Lean in the Service Industry

Lean in the Service IndustryPoint of View

January 2005

DRAFT

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Confidential not to be used without consent

Kinetik Solutions

The Service sector faces twin challenges of improvingtotal customer service and managing costs

• Back Office Processing and CallCentres will continue to grow– Forecasted to continue to grow until 2008

– Retention and Stress continue to be a major problemin this sector

• Customer are demanding excellenceService and are fickle– Survey by Amdocs (2004) finds that 80% of UK

consumers are prepared to change service providersafter just one negative experience

– Research by First Direct (2004) shows that poorcustomer service costs almost £14 billion (across allsectors) yet receiving good service is important to97% of customers

• Huge variety of product and ‘specialcases’ which seems to make creationof standard flows and processes‘impossible’

• Employees in the industry work atdifferent levels of competence.– Lack knowledge or initiative to ‘solve’ problems

relative to customer expectations

– Silo Environments exist : Individual Problem expertsrather then process experts

• Efficiency is Poor, with high levels ofRework in Back Office Services– Upto 20% of work done is non value added or rework

Resolving Customer requirements seems to be in directconflict with reducing costs!Resolving Customer requirements seems to be in directconflict with reducing costs!

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Kinetik Solutions

Lean Solutions developed over 20 years in ‘industrial’environment are easily transferable to Service Industries

Effect on Service Flow CustomerSatisfaction

Lean/Agile Methodology

Eliminate waste inprocess flowEliminate waste inprocess flow

Consistent Outcomes

Reduce Lead Time &Batch Size of workReduce Lead Time &Batch Size of work

Capacity Plan and tailorto total demandCapacity Plan and tailorto total demand

Less Work in Progress

Fast Response toExternal Change

Reduced Double Handling

Fast Turnaround time

Standardise discretework in process flowsStandardise discretework in process flows

Create and DestroyWorks Streams to fit

customer needs

Create and DestroyWorks Streams to fit

customer needs

Create multi functionalhigh competence teamsCreate multi functional

high competence teams Reduces Stress on Team

Receive Claim Waiting Pile Process Claim

Pass to Expert

Customer Query Recheck

Cost Reduction

Outcom

es of Lean and A

gile

Customer

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Kinetik Solutions

Phase 1Assessment

Phase 2Design Future State

Phase 3Roll Out Implementation

Project nProject n

Blue Print ofChange

Design FutureState

Wave 1

Wave 2Wave 3

Wave 4

5-6 weeks 2-4 months 6-18 months

The approach is based on early ‘quick wins’ and aphased approached to implementation

• Our approach is based on our proven methodology that generatesimmediate benefit

Training & Knowledge Transfer Sustainability

Lean Change does not need long analysis, strategy andplanning before commencing.Lean Change does not need long analysis, strategy andplanning before commencing.

Pilot

DEVELOP QUICK WINS

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Kinetik Solutions

• Credibility for Change

• Shared Knowledge

• Pragmatism in Journey

• Focus on learning andmoving forward

• End to End CustomerService optimised

• Sustainability

Several Critical success factors will ensure long termvalue realisation for Lean

Robust Champion:‘walks the talk’

Rapid transfer ofSkills

Holistic Team

Learning byDoing

Selective in Toolsof Implementation

Focus on End toEnd Process

CustomerInvolvement in

change

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Kinetik Solutions

Kinetik Solutions has wide experience in ProcessImprovement and Change Management

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“I was impressed at the ability ofyour process team to grasp theissues and get to an effectiveconclusion so quickly. It is clearthat you played an important partin that”- General Manager Operations,British Airways, EfficiencyImprovement Project

“The quality of (his) approach,use of tools and techniques andend delivery of the documentedoutputs were all excellent”- Head of Business Change,Abbey, Facilitated SalesProductivity workshop