Cutting Out Waste in Service Sector

Lean Office:

Lean office is a place where all business transactions take place Right the First Time (RFT) using the lowest possible cost or resources.

Doing transactions right the first time is not easy, but doing so can be an effective way to begin a lean journey. This concept, known as first time right, involves making sure that all activities are carried out in the right manner the first time and every time.

First time right also helps address the eight wastes of Lean. By diligently following this spirit of making things right the first time, each of the forms of waste can be reduced, as explained here:

1. Defects - Anything deviated from the customer expectation is defined as a defect. The defect is a direct result of an error in the service delivery process. Any service rendered to a customer that is not first time right - wrong delivery, data entry or diagnosis in a hospital - is a defect. Services do not have the luxury of rework; any defect remains a defect.

2. Overproduction - In services, rework - not doing right first time is treated as overproduction. It takes up effort that should be going into a fresh transaction. For example, a package mis-delivered results in an extra pick up and delivery to the correct destination.

3. Processing - In services industries, a lot of processing takes place to prevent defects from reaching the customer. Inspection is a pure non-value-adding activity. Hence, inspection needs to be performed only when absolutely necessary and should not be used as a filtering process to hide the inefficiency of the input. If a customer address is not captured accurately on a majority of applications, it is better to devote time and effort on correctly capturing the information the first time rather than deploying someone to check and rectify all the applications.

4. Waiting - Any difference between the processing turnaround time and customer demand results in customer waiting time. In many cases, the processing turnaround time increases due to rework for activities that have not happened correctly the first time. For any kind of rework, there is waiting involved - usually on the part of the customer.

5. Inventory - Things In Progress (TIP) is treated as an inventory in a service organization. Services cannot be stored for future delivery. A hotel room left vacant for a night is lost business forever - it can never be recovered. Keeping loan applications in a bank without processing as expected by the customer is an inventory where the money is tied up.

6. Motion and 7. Transportation - Services incur motion and transportation in the form of various handoffs that take place at stages of service delivery. Any rework results in more of these handoffs. For example, a loan that has been rejected due to incorrect income calculations goes through multiple handoffs and approvals before it is corrected.

8. Underutilized people - Some service delivery processes have not been designed to serve the customer right first time which leads to create a hidden office where detection and correction of mistakes take place. In general 20% of the people work in the hidden office while the balance work in visible office. The hidden office is purely a waste.

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