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How to apply Lean in services to create value for the client?

11-10-2017

  • What is the daily average flow of clients, queries or tasks?
  • How many full-time jobs are needed to serve the flow?
  • How much time on average does it take to serve clients in terms of different issues?
  • What should be the goal of each employee so that I could serve our clients more efficiently?

This is a rational sequence of questions that managers, working for service providers or in production support, ask themselves. I can see how managers’ eyes light up when they start thinking about measurements :). If they also visit production companies that use LEAN, they soon start employing performance indicators to increase efficiency as well.

“If a production company measures the capacity usage of separate devices, fluctuations in speed, downtime, then service providers can measure the efficiency of functions or even employees,” a manager usually thinks.

Imagine that you come to an architect with a request to design a house or want to take a mortgage out of a bank. Can an architect or a bank consultant provide you a service that meets your needs immediately? How many times will you have to interact with the production process until you get the final blueprint of the house or pay the mortgage?

The main difference between production and services is that in services, the client participates in the production process. Thus a much greater demand variation occurs in services compared to production. Processes that perform services face two types of demand: value-creating requests and faulty requests by clients.

Value-creating request occurs when clients want services because of which the company or process exists.
A family requests an architect to design a house according to their needs.

A faulty request occurs when we fail to provide a correct service or have promised something that we did not do to an internal or external client.
The family calls an architect and asks him to redesign the bathroom.

Faulty requests by clients frequently constitute from 30% to 60% of all demand in financial, design, construction, health and IT services. Faulty demand might reach 70% to 90% in telecommunications, police and municipalities (according to research by Vanguard UK in 2016). 

Employees who work with service processes use up to 80% of their time to fix the errors occurring due to faulty processes in the company.

Below you can see the insurance premium process (a working diagram from our diagnostics). 56% to 78% of the incoming queries by clients are faulty due to various causes in the process flow.

Imagine for a moment that we measure employees in an insurance company like this:

  • “the expected/actual number of received requests”
  • “the exceeded or maintained insurance payment sum”
  • “the expected/actual number of sorted/investigated cases” etc.

The client meanwhile wants to get the insurance premium as smoothly and quickly as possible.

How do these indicators relate to the client’s expectations? Which of these goals helps to meet the client’s need correctly from the first time? Which one helps to transfer correctly performed tasks from one operation to another? How can the payment time be shortened if the attention is focused on the efficiency of separate operations without knowing how the demand is distributed throughout the entire process?

Not knowing how to employ faulty demand to increase the created value, us, managers, start measuring the efficiency of separate operations, introducing more waste into the process. We start seeing things clearly after having studied the process thoroughly.
Faulty requests by clients demonstrate bad connections between processes in a company where wasted time, efficiency, expenses and, most importantly, the concern or disappointment of your people in the values of the company are hidden, because one of your values is most likely concerned with creating value to the client.
A faulty request must be transferred throughout the entire process flow (end-to-end) and the client’s journey must be measured in horizontal indicators. Then the application of LEAN will create value for clients, increase the efficiency and quality.

 

LAURA GERRITS-GEDVILE, HOLISTIC COACH, FOUNDER OF UAB IMPROVEMENT

 



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