and worth flows. Valuestream management appears as an important tool to ease the leantransformation. It maps the information and materials flow, identifiesvarious types of wastes, and redesigns the value stream toward thefuture state. (Womack & Jones, 1996b).Value Stream MappingThe core of Value Stream Mapping (VSM) basically is graphical representationof materials and information flow within the facility and consists of two maps(Hines, et al., 1998) (Braglia, Frosolini, & Zammori, "Uncertainty in ValueStream Mapping Analysis,” International Journal of Logistic: Research andApplication,, 2009). It is also known as "material and information flowmapping" in Toyota where the Lean system and its techniques has started(Rother & Shook, 2003). The first map represents the current state, whereas thesecond map is the future state map, which represents the optimum achievementthe system should produce. The aim of is illustrative maps is that 1) it represents
  11. 11. 11Visual Management to communicate the goals of the organizational and 2) itshows relationship documentation between the front-line processes and thecontrol policies (Emiliani & Stec, 2004).Current state value stream mapA “current state” map is created to illustrate and define the flow of the currentprocess and its performance levels.Figure 2 Value Stream Map (Current State)Source: MWP advanced manufacturing magazine, Chris McKellen, Mapping techniquesFuture/Desired state value stream mapThe “future or desired state” map is designed to show the desired flow of theprocess and its targeted performance levels.Figure 3 Value Stream Map (Future State)Source: MWP advanced manufacturing magazine, Chris McKellen, Mapping techniques
  12. 12. 12Service Value Stream ManagementConsidering the debate highlighted earlier, this paper highlights an enhancedlean approach called Service Value Stream Management (SVSM), which makesit possible to identify the criticalities of a service and enhance its performance.SVSM steps beyond the standard VSM in that it has been specially modified toaccommodate the needs of services industry. Specifically, the following mainmodification was made: 1) introducing new set of icons for a detailed servicevalue stream map; and 2) the definitions for some items such as Takt-Time werereformed in a more suitable way. SVSM follows six steps procedure: 1)committing to the lean concepts; 2) learning about lean; 3) choosing whichvalue stream to be improved; 4) mapping of the current state; 5) identifying themetrics, discussing the impact of waste and set the desired state and targets forthe improvement; 6) mapping the future state. (Bonaccorsi, Carmignani, &Zammori, 2011)1- Commit to leanDeveloping a lean process requires a strong commitment and especially the topmanagement while the front line workers must be engaged in the project. Unlessthe necessity of a change is backed (financially and in time and spirit) by the topmanagement and transferred accordingly to all the employees, implementinglean concepts is doomed to be a failure (Holmes, 2007)2- Learn about leanIn the second step learning/ training sessions on lean concepts shall take place tothe organization. Its objective is to increase commitment and develop theabilities to identify/resolve any operational weaknesses negatively affectingorganizational effectiveness and efficiency (Canel, Rosen, & Ancerson, 2000),(Monden, 1993). The people involved in the lean implementation project shouldparticipate in the training sessions, but the involvement levels should beredesigned on their specific needs. However, everybody should have the basicconcepts of lean and should be familiar and have full understanding with thewastes of the service industry (Kollberg, Dahlgaard, & Brehmer, 2007).
  13. 13. 133- Choose Value streamThe value stream can be easily selected making a Service- Quantity (SQ)analysis and organizing data. More frequently asked services or those which aregenerating the biggest share of the total revenue should be chosen for theanalysis. If the services delivered cannot be easily classified into critical fewand trivial many, the services shall be grouped into consistent families(Bonaccorsi, Carmignani, & Zammori, 2011). By defining product families andclarifying the flow of each, common steps can be merged together for similarfamilies at a time. The more value added during the steps, the higher profit willflow (Bhasin & G, 2006).In that manner the team involved in implementation should specify defectscategories such as: delays, data errors, loss of documents, etc…and define thesedefects. The team shall gather as much information as possible from internaland external customers, using different data and information means. Thecollected data should be enough to 1) clarify the customers’ needs; 2) determinethe defect in categories; 3) give an importance weight to each defect and 4)categorize each service in terms of criticality and rank it (Bonaccorsi,Carmignani, & Zammori, 2011).4- Mapping the current stateAt this point the current value stream map shall be constructed shall take place.This is a basic step of the lean project, as it defines the project’s baseline andmakes the team to get familiar with the process and to investigate how thecurrent processes is running (Bonaccorsi, Carmignani, & Zammori, 2011).5- Set Improvement TargetsHere is where activities is ordered as: 1) value added; 2)non-value added butnecessary and 3) waste. This has to be handled with attention because someactivities can be bulky (Bonaccorsi, Carmignani, & Zammori, 2011). For thisreason it is important to organize the activities from two points of view: aprocess and a customer oriented perspective, respectively. In case ofdiscrepancy, the customer perspective should be favored.
