Lean in service and administration

Although the lean principles were originally developed for production optimization, they can also be successfully implemented in the service and administration sectors. However, it does require acknowledgment that the tasks include production. The individual work processes in administration and service are usually activities that are largely repeated and where there is an expected output that can be standardized. Thus, there is a great similarity between the tasks in administration and service companies and in the production industry.

The implementation of lean presupposes a thorough feasibility study of the company and the processes that are handled at the organization's various levels. In administration and service subjects, knowledge of what is produced, and the processes associated with it is often limited to individuals and thus not attached to general guidelines and procedures.

This distribution of knowledge means, that there is a greater tendency for bottlenecks and breakdowns in production. This is due to the great dependence on the fact that all the respective specialist groups are at work and that they are performing what is necessary to meet the given demand. This form of work therefore entails low flexibility during, for example, holidays, illness, dismissal, and absence in general.

In administration and service, there is often a greater focus on the end result rather than the process, which means, among other things, that mistakes are often made. In addition, learning from this is limited, which is why mistakes are often repeated. At the same time, customers participate in the entire process, and not just the end product. This means that the customer can disrupt or influence the process along the way. The abrupt process makes it harder for employees to keep track of the overview and continuity of their work.

Another trend that is prevalent in management and service companies is short-term planning, which often lowers capacity utilization further, as this means that there are either too many or too few employees at work. A common excuse here is that one cannot plan or predict incoming work because the workload depends on the demand at the time in question. In addition, there are often problems with management in administration and service. Management often seems to be very little visible, and if employees have ideas for improvements or process changes, this is often a slow process.

Nine Steps

The above problems can be reduced or even completely averted by the implementation of lean. It requires a different perspective on administration and service. To adapt the lean principles to administration and service companies, we recommend that the following nine steps, are used as a starting point:

1. Understand customers and organize tasks. Clarify which customers are customers of the "production" and consider who is involved in the overall product. Next, consider whether those involved can be organized, and work together as a team, thereby increasing the possibility of flow.
2. Take charge and initiate active planning and management of the task flow. This should include a determination of standard time for each type of task, a historical analysis of the task approach and an analysis of expedition and resource consumption per task.
3. Create visibility. Establish visible and logical processes and set visible goals and results so that employees can follow developments or lack thereof.
4. Trust the standards. It is not only in work procedures that standards can help to lower the uncertainty and stress level of the individual. Physical standards, in the form of tidiness in daily work, can help make the workplace a more comfortable place for employees as well as lower their stress levels. It thus releases energy that can be used elsewhere where it provides value to the customer.
5. Clarify responsibilities. In the administration and service sector, it is often problematic to implement amendments to management. Visible management is important, especially when implementing lean. Management must take responsibility for the implementation, but at the same time they must also involve the employees by giving them responsibility. One way this can be done is by introducing teamwork. By working closely together in small groups, the employees' opportunities to have proposals implemented are increased - directly through the team leader.
6. Once the above foundation is put together, it is important to create a flow in the company. Flow is about reducing turnaround time by ensuring that work flows faster through the respective process levels. This process is characterized by value stream analysis. This process is about identifying the waiting time and the lack of flow in the processing time from the receipt of the order to the shipment. The problems regarding professional individuals can, among other things, lead to bottlenecks and thus unnecessary waiting time in the expedition. An example could be an insurance company where only one employee is available to take care a specific type of damages. If this employee is absent, the processing time of customers' cases will be delayed, which breaks the flow.
7. It is important to prevent and identify errors and sources of error. It is essential to take a critical look at the foundation that has been laid for the implementation and see if there are errors or shortcomings present. Often there will be a tendency to resolve errors the moment they occur, but this tendency hampers the possibility of learning, as one often fails to reflect on how and why the error occurred. It is also important to avoid placing the fault on the employees. Management must be held accountable for the mistakes, and a culture must be created where mistakes are accepted. There must therefore be a common consensus that mistakes are evolving and instructive rather than threatening.
8. When employees work to create and drive improvements of their own operations, Kaizen (the Japanese term for continuous improvement) is achieved. Here, continuous improvements of the process are considered, created, and initiated, and the employees, as well as the management, have all taken ownership of the process. Kaizen starts at the management level, with a search for improvements, while also providing space for employees to make improvements. This could basically concern such as giving the green light to use financial resources e.g., for purchasing new printers with shorter printing time.
9. The last point is to create added value for customers. It is a question of introducing and maintaining a culture where the company exists for the sake of the customers. The starting point for this is to define who the customer is. The customer is not only an external customer but can also be the department that continues to work on the product. Next, consider the perceived quality level of the individual customer, how much time is spent on the individual, and which areas can be improved in relation to the individual customer.

