In the west, service businesses dominate the corporate landscape. In the UK alone the service sector is almost 80% of GDP compared to 45% in 1948. For such a large sector, from an operational perspective the factors that affect customer choice are Customer Experience, Quality of Service and Speed.
Operational excellence concepts were born in the Manufacturing industries. Lean is a well-known methodology for Operational Excellence, and it increasingly plays a large part in the service sector. For example, almost 65% of Finance sector organisations in the US1 are involved in Operational Excellence while in Europe 50% have or intend to have an initiative in Operational Excellence2.
Lean also has a rich pedigree of simulations to enhance learning. These are played by groups or teams and the experience is an excellent way to learn about the 5 Lean principles, the definition of customer value and the 7 wastes. In my 19 years as a consultant, and having been involved in many lean simulations, it is very clear that people gain deep experiential knowledge, as well as better transfer retention of Lean principles, when they play such simulations. As Lean thinking has matured there has been a host of simulations in the market place, some which are basic (e.g. The 5S numbers game) to some which are a bit more complicated (e.g. The Plug Game).
However Lean simulations for the service sector need to be fit for purpose. Many of the current simulations are manufacturing based and still used in service industries. Even the ones that claim to be “service” are based on more administrative/support activities rather than a full end-to-end customer process.
In my view Lean Service Simulations should have the following features:
- Based on Real Service Processes: These are processes such as opening a new bank account, insurance claims, buying an online product, health intervention etc.
- Reflect Customer Experience: Customer experience is a core part of service delivery. Customer value exists in several dimensions (e.g. efficiency, quality and overall experience) and this is how customers judge the service process. In recent research the experience has often been the overriding feature even over functionality.
- No ‘one-size fits all’: A set Standard processes do not work in the service sector. Lean simulations must recognise that a standard process cannot serve each customer individually, as there will be variations within the standard work such as sub process variations.
- The Right Set of Measures: There has to be a built-in measurement process that connects process measurements (i.e. cycle times, lead times, resources, quality outcomes, experience) to the bottom line (e.g. costs, revenue, reputation, asset utilisation).
- Improvisation: The simulation must allow the facilitator to improvise. More flexibility for the facilitator allows them to run the simulation so that the simulation will meet the learning needs of the organisation around Lean.
- Fun: Simulations must incorporate a strong element of fun while learning to keep people engaged. Laughter and humour combined with experience bring about eureka moments.
This has led me to design a new Lean simulation around a fictitious Insurance company, InsureFlow that specialises in asset insurance and trades internationally. One of InsureFlow’s divisions provides tractor insurance. The goal is to deal quicker with claims, ensure a good service experience while improving productivity, reducing stress in the workforce, and achieving sustainable benefits to the bottom line.
The simulation will let you understand the five principles of Lean, recognise the 7 wastes in the company, and grasp the relationship amongst customer value, demand, variation and their relationship to capacity and resources.
The simulation comes in a well-presented box with clear instructions and a facilitator guide. Alternatively we can run the simulation for you at your premises. You can find more about the simulation at https://kinetik.uk.com/products/leansimulation/.
Ketan Varia, with editorial support from Burcu Atay
- Marc Beaujean, Jonathan Davidson, and Stacey Madge; “The ‘moment of truth’ in customer service”, Mckinsey Quarterly. 2006
- “A new perspective on operational excellence”, Eurogroup Consulting. 2013.