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Q1. Lean Six Sigma and Service
I know about Lean manufacturing from Toyota. How would you suggest I use Lean tools and Six Sigma in my Service business? I take telephone orders for Insurance.

Q2. Putting Customers at Risk With Lean
My company is being counselled to strip away inventory and align processes to free up cash. It appears we may put customer service at risk. How do we cash in safely?

Answers

A1 . Lean Six Sigma for Service
Lean and Six Sigma were tools that were first used in businesses that had manufacturing bases. They apply to every type of business. Service businesses need them just as greatly to cut out waste and achieve high levels of customer satisfaction.
Taking customer orders over the phone is an example of a transactional process.

The 7 wastes of Lean all may apply:
a. Over-processing. Recording the information received in 2 separate locations.
b. Transportation. Hand-offs from the receiver to a second person to locate the customers’ files and records.
c. Motion. The customer is asked to retrieve information not to-hand at the start of the call from bank accounts or existing insurance details during the call.
d. Inventory. Orders are assembled into a batch so that each customer must wait longer than necessary for the Underwriters to be called about their particular enquiry or application.
e. Waiting. The next step may be a call to the under-writers. This is delayed by an hour to attend a staff meeting on relocation.
f. Defect. The customer’s phone number or e-mail address has been entered wrongly with no back-up check, and the enquiry is stalled while a search is made for the number/address.
g. Over-production. The order is placed and an invoice arrives. The process is repeated by mistake by another operator, and a second invoice is sent out.

If these sort of things do not happen in your transactional processes, then all the Companies I have visited over the years in manufacturing and supply must be very unlucky.

Six Sigma helps address the root causes of the defects and process elapsed time that is the mirror of any inventory in every process.
Reliable, high quality-every time processes lend themselves to reduction of inventory and using human resources where it is most needed rather than accommodating errors in a poorly designed system.

Customers and clients will not pay for inefficiency, and nor will they return if you make a critical error. Lean and Six Sigma will protect and serve you well.

A2. Lean and the Risk to Customers
Lean tools work. Used badly they hurt your business by exposing the customers to internal defects that your current process catches and manages for you.
Robust, dependable, reliable processes and equipment can be coupled together to take out wastes of motion, transportation, over-production and other forms.
Coupling unreliable processes reduces efficiency of the whole and leaves the business vulnerable to short-term variability by tempting managers to cash inventory in before the process can support it.

Take an example:
In a “World-class” manufacturer they coupled 4 process lines together in one “customer flow”. The reason was reduction in manpower and inventory.

Process 1=85% efficient (overall equipment effectiveness)
Process 2=85% efficient (overall equipment effectiveness)
Process 3=85% efficient (overall equipment effectiveness)
Process 4=40% efficient (overall equipment effectiveness)

The team considered a “miracle” would occur and when coupled the OEE would be greater than 0.85*0.85*0.85*0.40 = 25% efficient.

A sister plant in Mexico ran such a combined flow with less waste and succeeded because the TAKT rate (demand rate) is only 25% of the rate of the site considering making the change.

So, to cash in on waste use reliability tools and six sigma to identify the causes of defects and non-value added elapsed time, and tackle these BEFORE combining equipment or processes into flows.