These points all serve to support a proper implementation of lean. The first five form the foundation on which you build your intervention. Thus, these five must be in place before work on the last four points is initiated.

Organization of tasks

When lean is to be implemented in a service or administration company, there are several things that need to be focused on in relation to the tasks. As mentioned, you must view the tasks as if they are each a specific production. In addition, the tasks must be organized. Many administrative teams do not have a tradition of working systematically with the nature of the tasks and perceive the tasks as individual sizes. The argument is that no two tasks are alike and therefore they must also be treated differently.

The individual treatment can have a very trustworthy effect on the customers, but the problem is that the similarities in the various tasks are not utilized sufficiently to develop competencies, management, deliveries, and services. If the tasks are not organized appropriately, it can result in the tasks fluctuating in quality, as they are spread out in the organization and the process is not organized. An example could be a patient course, where the patient is sent between different wards and through the treatment course receives many qualified but diverse answers and instructions from doctors and nurses.

To properly establish an organization, it is necessary to make some considerations concerning the tasks, such as at which points the individual tasks are similar and can be grouped, and where they differ. The right organization is important because a basic organization of the tasks in departments, teams, customer centres, etc. is crucial to how the organization works and meets the customer's needs. The service that the company offers to the customer has been through a process that often takes place across the organization and the given quality, while the speed is determined by the overall process.

The following seven points demonstrate an approach to understanding and organizing the tasks of an organization:

1. Map the different types of tasks by compiling a gross list of the most important tasks
2. State where the customers belong for each task
3. Apply relevant data to each type of task: for example, the annual number, which activities are included, how long the task takes to complete and what qualifications are required to solve the task.
4. Try to create patterns in the task list - consider which tasks are logically connected. Uniform tasks, same process, adjacent tasks in the same process, same customer, same competence requirements, flexibility, capacity load over the year, etc.
5. Assess the current organization in relation to the patterns in the task list - do they fit together, or are adjustments needed?
6. Record the most optimal organization and group the individual tasks in the right department
7. Prepare for new staffing

There will always be pros and cons to the way you choose to organize. However, there are some principles that from experience works as a guide. One of them is to build the organization as a process organization, i.e., around the products and deliveries that the customers demand (as opposed to a functional organization). Another good principle is to focus on building a broad, interdisciplinary specialization and not just function specialization.

In addition, it must be ensured that there are few changes of responsibility in the process, and that departments and teams have overall process responsibility.

It could be appropriate to divide the tasks within a department into product families, so that the task types are structured in uniformed groups. This way, a basis is created for more uniformed workflows, the processes are structured, and there is an opportunity to keep a more detailed eye on how the results are created. Thus, there is potential for initiating targeted actions and management of the service goals. Product families will typically reduce the average production time significantly, as it is possible to set different service goals for different products.

Focus on the standards

Standards is an essential prerequisite for creating sustainable processes as well as stable operations and are a crucial part of the foundation for lean. A standard is defined as a description of how a given process or activity is performed correctly and where the end goal is to create repeatable processes. Standards are designed as business procedures, instructions, illustrations, templates, guides, and the like. However, well-functioning standards are generally a rarity in administration and service.

Business processes and service goals are often not well documented, known or used by employees. Many companies have introduced comprehensive procedure descriptions that often require a great deal of effort for the employee to familiarize themselves with, e.g., because of their size. This results in the descriptions not being used in the daily work by the employees, who instead develop individual ways of solving the tasks. The workflows are handed over verbally to new employees, and the documentation becomes primarily "evidence" and not an incorporated tool.

