Lean Systems is described as a managerial philosophy which enhances the value perceived by the customers, by adding product and/or service features and by continuously removing non value added activities (i.e. wastes), which are concealed in any kind of process. To reduce waste, the lean manufacturing is capitalizing on various tools at its disposal including regular process review. In particular the five Lean principles proposed , these 5 principles are Define Value, Value stream, Flow, Pull and perfection.

1. Master of International Business Administration
(MIBA)
Lean Systems Adaption in
Services Industry
Project Supervisor: Dr. Abd El Monem El Saied
By: Ahmed Mohamed Adel
Academic Year 2012

2. What is Lean Systems?
Why Lean systems?
Why in Services industry?
The Debate Between Man.
And Services industry
How does it work?
Service Value Stream
Management
Lean Systems disadvantages.
Conclusion
Contents

3. Lean System
What is Lean System?
• Lean Systems is described as a
managerial philosophy which enhances
the value perceived by the customers, by
adding product and/or service features
and by continuously removing non value
added activities (i.e. wastes), which are
concealed in any kind of process.
 To reduce waste, the lean manufacturing is
capitalizing on various tools at its disposal
including regular process review.
 In particular the five Lean principles
proposed , these 5 principles are Define
Value, Value stream, Flow, Pull and
perfection.
The Process
Define
Value
Identify
Value
Stream
Make the
stream
flow
Implement
pull
system
Strive for
Perfection

4. Lean System
How did it evolve? (Historical Background)
• Toyota production system (TPS) is
considered the base stone of Lean
Systems, introduced by Toyoda Sakichi
(1867-1930) and Toyoda Kiichiro (1894-
1952).
• TPS is described as an integrated socio-
technical scheme that systematizes
industrial and logistics for the automobile
manufacturing companies, including
interfacing with suppliers and consumers.
• According to Taiichi Ohno, the Japanese
based production technology principle
contributed most to the world in the latter
half of the 20th century.
Toyoda Sakichi

5. What is Lean Systems?
Why Lean systems?
Why in Services industry?
The Debate Between Man.
And Services industry
How does it work?
Service Value Stream
Management
Lean Systems disadvantages.
Conclusion

6. • It is well perceived about the
lean system, that it greatly
improves customer
service, feedback, quality and
profitability (Standard et
al, 1999).
• It has been adapted by many
multi-national manufacturing
enterprises and shown
significant positive impact on
quality, cost, productivity and
profitability.
Increase Quality
Decrease Cost
Increase productivity
Increase Profitability
Why Lean
System?

7. What is Lean Systems?
Why Lean systems?
Why in Services industry?
The Debate Between Man.
And Services industry
How does it work?
Service Value Stream
Management
Lean Systems disadvantages.
Conclusion

8. Services Industry Importance
Why Shall it be applied in
services industry?
• Services industry application is
participating in the global GDP by 63.4%.
• Its participation in some countries GDP
reaches almost 80%.
• Services industry needs of increasing
quality, profitability , productivity and
decreasing cost is as much essential as in
manufacturing industry.
Services Output as a Share in GDP
Country 1960 1970 1980 1985 1990 2011
(estimate)
Canada 46.2 52.4 53.8 55.7 69.7
Germ. 45.8 45.6 49.4 50.6 53.7 70.6
France 49 50.3 52.4 54.2 56.8 79.5
UK 54.9 57 59.9 63.1 77.8
Italy 59.4 57.5 58 58.8 73.4
Japan 57.8 59.7 58.5 59.4 71.6

9. The Debate about difference between
Services and Manufacturing Industries
• There is a debate initiated that there is fundamental difference between
manufacturing and services industry and whether they shall be treated in
the same manner,
• The four major difference points (Grönroos, 1990)
1- Services are more or less intangible,
2- Services are activities or a series of activities rather than things,
3- Services are at least to some extent produced and consumed
simultaneously, 4- The customer participates in the production process at least
to some extent.
However:
1- Dealing with a good or a service it is considered to be a demand
for the client that should fulfill his needs and ensure his satisfaction
via an organized set of processes.
2- Lean System shall adapt and mutate to serve the service industry.
3- Lean system has to redefine some of its steps to succeed.
4- Service Value Stream Management has been introduced.