  14. 14. 14The classification objective is mainly to remove wastes and to improve theefficiency and effectiveness of all the other activities. A set of metrics shall bedefined that will be used to measure the status, to establish targets for theimprovement and to assess obtained results. The efficiency of the service is themain lean metric. (Bonaccorsi, Carmignani, & Zammori, 2011).6- Map Future stateThis is a visual tool that shows the desired value stream status afterimprovement implementation. A future-state value stream map is an ideal viewof a value stream and represents the goal of a lean initiative.Step 3: Creating Value stream flowUnder the lean concept work should flawlessly flow from one value addedprocess to another forming a streamlined batches moving along from one stepthrough the another one, all the efforts should be concentrated in eliminatingand preventing any bottlenecks that may rise during the flow (Womack & Jones,1996b). The various activities are sequenced in a manner that reflects the stepsof the manufacturing process, thereby enabling a continuous one-piece flow ofproduction. Employees are cross-trained to perform all the steps within the cell(KennedyCPA & BrewerCPA, 2005).Step 4: Implementing the pull systemFor Pull concept, the products should be driven by the customer demandwhich pulls the work through the system and not pushing the products to thecustomer that not needed (Womack & Jones, 1996b). Implement a Pull Systemwhere customer demand dictates the production level.Push systemA production method based on keeping up with preset inventory levels or withdue dates for customer orders rather than customer demand.Step 5: PerfectionThe flawless flow is 100% quality compliant at the pull of the customer,creating flow and pull starts by reorganizing process steps together, the moreflawlessly combined, seeking perfection is a must, as this happens more andmore layers of waste become visible and the process improves targeted the end
  15. 15. 15point of perfection, where every action shall add value for the customer(Sheehan, 2002).Strive for Perfection, leverages the process knowledge of frontline workers.Rather than relying exclusively on management-level employees to generateideas for improvement, management views all employees as intellectual assetscapable of improving the flow of value to customers (KennedyCPA &BrewerCPA, 2005).EmpowermentThe resources, systems and polices in place that is helping each employee totake the relevant necessary data & information in order for him to take theright decision (Sundbo, 1999). This plays a major part of employeeengagement in the business and on the other hands promotes the ownership ofeach employee to what he is doing and fosters employee citizenship to thegiven enterprise.Lean System implementationAny lean system need to take 5 years in order to maximize the successchances, the methodology defined divided in to four main phases (Womack &Jones, 1996b).The four phases are as follows, get started, create a new organization, installbusiness system and complete the implementation. A detailed illustration foreach phase is shown in the below table (1).Phase Steps Involved Time frameGet Started Find a change agentGet lean KnowledgeMap value StreamsExpand company scopeSix monthsCreate a new organization Reorganize by product familyCreate a lean functionDevise a growth strategyInstill a perfection mindsetSix months to twoyears
  16. 16. 16Install Business Systems Introduce lean accountingRelate pay to firm performanceInitiate policy developmentIntroduce lean learningFight right size toolsYear three and fourComplete the implementation Apply previous steps tosuppliers/customersDevelop global strategyTransition from top down tobottom up improvementBy end of the fifthyearTable 2 Lean system implementation phases (Womack, 2003)Benefits of Lean systems:As formerly mentioned and as well perceived about the lean system, that itgreatly improve customer service, feedback, quality and profitability (Standardet al, 1999). The approach that lean will directly affect productivityimprovements is very well supported. “converting a classic batch and queueproduction system to continue flow with effective pull by the customer willdouble labor productivity all through the time”. (Womack & Jones, 1996b)Hence, profitability as well improved along as a consequence fromproductivity and production related parameters improvement. Moreover, andas speaking about productivity improvement “another important advantagethat companies realize as they become lean is a marked increase inproductivity”. (Liker, 2003)Lean manufacturing tools being used in the UK’s public sector services. It isproclaimed as successful the adoption of ‘lean tools’ in the Scottish publicsector (Radnor, Walley, Stephens, & Bucci, 2006).Disadvantage of Lean SystemNaturally, any system subjected to criticism regardless the stability, efficiencyand effectiveness of the system, the same applies on lean system as well. Themain criticism under focus is the human dimension of the system. (William etal, 1992)
