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Lean in Shared Services Organizations – Could Deliver Big Bang for the Buck …

April 24th, 2012 3 comments

Lean in shared servicesBusiness models becoming more complex, customers asking for more and more for less and less, competition much more fierce, and an incessant demand to keep costs (headcounts) down — a new reality that is not just gently suggesting, but  demanding more effective utilization of available, and often scarcer,  resources.

Enter – shared-services organizations.  A shared services organization (SSO) can theoretically consolidate support operations into a single organizational unit and substantially improve operating efficiencies by eliminating duplication and excess overhead, and streamlining and standardizing processes.  The SSO should be able to deliver a substantially better service at a substantially lower cost.  It should be a center of both value creation and cost reduction for the enterprise.  If it can’t do this, you have to ask … what’s the point?

In concept, establishing a well-functioning, value-delivering SSO sounds really simple. BUT, reality says not so fast.  I work with companies every day, and it’s a very rare event (and that’s generous) for me to hear someone say their internal shared service organizations deliver the highest-quality, while being the lowest cost provider of services.  Why is this?  Optimized internal SSOs should be able consolidate, standardize, and optimize known best practices for the enterprise, right?  They should be able to align with the strategic direction and goals of the company, and orient service levels towards improving customer experience, right?   I mean, they’re part of the enterprise, so they should be able to do these things at least as well and an external provider of the service, right?

There’s more to good shared services organizations than just consolidating people and systems …

Often times, it does seem that a shared services organization was built simply by throwing together people and systems from different areas and groups.  All I can say is good luck with this approach.  In reality, it requires a change in mindset and an increased focus on the overall business, and a hard look at the processes that are really needed to drive the business. No more living in that isolated black box.  Successful SSO’s integrate aligned and continually optimizing processes with right-fit people, information, and technology automation to deliver a totally new level of capabilities.

Download Lean Services

 a short powerpoint overview of Lean in Services Operations …

Download Lean in internal service functions  a example approach to applying lean at an operations level …

  • Understand the value stream, end-to-end, from both the customer AND the producer perspective.  You can’t optimize what you don’t understand.
  • Establish meaningful and actionable service and process metrics that serve all customers of the service.  Make the metrics visible.
  • Focus on driving efficiency by eliminating wasteful, non-value-add steps and unnecessary complexity — from supplier, producer, and the consumer of the service.
  • Constant focus on customer experience, alignment, and process improvement.  Well-executed, targeted Kaizen events can deliver improvements in weeks or days, not months or years.  And, those improvements positively impact all customers of the service.

There are many other examples, but the point is that if you’re looking for a place from which to pull significant additional value, then you may need to look no further than then enterprise’s shared services organizations.  And Lean may be a powerful and extremely cost-effective tool to apply.  As always, feel free to contact me directly if you’d like to discuss in more detail.

Small Steps Lead to Success for Lean in Service Operations

April 13th, 2012 Comments off

Lean - Small Steps for Service OperationsImprovement is about change, and change is tough.  It doesn’t matter if you are trying to change personal health habits or a critical business process, it’s just tough.  But change in Service Operations is particularly difficult because so much is not visible to easy inspection, embedded in individuals, lacking data, in constant flux, and dependent on many variables.  These same challenges apply to deploying Lean in Service and Back Office operations.

A natural path many disciplined thinkers follow for any improvement of any type is to thoroughly understand the total system before embarking on improvement.  But within Service Operations the complexities are so great that to thoroughly understand the system requires so much time and investment that the business gives up on the effort before ever getting improvement activities that yield results off the ground.  This is made even more challenging because of the tight resource constraints we face in this economic environment and the demands of ever more discriminating customers.  As in all businesses these days, Service Operations must do more with less.

Our proposed philosophies at a deployment level, about which we have written often, are things like pulling capability development at the rate the business needs it, building foundational capabilities broadly before developing advanced capability, paying for new capability development by providing hard returns on investments as they are made, and aligning resources and efforts to business and customer metrics (i.e. things that really matter).

Download Lean Services

 a short Powerpoint discussing Lean in Service Operations …

We take these philosophies down to a project execution level by building an understanding of the project problem solving roadmap and moving back and forth between tools to validate project assumptions while using a lot of tollgates so as to invest time wisely.  Use a problem statement and simple SIPOC to define goals, owners, team members and the process. Take that to tollgate to ensure alignment before moving to deep process characterization.  Use the SIPOC’s process column to do a preliminary value stream with some simple time and quality assumptions and conduct a tollgate review before moving to functional flow charts or collecting data.  Do a simple fishbone diagram to validate the demographics of the data before moving to a more detailed FMEA or creating a data measurement system.   And constantly validate the business case and alignment.

The point is that the need to use resources wisely and drive change counter intuitively means we should take many smaller steps rather than looking for the big steps.  The complexity and immaturity of the system makes the understanding of the overall system too expensive and the success of a big, top down project too low a probability.   Keep this in mind when trying to deploy Lean in a services operation, and your chances of success improve greatly.

If you would like to discuss any of these points, feel free to contact me .