Lean Manufacturing Is Not for Service Organizations

Tripp Babbitt
Contributor: Tripp Babbitt
Posted: 05/26/2009
One thing I have learned from John Seddon (and Vanguard Consulting Ltd. my partners in the UK) is that that tools of manufacturing do not transfer very well to service organizations. Personally, I have always started with concepts and principles before tools, but command and control thinkers want the quick fix . . . so to the tool kit we go to for immediate results.

The problem is that there are differences between service and manufacturing. With more and more lean manufacturing people moving to service they don't distinguish the difference.

So let's establish the one big difference and it is in variety of demand. The Lean manufacturing folks love to start with 5S. 5S is a tool that is used to provide a standard workplace environment, establishing standard work and the removal of waste.

Failure Demand—The Standard Process’ Inability to Absorb the Variety of Demand that the Customer Brings

The philosophy is comprised of order, organization, discipline, elimination of bad habits and wasted effort. This leads to the standardization of work, wholly the wrong place to begin in service because of the variety of demand that customers bring to service organizations.

This creates failure demand when the standard process is unable to absorb the variety of demand that the customer brings. Command and control thinking managers love standardization because this allows them (typically) to blame the worker for the non-standard events, plus this allows them to do planning and resource management unaware of the need to separate the planning and operation management.

Command and Control: The Root of the Problem

Requirements for workers to meet standard times and work measures known as targets give us plenty of examples for this misconception. Dr. W. Edwards Deming showed us how to deal with variation and stood against the targets promoted by lean activities.

An understanding of variation is necessary in order to avoid tampering with the systems they work in. Unfortunately, this leads to increased costs and a drop in customer satisfaction that is a spiral adding more costs and decreased service to customers as the system becomes more burdened with command and control decisions.

Business process improvement and corporate cost reduction in service industry is best done without the influence of Lean or Lean Six Sigma manufacturing tools. They miss the point of variety in demand in service industry and lock in costs with their standardization activities.

There is a better way.

First published on the New Systems Thinking Blog.
Tripp Babbitt
Contributor: Tripp Babbitt
Posted: 05/26/2009

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