Lean services apply lean manufacturing ideas to service industries, focusing on eliminating waste and improving efficiency. Toyota’s concept of lean manufacturing management was adapted to include service factors, and continuous improvement through Kaizen is encouraged. However, applying lean services to service industries can reduce flexibility and create problems in some cases, as seen with JetBlue Airways’ flight delays and cancellations due to an unpredictable event.
The term lean services refers to the application of lean manufacturing ideas to service industries. Relative to lean manufacturing, lean services focus on eliminating waste and improving efficiency in work processes. Service industries where the lean model has been applied include information technology (IT), accounting, insurance, and the airline industry, among many others. While the lean strategy is often successful in increasing profits in services, it has also been criticized for reducing flexibility and creating problems in some industries.
The Japanese automobile company Toyota originally developed the concept of lean manufacturing management as the basis for the Toyota Production System (TPS). In TPS, Toyota executive Taiichi Ohno described seven waste factors that could be improved through management to increase the company’s profit. The original seven residuals were redefined to include service factors such as delay in customer service, duplication of data entry, inventory errors, miscommunication, and unprofessional interactions with customers. Lean services attempt to reduce or eliminate this waste.
Continuous improvement, also known as Kaizen, is another key concept in implementing lean services. In addition to eliminating waste, lean services encourage employees to continually look for ways to innovate and improve value. The Kaizen philosophy favors an organic bottom-up approach over a top-down model of change. Improvement in Kaizen comes from small, continuous ideas generated by employees, not from infrequent, broad changes generated by a research and development department.
The application of lean manufacturing principles to service industries has been controversial in some cases, as these two types of businesses are very different in nature. Service industries, unlike manufacturing industries, generally produce intangible products through activities in which the consumer partially participates. By optimizing a service infrastructure to reduce waste, a company risks reducing its own ability to promptly serve customers or react to external changes.
An example of the disadvantage of lean services occurred in February 2007, when commercial airline JetBlue Airways Inc. encountered major flight delays and cancellations due to a storm in the eastern US lean business strategy, JetBlue had already reduced the number of flights running, as well as the number of employees and communications infrastructure available. Normally, these cutbacks would eliminate waste, but in this special case, the lean strategy failed because the airline’s service faced an unpredictable event. Unlike a fairly standardized and predictable manufacturing production line, many times a service sector must quickly adapt to new conditions to serve customers.
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