You can incorporate a standardization culture in the company by following the points below in the build-up phase:

1. Initially, the physical environment must be cleaned up. All employees are actively involved, as the clean-up is the start of an ongoing, sustained process that must establish and maintain standards for the work.
2. The main processes of the company must be identified and mapped, and a collection of all the existing standards and procedures is to be carried out. This covers all process steps, including those that have procedures that are not used by the employees at present.
3. The target group for the standards is mapped and the ideal format is determined together with the target group.
4. New standards are established where they are missing. Make short checklists of what needs to be completed before a process step is completed.
5. Both new and old standards are communicated to the employees, so that they have the opportunity to familiarize themselves with which standards apply to their particular area of work.
6. Initiate a follow-up procedure that ensures compliance, such as goal management.

There is often a need to establish some standards for all the departments in a company, to be able to deliver a consistent quality. The establishment of the standards can prevent tasks from being passed on from one department to another, with a quality below expected standards. The Service Level Agreement (SLA) is a great tool to do so. In this way, a measurable expectation vote is added between the two parties on which service or product is to be delivered, as well as which specifications and which quality the service / product must contain.

SLAs can also be used internally in an organization, e.g., between sales function, order receipt and production. Optimally, such functions will be one and the same unit in a lean organization, but this is often not possible in practice, which is why SLAs can be a valuable tool.

Standards are thus a central part of production development. Without these, it is difficult to manage and optimize the processes in the company, as there will often be a lack of a common starting point. However, standards can be a very sensitive area, as employees may perceive the work with standards as a unification that approaches a sense of assembly line work. From a customer point of view, standards can also be seen as a deterioration in service, as the individual needs are seen as ignored. The preparation of standards is therefore a major challenge that requires the involvement of both customers and employees.

The importance of customers

Maximizing customer value is a fundamental aspect of lean philosophy. The customer value should govern which products and services the company provides to the customers. The focus is always first and foremost on the customers and not only on the internal work with systems and structures. This requires an insight into who the customers are and what they expect from the company.

There are many service organizations that do not have a clear picture of who their customers are. The first step is to create an overview. It can be useful here to map the customers by placing them in three groups:

1. External customers: The end customer who receives the final delivery.
2. Internal customers: Typically, other departments or individuals within the organization.
3. Stakeholders: Customer-like relationships with some who do not directly receive deliveries, such as authorities, politicians, and professional organizations.

In addition, work must be done to understand what creates value for customers and how the company can increase customer value. In this relation, the company may find that customers are emphasizing some completely different things than what the company thought.

In the work of exploring the customer value, you can use methods such as individual interviews and focus groups, where several customers gather and deal with a given issue. In addition to the mentioned methods, there are also several indirect methods such as customer satisfaction surveys, customer observations, market surveys and complaints. The conditions around the internal customers must be examined as thoroughly as the external customers.

Customer needs can be divided into four levels:

1. Basic needs: In a hotel context, it can be, soap, towels, and toilet paper. None of these are particularly valuable - unless they are lacking.
2. Performance requirements: Competition parameters, such as minibar, coffee machine and the selection of TV channels and movies. These are typical parameters that can make the customer choose another hotel.
3. Extraordinary needs: Needs that only arise when they are presented to the customer - example, the ability to check in using only their credit card and to sign on a monitor and then have their key card handed out immediately.
4. False needs: Needs that are seemingly real, but should not be present, as the need is created by poor delivery quality in other parts of the organization. An example could be a situation in a logistics company where there are many inquiries about packages that have not been received, couriers that have not turned up and payment that has not been transferred.

After the customers have been identified and the customer value has been mapped, work must be done to design the organization. In this process, we work continuously with a focus on customers and customer value creation. It is then important that the customer value is not perceived as a static quantity, but an element that changes over time. In the process, it is advantageous to make ongoing customer focus groups and customer surveys, which ensure that the organization constantly delivers services that are adapted to the customers' needs.

Implementation

Any change in the organizational structure and the day-to-day enterprises is significant at all levels of the company. It can therefore seem confusing to find out where to start and how to initiate the implementation.