  17. 17. 17It was mentioned that the system is dehumanizing and un-equal. Year to year,the system was associated with being a big mean and with exploiting the workplace (Bicheno, 2008). It was argued as well that the introduction of leansystem was not helping the job development any more, it’s more leaningtowards some activities and technical processes that affects dramaticallyworker disempowerment, for example this approach was clearly illustrated inKaizen tool which was claimed as a method stealing the workers ideas andutilizing it for the facility’s benefit. (Garrahan and Stewart, 1992)Lean System Application in Services IndustryCritical Benefits of Lean in Services Industry:There is a belief that there are a number of key areas in which customers willbenefit from implementing Lean Service Solutions, these potential benefitsinclude:1. Employee Benefits:Employee Lean capabilities expand from the core Lean team to embrace fullemployee engagement, with staffers contributing to continuous small changes,being incented to drive new development ideas and seeing improvedresponsibility and job satisfaction.2. Operational Benefits:Operational benefits include improvements in throughput, cycle time, andquality. According to (TBR, 2012) it has helped a leading insurance companyimprove its bug-fix efficiency by 11% to 29%, while an airline client benefitedfrom a 30% improvement in cut phase productivity. A global telecomcompany was able to achieve substantial benefits with a reduction in fault slip-through from 16% to 4% with no significant impact on other key performanceindicators.3. Customer Benefits:Customer benefits include faster response times, increased flexibility andhigher customer satisfaction.4. Financial Benefits:Financial benefits include increased resource return on investment, improvedleverage of organizational assets and reduced rework costs.
  18. 18. 185. Lean Capabilities:Internal Lean capabilities also improve with time, including the developmentof an in-house training capability, training materials and building year-to-yeargains across strategic, customer and operational benefits.Service View for Lean Principles Application:Value identification from Services viewIn service management, especially in service marketing issues, this is a coreaspect. Customers have got several expectations and service organizationsneed to act and customize according to their needs and expectations. So, thisprinciple can be used as well in a service organization. Using lean thinkingexperience in combination of service marketing creates a powerful toolbox forservices manager (Abdi & Shavarini, 2006).Identify the Service Value StreamThis is a valid principle in service organizations. Any service organizationshave got one or many process. In service literature, tools like blue printing andprocess mapping have been used (Lovelock & L. Wright, 2001). But usinglean approach help to refine and design or improve the entire value chain. Itmeans that all parts of the organization get involved in service providing, andit is not a disconnected isolated effort. On the other hand, some changes mustbe adopted such as differentiating between front office and back office andattending customers in service process (Abdi & Shavarini, 2006).Making the Value flow from Service viewFlow in a service context means to behave in a manner that minimizes delaysor stoppages in the work performed by others. Common practices that causedelays include contradictory or confusing words or actions delivered byservice managers or colleagues. Any form of inconsistent behavior will createqueues that threaten responsiveness to rapidly changing conditions (Abdi,Shavarini, & Hoseini, 2006).Supply at the Pull of the Customer Service ViewPull applied in a service organizations as a behavioral context means torecognize that people operate under many different mental models (Senge,1990), which requires adjustments. We can think of the people that we interactwith as customers, where each one has a different set of demands. Practicing
  19. 19. 19lean behaviors reduces ambiguity and re-works in interpersonal relationships.Service organization always encounter inconsistency: related with flexibilityversus efficiency. Lean systems is considered a solution for this inconsistency,especially applying value stream mapping and pull techniques (Abdi &Shavarini, 2006).Pursuit Perfection Service ViewSimilarly, perfection in a service context is more about people and theirbehaviors. It means to take advantage of the transparency brought about by thelean system steps in order to more easily identify and eliminate behaviors thatdo not create value. (Abdi, Shavarini, & Hoseini, 2006).Application Examples in Services Environment:Example: Southwest AirlinesSouthwest Airlines (SWA) is frequently cited as a service role model(HESKETT, Jr., & Hart, 1990). They granted this description after being ableto have fewest late flights, fewest mishandled bags, and fewest passengercomplaints (this is according to Department of Transportation records) forthree consecutive years as well as being the only major US airline to makeprofit throughout the 1990s (Hallowel, 1997). By viewing SWA’s strategy andoperations it is noticeable that they resemble an example of the “lean”production-line approach to service.SWA has resolved the performance tradeoff between efficiency and othercustomer benefits such as flexibility, quality, and variety. SWA’s operationsare driven by a value chain orientation and are supported by flow productionand JIT pull. Their approach has removed the waste and cost of services suchas in-flight meals that are considered to be relatively unimportant topassengers. The new approach allowed SWA to turn around a flight in only 17minutes whereas the average airline takes approximately 45 minutes(Hallowel, 1997). SWA displays the commitment to increased customerfocus, involvement, and training true of the lean approach. Employees and linemanagers are reminded of these goals through corporate and personalcommunication with top management (Hallowell, 1996). The empowerment
