Posts Tagged ‘Service Organizations & Operations’

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).

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 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 .

Lean for Service Operations – It Really is Different …

March 30th, 2012 2 comments

Lean Services vs. Lean ManufacturingWe have many conversations with companies that want to talk about applying lean in areas other than manufacturing.  Some of these companies are manufacturers that have been doing Lean for years, and doing it well in their productions operations, but not at all in non-manufacturing parts of the business.  Others are pure services companies like telcos, banks, and insurance companies that are just now starting to explore Lean.  In many cases, they’re looking at Lean because they’re being asked to do more with the static or declining headcounts.

One of the challenges that I keep seeing is that companies try to do Lean Manufacturing in a services environment.   Let me be blunt … if you think you can blindly copy the tools of Lean manufacturing in a services environment, you’re setting yourself up for failure.  We see this happen when manufacturing companies that have had great success with Lean in the production operation try to take their Lean manufacturing experts and approaches and leverage them to roll out Lean in services operations.  These people may indeed be Lean manufacturing specialists with great knowledge, but this doesn’t mean they can effectively roll out Lean in non-manufacturing aspects of the business.  In most cases, it doesn’t work.  The same thing happens when services companies hire a Lean manufacturing expert to help them.  It just doesn’t work.  Why?   Because Lean in a services operation is just different, that’s why.

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this powerpoint overview of Lean in a Services environment …

Now, we could dive right in and start looking at a lot of individual tools and see which ones fit well in a services environment and which ones don’t.  But, I think the better approach is to take a step back and look at the differences from a business perspective first, then come back and start talking about tools and approaches.  So, here are some of my thoughts on how a services environment is different, and these difference most certainly impact the way Lean should be rolled out.  I encourage our readers to chime in with their own ideas.

  • There is typically greater involvement of customers in the production process. In many cases, the customer is a supplier to the process.  Sometimes the involvement is so ingrained in the process that you really end up with co-production with the customer.
  • Since services processes are often very people-centric (vs. machine-centric), it is very difficult to get to real standardization.
  • Quality is an experience, not just a measurement against specifications.  The inability to standardize the process makes it very difficult to standardize quality.  The customer’s definition of quality is a perception, subjective vs. objective
  • There is much less visibility to what is happening.  Information is flowing, not product, and that information can be digital, paper, or even verbal.  And, HOW it flows often has little or no standardization
  • IT systems play a much bigger role.  They enable the process, but can also be a rigid constraint on the process.   There may be multiple and often un-integrated systems.  Workarounds persist in the form of excel spreadsheets, word docs, etc
  • WIP and inventory are often hidden and ignored, but they are there and can have the same negative impacts as in a manufacturing environment (e.g. wasted resources, longer lead times, more variation

These are just a few of the key distinctions, and there are many more.  But they do point out some fundamental differences in manufacturing and non-manufacturing operations.  The differences are so stark that common sense should tell you that you cannot roll out Lean in a services operation the same way you do it in a manufacturing operation, not if you want to see results, and our experience here at Qualtec backs that up.

This is but the first in a series of articles we’ll publish on this.  I invite your thoughts, comments and feedback.  Feel free to contact me if you’d like to discuss.

Applying Lean at an Operation Level for HR, Finance, IT and other Internal Service Functions Can Yield Good Results

October 21st, 2011 3 comments

Organizations are increasingly adding tried and true Lean principles, tools and techniques to their continuous improvement initiatives to eliminate waste, improve customer satisfaction and reduce unnecessary costs.  And rightly so.  Successful Lean routinely reduce operating costs 20% – 40% and cycle time by even greater margins, and those cost reductions often go straight to the bottom line.

Lean Operations, Lean Management in Internal Services FunctionsTraditionally, in applying Lean, trained teams identify then eliminate or significantly reduce the non-value added activities and related costs for specific processes within their operation.  But what if there are no “trained teams”?  What if process boundaries are unclear in a functionally silo’d organization?  Does this mean you can’t do anything to get results until significant infrastructure is in place?  I think not.


Download an overview of our approach for applying lean at an operations level for internal service functions a short overview of our approach to applying lean at an operations level to internal service functions

We’ve found that Lean concepts and tools can be leveraged at a higher, function or operation level  very effectively.  The good news is that this approach delivers impressive business results on its own in the short term AND sets the stage for even more impactful process level improvements.  This is especially true for back office / internal service operations like HR, finance, IT, sales and marketing, supply chain management, etc.

Lean applied at an Operation Level for internal service and back office functions like HR, Finance, Procurement, IT, Marketing and Sales, and Supply Chain Management can make an immediate business impact …


The idea is to identify a complete business operation‘s most impactful cost drivers, BEFORE tightening focus to any process/subprocess in the value stream.  For those of you that have done Lean at the process level, I know this sounds a bit strange and your first thought may be that the scope will be too big and nothing will get done. But, our experience is that this can work very well and be very impactful:

  • It can serve as a front-end audit function, greatly helping to identify next tier focus areas.
  • It recognizes and works within functional boundaries that exist in the enterprise, as opposed to attempting to force artificial process boundaries that, while may be desirable, do not exist
  • It maps and costs all key value streams of a targeted business function or sub-function, a necessary prerequisite for lower level improvements
  • Attacks waste organization wide,  in both the supply-side (internal function itself) and demand-side (customer, consumer of the output).
  • It consistently identifies low hanging fruit opportunities that can be realized immediately
  • It can be used to jumpstart a new lean initiative or address unrealized opportunities from earlier lean events.

Lean Operations (lean applied at an high-level operations level) can definitely be a powerful tool for enterprises that are looking for immediate cost savings and/or performance improvements in internal service operations, but don’t have the desire/bandwidth/budget to start up a formal Continuous Improvement program.   It can be applied to an entire operation (e.g. HR, finance, Legal, IT, etc)  in a relatively short time period, and it does not require a big investment in training and infrastructure.  For those organizations that do want to move to a more structured Continuous Improvement program, it can be an excellent way to jumpstart a BPM, Lean, Six Sigma, etc. program

Need to improve performance or lower costs in internal service functions like Human Resources (HR), Finance, Procurement, Supply Chain, IT, Marketing and Sales, or any other back office type function?   Contact me to learn more about our approach to applying lean at an operations level.