10. Types of Waste
In Services (Bicheno and Holweg, 2009)
1. Delay on the part of customers waiting for service.
2. Duplication. Having to re-enter data, repeat details on forms, copy
information across, etc.
3. Unnecessary Movement.
4. Unclear communication, and the wastes of seeking clarification,
5. Incorrect inventory.
6. An opportunity lost to retain or win customers,
7. Errors in the service transaction, product defects in the product-
service bundle.
In Production
(OHNO, 1988)
1. Overproduction,
2. Unnecessary
transportation,
3. Inventory,
4. Worker motion,
5. Defects,
6. Over processing,
7. Waiting

11. What is Lean Systems?
Why Lean systems?
Why in Services industry?
The Debate Between Man.
And Services industry
How does it work?
Service Value Stream
Management
Lean Systems disadvantages.
Conclusion

12. Lean System Steps
Define Value
Is about providing the
full value that
consumer’s desire
from their goods and
services, with the
greatest efficiency and
least pain
Value Stream
Is a sequence of
activities necessary to
design, produce or
manufacture and
provide a specific good
or service and
describes as well
which
information, materials
and worth flows.
Flow
Work should flawlessly
flow from one value
added process to
another.
All the efforts should
be concentrated in
eliminating &
preventing any
bottlenecks that may
rise during the flow.
Pull
The goods should be
driven by the
customer demand
which pulls the work
through the system
and not pushing the
goods to the customer
that not needed.
Perfection
Leverages the process
knowledge of frontline
workers
 Lean principles proposed, these 5 principles are Define Value, Value Stream,
Flow, Pull and Perfection.

13. 1- Define Value
• The customers are the ones
who define what they value
in specific products and/or
services.
• It is about providing the full
value that consumer’s desire
from their goods and
services, with the greatest
efficiency and least pain.
• Specifying Value must be
carried out on a continuous
basis as customers change
their mind with time.
Value
Add
can simply be distinguished as the activities
that changes the form or function of a product
or service and this is what the customer is
willing to pay for.
Non
Value
Add
are the activities are those which don’t add
value to the process and will not impact the
specifications required by the customer.
Essential
Non
Value
Add
is designed to insure that the value add
activities are implemented correctly and
completed to reduce waste (ex. Quality
Control).
Waste Is the unintentional use or consumption of
resources or during the process, leading to
lose
(time, money, materials, machine, manpower,
etc…), cost increase will be a significant
outcome of this loses.

14. 2- Value Stream
• The Value Stream is a
sequence of activities
necessary to
design, produce or
manufacture and provide a
specific good or service
and describes as well
which
information, materials and
worth flows.
VSM This approach
1- Implements Visual Management as a way to
communicate organizational goals and
2- Documents the relationships between the
shop-floor processes and the control policies
(such as production scheduling and production
information), used to manage these processes.
Current
State Map
A “current state” map is created to illustrate and
define the flow of the current process and its
performance levels.
Future
state map
The “future or desired state” map is designed to
show the desired flow of the process and its
targeted performance levels.
• Consists in the definition of
two maps, being a
graphical representation
of both materials and
information flows within a
facility
Value Stream Mapping (VSM)

15. Value Stream Mapping
Current state Map Future State Map
Value stream mapping uses group of previously defined icons that indicates activities
and process flow.

16. 3,4 Creating Value Stream Flow &
Pull System
Value Stream Flow Implementing Pull System
• The products should be driven by the
customer demand which pulls the work
through the system and not pushing the
products to the customer that not
needed.
• Under the lean concept work should
flawlessly flow from one value added
process to another forming a streamlined
batches moving along from one step
through the another one,
• All the efforts should be concentrated in
eliminating and preventing any
bottlenecks that may rise during the flow
Push system:
A production method based on keeping up with preset
inventory levels or with due dates for customer orders
rather than customer demand.

17. 5- Perfection
• Leverages the process knowledge of frontline workers.
• Management shall view all employees as intellectual assets capable of
improving the flow of value to customers.
• The flawless flow is 100% quality compliant at the pull of the customer.
• Every asset and every action shall have value add for the end customer.
Empowerment:
Systems and polices in place that is helping each
employee to take the relevant necessary data &
information in order for him to take the right decision.
This increase employee engagement in the business
and on the other hands promotes the ownership of
each employee to what he is doing and fosters
employee citizenship to the given enterprise.

18. What is Lean Systems?
Why Lean systems?
Why in Services industry?
The Debate Between Man.
And Services industry
How does it work?
Service Value Stream
Management
Lean Systems disadvantages.
Conclusion

19. 2.1 Service value stream mapping
(SVSM)
• SVSM tackles some critical points to adapt lean system in service industry.
• A detailed map of a service a new set of icons shall be created;
• Most of the lean approaches were adapted/modified
• Concepts such as Takt-Time were redefined in a more suitable way.
• SVSM follows a step by step procedure made of six points
(Bonaccorsi, Carmignani, & Zammori, 2011):
1. Commit to lean;
2. Learn about lean;
3. Choose the value stream to be improved;
4. Map the current state;
5. Identify the impact of waste and set the target for the improvement;
6. Map the future state.

