Lean management is the philosophy of making continuous, incremental improvements in processes in order to cut down wastage and bring down the cost of operations & production. It is a fallacy to think that lean management is only relevant for manufacturing organizations such as Toyota et al. The philosophy of lean is as relevant for service organizations as it is for manufacturing ones.
A number of service companies have cut down their operational costs by applying the principles of lean management. Consultancy firm McKinsey & Co recently cited a case of how global law firm, Seyfarth Shaw, is saving millions of dollars every year by cutting down wastage and identifying areas of inefficiencies and eliminating them.
Service companies need to have process-oriented approach if they want to identify areas of inefficiencies and wastages. The best example of such a process-oriented approach is McDonald’s. If you visit a McDonald’s restaurant – anywhere in the world – you will find that there are clearly defined processes for even the smallest of operational activities. The aim behind standardization of these activities at McDonald’s is to maximize efficiency while ensuring that standard quality of products and service is delivered to customers.
Service organizations that have successfully applied the principles of lean management have used lean principles such as process-mapping. In process mapping a company maps every process that is there in the delivery of service to a customer. Then when the processes have been mapped, those processes can be identified which do not create any value for customers. These processes are then eliminated in order to make the entire value chain more efficient.
In the contemporary competitive scenario, services companies need to have the same focus on efficiency and quality that manufacturing companies, like Toyota, tend to have. Service companies too need to standardize many of the routine processes in order to make them more efficient and control costs. They need to focus on the processes in order to improve quality and ensure that the same standard quality is delivered to customers, every time they buy the service.
Service companies should continuously strive for maximizing the value created for customers, if they want to stay competitive. Lean management is a great tool for achieving competitive advantage over competitors – both for manufacturing & service companies.
If you want to understand more about how to apply principles of lean then you should do iACT’s courses in Six Sigma and Lean Management.