Lean Six Sigma (1/3): Service vs. industry


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Peter Matthijssen
Posted by Peter Matthijssen on Aug 29, 2011

Lean Management

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The industrial sector has been applying Lean Management and Six Sigma for decades. For many service organizations these methods are much more of a novelty. You could say that the service sector runs about 20 years behind on the industrial sector in this aspect. How did this happen? And isn’t it time for service organizations to catch up?

Visibility of processes

One simple explanation has to do with the visibility of processes. When you build trucks, an obstacle in the process is quickly visible and tangible for the simple reason that you don’t just put three trucks ‘on hold’. The entire process jams. A bank that processes mortgage applications is much less plagued by jammed processes. The process flow in service sectors is a lot less visible.

Need for quality

Secondly, the service sector has gotten away with delivering mediocre quality. When we apply for a permit with the city, we render it normal when this takes four weeks. This processing time is of course completely out of proportion with the amount of time it takes to actually write up the permit. Organizations don’t need an advanced optimization technique to live up to a standard of a generous four weeks.

Complexity of products

Another reason why the service sector runs behind on the industrial sector is the complexity of products. Industrial products rapidly become more and more advanced and compact. To still deliver quality, factories need to have a firm grip on the production process and have high standards. LSS helps them to reach these standards.

Service organizations catching up

But we do see a shift in the service sector as well. Customers are getting more verbal and don’t accept just anything anymore. We do not accept being put on hold, especially not for weeks on end. We want the product or service fast and for a good price, which we checked online first of course. Organizations have to adopt to these developments in order to compete. In the service sector, we also see a shift to increasingly complex products and services. We don’t just speak about regular insurance anymore, but a plethora of variations: different products for different target audiences, in various combinations, with specific conditions and separate pricing models. We make things rather complex. The government doesn’t make our lives easier either by implementing complicated legislation, which companies have to abide by. And then there is technological development, creating many opportunities, but complicating matters even more.

Wherever LSS has helped (and still helps) industrial organizations to raise the bar and to get a better grip on the process, there are also challenges in the application of this knowledge in the service sector. That means lots of opportunities for LSS!

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