20. 2.2 Service value stream mapping (SVSM) Steps
1- Commit to Lean
Unless the
need of a
change is
sponsored
(financially
and in time
and spirit) by
the top
management
& transferred
to all the
employees,
implementing
lean concepts
is doomed to
be a failure.
2- Learn about Lean
Consists in the
organization of
learning/
training
sessions on
lean concepts.
This has the
objective to
increase
commitment
and to develop
the skills to
identify
operational
weaknesses
hindering
organizational
effectiveness
and efficiency.
3- Choosing Value
Stream
It can be easily
selected
making a (SQ)
analysis and
organizing
data.
. Collected
data should be
sufficient to:
1) clarify
customers
needs; 2)
ascertain the
correctness of
the defect
categories; 3)
give an
importance
weight to each
defect and 4)
classify in
terms of
criticality
4- Current State
Mapping
This is a basic
step of the
lean
project, as it
defines the
project’s
baseline and
forces the
team to get
acquainted
with the
process and to
investigate and
question how
and why it is
performed in a
certain way.
5- Setting Targeted
Improvement
- It is advisable
to classify
activities
following two
points of view:
a process and
a customer
oriented
perspective.
- In case of
mismatch, the
customer
oriented
perspective
should be
preferred.
- The service
Cycle
Efficiency is
the main lean
metric and is
defined as the
proportion of
time
6- Future state
Mapping
This is a visual
tool that
shows how a
value stream
can look after
improvements
have been
implemented

21. Lean System Implementation Phases
Phase Steps Involved Time frame
Get Started Find a change agent
Get lean Knowledge
Map value Streams
Six months
Create a new organization Reorganize by product family
Create a lean function
Devise a growth strategy
Instill a perfection mindset
Six months to two years
Install Business Systems Introduce lean accounting
Relate pay to firm performance
Initiate policy development
Introduce lean learning
Fight right size tools
Year three and four
Complete the implementation Apply previous steps to suppliers/customers
Develop global strategy
By end of the fifth year

22. What is Lean Systems?
Why Lean systems?
Why in Services industry?
The Debate Between Man.
And Services industry
How does it work?
Service Value Stream
Management
Lean Systems disadvantages.
Conclusion

23. Lean System Disadvantage
• Naturally, any system subjected to criticism regardless the stability, efficiency
and effectiveness of the system, the same applies on lean system as well.
• The main criticism under focus is the human dimension of the system.
• It was argued that it is not helping the job development any more, it’s more
leaning towards some activities and technical processes that affects
dramatically worker disempowerment.

24. What is Lean Systems?
Why Lean systems?
Why in Services industry?
The Debate Between Man.
And Services industry
How does it work?
Service Value Stream
Management
Lean Systems disadvantages.
Conclusion

25. Application in Service industry
• South West Airlines, after applying Lean system findings:
1- the ONLY US airlines to make profit in 1990s.
2- SWA can turn around a flight in 17 minutes Vs. 45 minutes for its competitors.
Large U.S. Retail Consumer Company
1- Response and resolution compliance for support calls increased to 97%+ from 70%.
2- Adherence to schedule for enhancement requests increased to 95%+
3- 4,728 working hours are saved per month on reporting due to improved flow of
information.
4- 45 backlog enhancement requests only after 6 months of lean implementation, from 1,440
before Lean

26. Conclusion
• The core objective of Lean system is to remove waste.
• Lean system is broadly adapted in the last thirty years in almost all kind of
industries involving service, manufacturing and agriculture fields.
• Lean system has to change/adapt some of its basic steps to serve services industry,
as services industry’s business nature and processes is different from manufacturing
industry.
• Lean is a philosophy or a set of tools, specifically designed to serve its purpose by
each type of product emphasizing the customer requirements and maintaining his
needs as the main driver.
• The disadvantages of lean were mostly concerned on the dehumanized and missing
empowerment; not taking into consideration communicating and adaption on all
corporate levels specially the first line.

27. Conclusion (Cont.)
• Lean system needs management believe in, understanding and guarantee to adapt
before proceeding with implementation.
• There was indication that Lean system has negatively affected product quality or
profitability which are considered corporates main concern, on contrary, all the
reviews emphasized remarkable positive change in profitability by the organization.
• Lean system shall be applied on phases, starting by a pilot run before applying
across the whole organization; it shall consider while implementation the employee
resistance that has been has been described earlier as one of the disadvantages of
the whole system.

28. Finally
“We are what we repeatedly do. Excellence, then, is not an act, but habit.”
Aristotle
“Costs do not exist to be calculated. Costs exist to be reduced.”
Taiichi Ohno
“Make only what is needed, only when it is needed”
Kiichiro Toyoda