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Group b opm-ppt_final


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Group b opm-ppt_final

  1. 1. Lean Management in Service Industry Group B
  2. 2. Introduction WHAT IS LEAN MANAGEMENT ?Def: Lean Management is a systematic approach aimed at maximizing the value added by activities by reducing waste and delays• Lean concept developed by ‘Toyota’ is arguably the most important innovation in operations• Most of the manufacturing companies adopted ‘lean management’ principles and became profitable• Most in the business world believed that ‘lean management’ principles were confined only to manufacturing industry , but the trend changed after 2000• Most of the service companies adopted ‘lean management’ principles and were highly successful
  3. 3. What does Lean Management say• Standardize the process• Process should be simple , straight forward and should not be ambiguous• Continuous improvement• Define the path clearly and explicitly Concepts• Value Added Time – Directly satisfies the customer, improves the product being produced.• Non-value Added Time – Include activities like communication, setup, preparation etc.• Process – A series of activities necessary to achieve desired outcome• Value Stream – A series of activities that occur as we work ourselves through a process
  4. 4. Types of Waste(Muda) in ITWaste Element Examples Business OutcomeDefects Unauthorized system and Poor customer application changes. service, increased costs Substandard project executionOverproduction Unnecessary delivery of Business and IT low-value applications and misalignment, Increased services. maintenanceWaiting Slow application response Lost revenue, poor times. customer service, reduced productivityNon-value Added Reporting technology MiscommunicationProcessing metrics to business managersTransportation On-site visits to resolve Higher capital and hardware and software operational expenses. issues.
  5. 5. Types of Waste(Muda) in IT Contd.Waste Element Examples Business OutcomeMotion (Excess) Fire-fighting repeat Lost productivity problems within the IT infrastructure and applicationsInventory (Excess) Server sprawl, Increased costs: data underutilized hardware. center, energy; lost Benched application productivity development teams.Employee Knowledge Failing to capture Talent leakage, low job(Unused) ideas/innovation. satisfaction, increased Employees spend time on support and maintenance repetitive or mundane costs tasks.
  6. 6. Lean Management at WiproWhy go in for Lean Management????• Company was not able to compete on the basis of low labor costs• Difficult to compete with other IT Firms on superior quality.• Could not meet customer expectations.
  7. 7. How Wipro Implemented Lean Management• Wipro started ‘lean journey ‘ in 2004• Wipro taught employees to ask ‘5 why’s’ to find the root cause for wastes and eliminate wastes, which can reduce inefficiency• This technique was implemented in a project which was falling behind the schedule.(Out of 10 projects identified)
  8. 8. Implementation In the Project- Wipro identified that most of employees were solving same problems over and over- Wipro identified that no standards existed- Skilled people were asked to create standards and train the same to other members- Rotation of people into different function was carried out to ensure employees acquired necessary skills- Certain wastes like ‘cluttering of unnecessary mails’, ‘unnecessary meetings’, ‘wastage of time due to unavailability of required resource – printer example’ were identified and fixed
  9. 9. Lean Management at an Organizational Level• Specify the work -Specify the process/chain in which the work should be carried out -Identify the repeatable parts of the process and codify them• Specify how workers should communicate -Define who should be communicating, how often, and what Wipro developed a tool similar to spread sheet, which helped in communicating within and/or outside the project. -Create a shared understanding Wipro created a structured communication framework to have an effective communication with clients
  10. 10. Continued ……..• Address problems quickly -If a problem arises, ideally the person who created it should fix it People closest to the problem might know better about the problem rather than an outsider• Problems should be solved where they occur Identify the location/step where the problem has occurred and fix at the same position. Wipro employs web tools to capture the location where the problem has occurred for further analysis• Engage your managers -Project managers and other midlevel leaders must motivate their teams -Senior leaders must be long term champions Implementing ‘lean’ process was looked from a long term perspective
  11. 11. Effect of Implementation in Wipro• As of 2010, almost 36% of total Projects are using Lean techniques.• Each project saves at minimum 20% cost on an average• Reduction in lead time for projects previously requiring 180 days to 100 days• Achieves cost reduction for both clients and Wipro• Defect rate reduced from 18% to 8%
  12. 12. Lean Management At RBSWhy go in for Lean Management???• High cost of operating activities.• Large number of errors pertaining to loan distribution. (Pursuit for Lean Management originated after the 2008 economic crisis)• Slow cycle time• Due to slow processes, efficiency was less.
  13. 13. How RBS Implemented Lean Systems• Creating work cells and relationship cells to eliminate wastes• Rotation of people among different cells so that people get chance to create expertise in 2 or more fields• Each work cell was entrusted with a particular responsibility, thus scope of work was specified• Team lead was appointed to each work cell – coordination within teams and inter – functional work groups• Created a mechanism to track dependencies between two cross functional teams – Used IT for this – which reduced further delays and wastage(of time and money).
  14. 14. Effect Of Lean Management Implementation in RBS• A productivity improvement figure was initially set at 12%. Actual improvement figures are close to 30%• Units that employed Lean Management saw improvements in customer satisfaction to the tune of 20%• Up to 25% improvement in employee engagement
  15. 15. References• ‘Lean Knowledge Work’ – Harvard Business Review• ‘Lean Management – New Frontiers For Finance Institutions’ – McKinsey & Company• ‘Bringing Lean Principles To Service Industry’ – Wharton School of Business