  20. 20. 20of SWA employees represents a radical departure from the mass production-line approach – which still seems to characterize the majority of the airlineindustry.In sum, SWA exemplify how the “lean” production-line approach can delivervalue (low cost, high quality) to customers. The example also demonstrate thatthe “lean” approach can overcome the barriers to transferring manufacturingprinciples alleged to exist due to the differences between manufacturing andservice. However, in the “lean” approach, the elimination of relatively non-value adding activities frees up employees to meet the fluctuating and diversecustomer demand.Example: Large U.S. Retail Consumer CompanyBefore the company implemented Lean principles it had multiple sources ofdata for Service Level Agreement (SLA) measurement, which led todiscrepancies in SLA reports. In addition, management was forced to bereactive due to the lack of a system to provide real-time status.By applying Lean system basics (Single Piece Flow, Automation and VisualControl) the following were observed: Response and resolution compliance for support calls increased to97%+ from 70%. Adherence to schedule for enhancement requests increased to 95%+ 4,728 working hours are saved per month on reporting due to improvedflow of information. 45 backlog enhancement requests only after 6 months of leanimplementation, from 1,440 before Lean
  21. 21. 21ConclusionIt is not doubtable that lean system is a distinctive step forward in to deliverbetter quality products through well designed management processes thatfocus on the customer requirements and expedite the product delivery.Clearly, because of the differences between the manufacturing and the serviceindustry, lean systems shall not applied typically “As Is” used inmanufacturing processes to services product processes. Applying lean toservices is challenging and it shall be redesigned and/or redefined in a waythat serves the services industry properly. In order to tackle this challenge anew approach is introduced named Service Value Stream Management(SVSM).This approach is flexible that can be adapted to different types of servicesfrom virtual manufacturing (such as software) to pure service processes (suchas call centers). SVSM is built on a set of evolving steps that is structured toserve as the road map to a true lean service.Accordingly, and considering the system adaptation cycle, keeping an eye onthe advantages and disadvantages raised, we can notice the following: Lean system is broadly adapted in the last thirty years in almost allkind of industries involving service, manufacturing and agriculturefields. Lean system has to change/adapt some of its basic steps to serveservices industry, as services industry’s business nature and processesis different from manufacturing industry. Lean is a philosophy or a set of tools, specifically designed to serve itspurpose by each type of product emphasizing the customerrequirements and maintaining his needs as the main driver. The disadvantages of lean were mostly concerned on the dehumanizedand missing empowerment; not taking into considerationcommunicating and adaption on all corporate levels specially the firstline.
  22. 22. 22 Lean system needs management believe in, understanding andguarantee to adapt before proceeding with implementation. There was indication that Lean system has negatively affected productquality or profitability which are considered corporates main concern,on contrary, all the reviews emphasized remarkable positive change inprofitability by the organization. Lean system shall be applied on phases, starting by a pilot run beforeapplying across the whole organization; it shall consider whileimplementation the employee resistance that has been has beendescribed earlier as one of the disadvantages of the whole system.In order to apply lean system in the organization, it has to consider that it willchange the culture the resistance shall be handled in a proper manner;management persistence as well as believing in the philosophy will help tocommunicate the positive aspects of system adaption across the organization.Once the Lean system culture is created, the effect will influence and improveall business aspects, productivity, effectiveness and quality will significantlyshare with the main part; this will end up with cost reduction and profitabilityimprovement which will take the organization to better competitive levels.
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