Lean Operations in Services
and Support Functions
Chapter 15
© 1998 by Prentice-Hall Inc
Russell/Taylor Oper Mgt 2/e
Lecture Outline
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Goals of lean services
Examples of lean service improvements
– Jefferson Pilot Insurance: Lean production
– Blockbuster's Project Store
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Principles of lean services
– Waste elimination
– Total quality management
Goals of Lean Services
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Waste is any amount of a resource that is not absolutely
required to produce and deliver a quality service when it
is needed
The goals of lean services are to reduce waste, while
improving service quality and timeliness
– Reducing waste will eliminate costs
These goals are achieved by forced problem solving: The
firm sets challenging goals and forces itself to meet them
Systems approach: consider the effects of proposed
changes on the whole company, suppliers, & customers
Jefferson Pilot's Lean Production
(page 690)
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This project focused on processing applications
for new policies
Process re-design principles for this project
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Co-locate linked processes in work cells
Standardize procedures
Eliminate loop-back
Set a common tempo, based on customer demand.
Takt time is the speed required to meet customer
demand.
Jefferson Pilot's Lean Production (2)
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Process re-design principles (continued)
– Balance the workload among employees
– Segregate complex processes.
 JP set up a separate work cell for applications that
required a doctor's statement.
 In general, set up separate work cells or facilities
for customers that require different resources or
different types of processing.
 Note: A work cell includes all the people and
resources required for a particular process.
Jefferson Pilot's Lean Production (3)
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Process re-design principles (continued)
– Post performance results for the work cell (visible
control and immediate feedback)
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Provided a board where employees could post
problems & discuss solutions.
Tested these ideas in a model cell before
implementing them for all applications
See performance results in textbook
Blockbuster's Project Store
Lean Operations Project
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Business objectives
– Enhance the customer's experience
– Increase sales
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Allow employees to spend more time with
customers
– Reduce costs
– Reduce employee stress
Blockbuster's Process Re-Design
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The goal was to simplify and standardize
processes across U.S. stores
Key process re-design principles
– Eliminated tasks that did not add value
– Separated customer-related tasks from those that
did not involve customers (example: shelving
videos)
– Reallocated the time saved to customer service
Blockbuster
Steps in Process Re-Design
1. Collected data on
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Processes used
Customer experiences
Customer satisfaction
How employees spent time (only 40% with
customers)
Employee frustrations
Blockbuster
Steps in Process Re-Design (2)
2. Worked with employees to identify improvement
ideas (brainstorming)
3. Tested the ideas in "learning" stores
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Involved employees in designing new processes
Gave employees "ownership" of the process
Refined the ideas
Did cost/benefit analysis
Developed flowcharts for the new processes
Blockbuster
Steps in Process Re-Design (3)
4. Trained employees in "pilot" stores to use
the new processes
5. National rollout: Implemented new
processes in all U. S. stores
– Human factors were the biggest obstacle to
implementation
Principles of Lean Services
Waste Elimination
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Re-design processes to eliminate waste.
– Eliminate unnecessary tasks
– See Jefferson Pilot example for other methods.
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Standardize processes.
Train workers in the standardized processes.
Re-arrange facility layout for a smooth work flow
– When possible, create a work cell for each process
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Use electronic document transmission to speed
work flow and reduce paper
Principles of Lean Services
Waste Elimination (2)
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Multi-functional workers are trained to perform
varied tasks
Use promotions and pricing to level demand
Eliminate interruptions or delays due to poorly
maintained equipment, inadequate computer
capacity, etc.
Principles of Lean Services
Waste Elimination (3)
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Set standards for suppliers, and certify suppliers
Standards may include cost, quality, on-time delivery,
frequent delivery, product flexibility, volume flexibility,
design assistance
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Reduce inventories by requiring suppliers to
deliver frequently, when that is economically
feasible
Track inventories using bar codes or RFID
Track sales trends, and order accordingly
Principles of Lean Services
Total Quality Management
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The principles of TQM that we studied previously
apply here.
Toyota principle (page 706)
– Before you do work, be clear about what you expect
to happen
– Each time you finish a task, see if what you expected
actually happened
– When there is a difference between what you
expected and what actually happened, solve the
problem while the information is still fresh
Principles of Lean Services
Total Quality Management (2)
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Quality at the source – Work is inspected
– By the person who did the work, or
– At the next work station, or
– By automated equipment or a computer
system
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Poka-yoke or mistake-proofing: make it
hard to do the job wrong (prevent defects)
Principles of Lean Services
Total Quality Management (3)
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Kaizen
– Continuous improvement
– Requires total employment involvement
– Essence of kaizen is willingness and ability of
workers to
spot quality problems
 generate ideas for improvement
 analyze problems
 perform different functions
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- This requires training
Principles of Lean Services
Total Quality Management (4)
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Visual control makes performance visible
– Can be applied to cost, quality, productivity,
safety, etc.
– Motivates people to solve problems
– Provides continuous feedback on
performance
© 1998 by Prentice-Hall Inc
Russell/Taylor Oper Mgt 2/e
Ch 15 - 28