Prior to the implementation of a lean program, you should consider whether the company is ready and open to a comprehensive change in the way work is structured. In addition, you should consider what funds are available to make a successful introduction of lean. Lean is not implemented from one day to the next. It requires time, resources, and endurance - partly from management and partly from employees. If this seems to be present in the company, the next step can be seen as the get-to-know phase.

In this phase, time is spent educating and motivating the employees and management in the exciting facets of the lean process, for example through courses and seminars. Here it is essential that you try to give the employees ownership of the change, as they will be more motivated to go wholeheartedly into the lean implementation.

This must be seen in relation to the next stage, the planning stage, where a strategy is laid out for the implementation of lean in the company. Among other things, this includes company surveys that shed light on the company's current reality, including jobs and work areas, objectives, as well as training and education.

The next step will be to implement the implementation strategy. It is crucial that the lean-trained employees spread the lean principles to their colleagues and around the company. In the implementation, it is especially important to identify and clarify the points that create value for the customer as well as the points that does not. This makes it clear to the employees where the focus should be.

In the next phase, the focus is on unfolding the implementation. This happens through improvements, i.e., through an improvement in production speed. After this, it is about continuing lean throughout the value system. The focus is not only on lean in production, but also on implementing the lean principles.

The final stage, the stage of excellence, is also the stage where the kaizen prevails. It is here that the preliminary results of the lean implementation are continuously analysed, so that work can be done to improve the areas for it, just as work can be done with new innovative ideas that will ensure the company's further development and survival. This stage is also called the permanent stage.

Pitfalls

In dealing with the implementation of lean, the most common areas of difficulty companies experience are:

1. Lean implementation is not linked to the company's strategy. There must be a connection between the company's strategy and lean.
2. Rationalization rather than growth. Lean dies if you start firing people along the way. Lean and growth belong together.
3. Lean is not anchored in top management. Lean requires a lean culture. As the management is the biggest carrier of culture, they must take the lead.
4. Lean is outsourced to consultants. Consultants are people of knowledge, inspiration, and experience. It is not their responsibility to introduce lean - that responsibility lies with the various levels of management in the organization.
5. Lean is implemented mechanically. Principles and tools are straightforward and relatively easy to learn. However, as implementation requires changing behaviours and attitudes, it takes longer time, requires more resources, and creates more problems than it immediately appears.
6. Systems, procedures, and processes are not adjusted. To be successful with lean, the company must be designed according to the customers, and the employees likewise strengthened in their problem-solving possibilities. All systems, procedures and processes that prevent the free flow of service to customers and information within the company must be redesigned. Management must take the lead in removing these obstacles.
7. The front-line leaders are forgotten. Team leaders or group leaders are key people. They are the ones who must take the daily battles between operation, firefighting and lean. Furthermore, they are the ones who must encourage the employees to embrace the new culture and without support for them, the implementation plan falls apart.
8. The gains must be visible on the bottom-line. Lean must be linked to budgets to monitor whether it works.

In addition, you must ask yourself the question: Is lean the right thing for my business? Many, especially lean consultants, will make lean appear as the solution to all the problems that a company faces - whether it is a school, a pharmaceutical company, or a service company.

The point is not that there is a particular type of business that cannot benefit from the lean mentality. The point is that you must be critical of lean salespeople and experts and make an informed and reflective decision if your own company will benefit from lean.

Closing comments

Many people mistakenly believe that lean is a Japanese invention. However, this is not the whole truth. Lean was developed by researchers from the Western world based on the philosophy that Toyota worked with in their “Total Production System”. Lean is simply the practical part of larger whole.

The other side of the coin is philosophy - the mindset that created and makes sense out of the tools that lean offers. The tools can provide improvements, but if you want to get the full benefit, the philosophy must also be implemented in the organization, otherwise the individual tools will just be fragments that do not work together.

If you believe that lean is something your company would benefit from, reach out to Nordic Logistics Partners, and let us support you in making a informed decision prior to implementation, and professional support during and after.

Daniel Olesen, CEO, Nordic Logistics Partner.