A Critical Analysis of the Implementation of Lean Principles in the Service Industry

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A CRITICAL ANALYSIS OF THE IMPLEMENTATION OF LEAN PRINCIPLES IN THE SERVICE INDUSTRY The operational systems of organizations can be viewed as open systems, which interact with their respective environments on a continuous basis. In this context, these systems comprise synergetic and interdependent subsystems of input, process and output with the main objective of these systems being to efficiently and effectively deliver goods and/or services to their demanding customers (Yasin and Wafa, 2002). Confronting the challenges of global competition, companies have to reduce costs, improve quality, and meet their customers’ ever-changing needs (Canel et al., 2000). Even though lean techniques were developed for the manufacturing firms and research journals have been slow to consider moving these techniques from the factory floor to nonmanufacturing environments, they are now being applied to service operations in manufacturing firms and pure service firms (Duclos et al., 1995; Swank, 2003). This report introduces the concept of lean and its similarity to the ‘just-in-time’ (JIT) philosophy. It further analyses a ’service’ by evaluating its characteristics while stating the lean principles and relating its applicability and how it can be used effectively in service sector firms. It concludes based on journal evidences that lean principles actually works and can work for service organisations. The lean concept started in the manufacturing industry with Toyota Motor Company being given the credit of developing the approach (Duclos et al., 1995) and it is often also referred to as lean production, lean manufacturing, Toyota manufacturing systems etc. The term Lean as defined by the National Institute of Standards and Technology Manufacturing Extension Partnership’s Lean Network is “a systematic approach to identifying and eliminating waste through continuous improvement, flowing the product at the pull of the customer in pursuit of perfection” (Kilpatrick, 2003). The term lean is linked with JIT. Though JIT involves producing products and services as needed, lean emphasises waste or muda elimination (Slack et al., 2009) with waste defined as “anything other than the minimum amount of equipment, materials, parts, space, and workers' time, which are essential to add value to the product or service” (Canel et al., 2000). However, Chase and Aquilano (1992) defined JIT as “a process-oriented waste-elimination philosophy”. Lean and JIT is used interchangeably in literature (see Greasley, 2009 pp. 349; Jacobs et al., 2009 pp. 404; Stevenson, 2005 pp. 617; Krajewski et al., 2010 pp. 316; Russell and Taylor, 2011 pp. 748) and for the purpose of this essay, the term ‘lean’ and ‘JIT’ will also be used interchangeably. All organisations engage in the creation of products whether it is in form of goods or services (Vonderembse and White, 1991). What differentiates a manufacturing firm from the pure service one is the level of service operation undertaken as shown in figure 1 (Levitt, 1972).

Service Components
All Organisations
Low
High
Non-manufacturing (Services)
Manufacturing
Service Components
All Organisations
Low
High
Non-manufacturing (Services)
Manufacturing
Figure 1: Service Continuum

Source: Adapted from Canel et al., 2000.
Services are generally perishable which addresses capacity utilisation, intangible (in form of performance, ideas or concepts) as reflected in consumer’s buying decision, heterogeneous as the same service can be provided by one employees to various customers with a discrepancy in the quality of service and lastly, the production and consumption of a service are done simultaneously and as such there is no room for quality control intervention (Rosen, 1990 in Canel et al., 2000; Moeller, 2010). THE LEAN PRINCIPLES

Womack and Jones (2003) identify five lean principles. Firstly, specify value as desired by the ultimate consumer; secondly, identify the value stream which includes all actions...
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