JWI 550 Operations Management, week6 summary, 2/17/13
Never did I fully appreciate how lean principles can apply well in the service industry !
This week's learning and the thought provoking discussions helped
transform my thinking. I am especially excited that the application of this fundamental concept in a
large market like India can do wonders to improve the lives of millions of people.
IBM was founded on three core values - respect for the
individual, superior customer service and excellence in everything we
do. This week's learning helps me tremendously in translating the core
value of superior customer service to reality in every organization I
will lead going forward.
Takeaways from this week's learning below.
thrilled
Dr DP
JWI 550 Operations Management, week6 summary, 2/17/13
I. What is Muda? (Womack & Jones, 2003)
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Muda is a Japanese word that means "waste". Specifically it is any human activity which absorbs resources but creates no value:
mistakes that require rectification, production of items no one wants so
that inventories pile up, processing steps that are unnecessary,
movement of employees and transport f goods from one place to another
without any purpose, groups of people in a downstream activity standing
around and waiting because an upstream activity has not delivered on
time, and goods and services that don't meet the needs of the customer.
II. What is Lean thinking ?
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Lean is the antidote to Muda. It provides a way to specify value - from
the customer's point of view, line up value-creating actions in the best
sequence, conduct those activities without interruption whenever
someone requests them, and perform them more and more effectively. It
provides a way to do more and more with less and less - less human
effort, less equipment, less time and less space - while coming closer
and closer to providing customers exactly what they want.
Similarities in application of Lean principles in both service and manufacturing industries
The features of lean operations apply to services just as they do in manufacturing (Heizer & Render, 2011).
Lean thinking, techniques and organization apply to practically any
activity, whether a good or a service (Womack & Jones, 2003).
The lean way to a hassles-free experience for customers begins with
always keeping the customer's definition of value in mind, letting the
customers pull the product or service from the enterprise rather than
pushing products or services on customers, using small batch sizes,
making value-creating steps flow using JIT techniques that eliminate
inventory, building systems that help employees produce perfect parts or
services every time, reducing space requirements to minimize travel
distance, developing partnerships with suppliers and educating them to
understand the needs of the ultimate customer, eliminating non-value add
activities in the entire value stream and developing and empowering
employees to take action.
Example of a product manufacturing firm that uses Lean would be the
famous Toyota Inc. Toyota has perfected the lean way of operations and
is know for its "Toyota way" of continuous improvement. Example of a
services firm would be the billion dollar Ronald Reagan UCLA medical
center that provides health and healing services.
III. Can Lean be applied to services ?
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Lean can be applied in process driven service environment. But this is
challenging as processes are not as visible as in a factory. Ways to
overcome the challenge and deliver services to customers under
continuously changing demand, suppliers need to be reliable, inventories
lean, cycle times short, and schedules nimble (Heizer, Render, 2011)
include:
- Analyze the Voice of Customer (VOC): define what constitutes value in the mind of the customer
- Apply Kano model and determine key dissatisfiers, satisfiers, delighters
- Design or re-design services to have a strong impact
- "What gets measured, Gets done", Peter Drucker
"What gets measured and rewarded, gets done well!" Dr Richard Chua
- "Everything can improve; Efficiencies are lurking everywhere in every
type of service and or process. Drive to find what can be made better"
George Degnon
IV. Turn on The Lean Service machine ! (Swank, 2003)
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(1) Place linked processes near one another
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For employees in functional silos - where they are personally responsible,
develop acute awareness that they part of the integrated whole enterprise whose purpose is customer service
break through "my work is all that matters" silo mentality
(2) Standardize procedures
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Balance employee freedom with discipline needed to
- improve performance of employee primarily on the job
- workload balancing
- manage absences & transfers
(3) Eliminate loop-backs that lead to delay and waste
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- remove confusion about who should be doing what and when
- keep work flowing smoothly
(4) Set a common tempo
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Takt: heartbeat of lean operations, baseline pacing of work according to customer demand
challenge employees to create shorter baseline times with improvements
(5) Workload balance evenly among employees
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- Eliminate unnecessary delays with full utilization of employees bandwidth, reduce idle time
- Make work flow smoothly from one employee to next
- Be fair to employees
(6) Segregate complexity
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- cluster tasks of similar levels of difficulty eg. put tasks with longer TAT into a separate group
Do not let long TAT items delay short TAT items
(7) Post Performance Results Scorecard for all to see
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clarify individual performance metrics, unit performance metrics
Display hourly productivity rate vs company's expectations
Help employees see where and when performance is suffering
Use displays as rallying point for setting new performance records & celebrate success
not just a place to assign blame and punish low performers
evaluate employees with objective results they track themselves vs subjective observations of bosses
(8) Set performance goals - spread accountability and rewards throughout the system instead of concentration at top
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- Measure performance and productivity from customer's perspective
- overhaul ways to measure costs, speed, quality, profitability
beware of corporate party line metrics that actually inhibit productivity
- ask who is working hard ? who is waiting ? how are defects handled ?
how is profitability calculated ? what would make the process better ?
- use hoshin kanri policy depoloyment principle of Toyota
link front line worker productivity - ie shop-floor operational goals - to CEO's strategic performance
(9) Convince the skeptics - explain why and how to get far reaching changes
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eg. Airplane game
highest profit = f(output - work in progress - defects)
Help people question basic aspects of their job
- how is profitability measured ?
- who uses my work ?
- how close do I sit with rest of process team ?
- is my neighbour idle while I scramble to keep pace ?
- does the work come in batches that allow a single step to become a bottle neck ?
or does work move forward one piece at a time ?
- are we waiting until end of process to check defects ?
or are we inspecting at every point in the process ?
- are there steps that can be eliminated ?
am I pushing the management to implement the changed ?
V. References
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- http://www.lean.org/WhatsLean/History.cfm
- lean six sigma in the U.S. army.
http://www.army.mil/standto/archive/2011/04/11/
http://www.isixsigma.com/industries/government/lean-six-sigma-army-now-improving-efficiency/
- VSM
http://www.lean.org/Bookstore/ProductDetails.cfm?SelectedProductId=9
http://www.amazon.com/Learning-See-Stream-Mapping-Eliminate/dp/0966784308
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