Jon: Thanks for having me here Brian.
Brian: Last year while I was at LabVantage, I blogged about our lunch together. We only touched briefly on Lean during that lunch conversation, but I promised my readers that we would get back together and talk about your passion for Lean. Well, I guess this is it!
Jon: That’s right. Before I learned about Lean I thought that I knew how to create and manage a process and that our team’s work was very efficient. What I learned is that bad processes beat good people every time. In reality we spent much of our time managing our processes, workarounds and inventory levels as opposed servicing our clients. Lean taught me how to convert all of that time managing our work into time spent creating value for our customers.
Brian: Sounds compelling, but let’s back up a bit for those who aren’t familiar with Lean. What is it, and why is it important?
Jon: Lean is the culture of identifying and eliminating waste while listening to what the customer really wants. Examples of waste in a process are un-necessary paperwork or the time work sits on your desk waiting for you to get to it. Lean helps hone your mindset on what “waste” is and also gives you the tools to get rid of it.
To me, Lean’s greatest benefit is improving people and giving them not just the tools to solve problems, but also the know-how and authority to do it. When you have a Lean culture everybody works more efficiently because it becomes engrained in their everyday life. I practice Lean just as much outside the workplace as inside.
Brian: Lean was originally a set of metrics and tools used to optimize manufacturing processes. But Lean can also be applied to services. Are there any special considerations when Lean is applied to services?
Jon: Compared to a manufacturing process, the service process is usually an ad-hoc set of steps that were strung together in sequence by the first employees doing it. Later hires change the process slightly to suit their personal habits. The result is that there is no standard process. A service process that hasn’t been “Leaned” is fertile ground for improvement.
When you apply Lean to a service you have an entirely new variable to contend with. It’s called human perception. Getting “buy in” from the team is paramount. In Japanese this is called “Nemawashi” which roughly translates to laying the “groundwork”. If the team doesn’t believe in Lean, then you will not succeed in implementing it.
What I like to do is to pick a small process and start with a “current process map”. Most service-based systems are ad-hoc or organic processes that just evolved overtime. More interestingly the people involved in the process don’t know what or how other group members do their jobs. The most common answer is “I don’t know….but I know this works for me”.
This is the discovery step that makes the process visible. All the communications, handoffs and deliverables are on one process map and everyone can see it. What instinctively happens next is that people see how wasteful some of the steps are and they immediately want to fix it.
Now I have “buy-in”. Now everyone can see the benefits of a “process map”, and I can start to implement change in a Lean fashion.
Brian: Do you have an example from your own experiences of a Lean services project?
Jon: I love accounts receivables. It’s the most overlooked part of any business; however, it goes to the heart of a company’s cash flow. Usually, everyone is so focused on completing projects for their clients that what gets forgotten about is invoicing for the service itself.
I went thru a two hour exercise with a controller and his entire team involved in invoicing and accounts receivables. After creating the “current state map”, we noted that there were several process steps that were batched on a weekly or sometimes monthly basis. Some of these steps were out of sync with each other, adding weeks onto the invoicing process.
In short, before we started optimizing, the DSO (Days Sales Outstanding) was in the 85 day range. Within two weeks we dropped that to 50 days, simply by applying some minor improvements. Within one month it was down to 35 days.
We made a number of changes to achieve this time reduction, many of them quite obvious once we saw the process on paper. For instance, we began invoicing on the same day as shipment, as opposed to once a week on Friday. This cut 4-5 days out of the process. We began to invoice by fax or e-mail instead of regular mail, saving 2-3 days per invoice. The most significant change was that we began to run an invoice aging report on a daily basis and followed up on the results immediately. This report had previously been run only monthly; running it daily cut a full 20-30 days out of the process!
Brian: That’s a fantastic case study for Lean. I’m sure there are countless processes in any services business that can benefit from close scrutiny and the application of Lean. What resources exist out there for a newbie to become familiar with Lean?
Jon: Most obvious will be my shameless plug for my blog Lean For Everyone, where I like to talk about everyday Lean…things you can do in your home life to make it easier. I’ve learned that by practicing Lean outside of the workplace, you get a greater sense of satisfaction because you reap 100% of the benefits. This then makes you want to implement Lean in the workplace, and over time turns you into a Lean champion. Some other great blogs are Curious Cat by John Hunter, Shmula by Pete Abilla, Lean Blog by Mark Graban, and Startup Lessons Learned by Eric Ries.
Some of the best books I’ve read on Lean for services are “The Complete Lean Enterprise: Value Stream Mapping for Administrative and Office Processes” by Keyte and Locher and “The Toyota Way to Continuous Improvement” by Liker and Franz. Also, if your company is in more of a startup or entrepreneurial phase, then you can’t miss with “The Lean Startup” by Eric Ries.
Brian: I’ll put in a plug for one of my favorite books on Lean, “Lean Six Sigma for Service” by Michael George. George does a great job of making the transition from Lean in manufacturing to applying it to services.
Well, it’s been an interesting discussion. Jon, thanks for taking the time to share with us today!
Jon: Thanks for having me Brian!
Update 6/22/12: If you work in a laboratory, read my interview with Jon about applying Lean to the lab on the Informatics Insights blog!
Have you used Lean to optimize your business processes or the services you provide to your customers? Do you help your customers to optimize their services using Lean? Leave a comment and share your experiences!