How To Apply Lean Manufacturing Principles To A Services Organization

As supply chains deepen in complexities many supply chain functions are finding ways that can benefit the rest of the organization.  Supply chain execution such as Global trade, supplier relationship, warehousing, transportation and collaboration management can be used to leverage other business functions that the company uses within for internal processes.

The cross functional  skill set created by these supply chain execution tasks lend themselves to other functions such as procurement, evaluation of suppliers and quality control measures and business process reengineering and refinement to maximize efficiencies across the entire organization.  Companies that employ  Six sigma, lean, kaizen strategies in their supply chain and manufacturing can adapt these strategies to other parts of the organization here are a few examples of how to apply manufacturing and supply chain practices to the rest of the organization.

  • Find ways to optimize procurement processes, including proper supplier on-boarding and having a preset method that is quantifiable and can adapt to any procedural changes.  Investigate new procedures utilizing business process efficiencies and or technologies to simplify tasks
  • Quality of products inspected as part of an existing process rather than a separate station and employee to complete the task. Reduce the waiting and touch points introduced into a process by eliminating non-valuable or redundancy.
  • Employee cross-training so that employees are versatile for company and employee purposes. A cross-trained employee can be used in several scenarios, and the variety of different tasks will also combat employee boredom.
  • Employee enablement should allow better and more efficient avenues to inspire employee creativity. This gives the employee and an overall sense of belonging and contribution to the organization
  • Outsourced procurement can be an effective optimization technique to explore, as a proper methodology is defined, quality standards for products and suppliers are established, and risk management are handled during the creation of such processes.  These are all benefits of this approach.
  • Work cell rearrangement to increase process flow and efficiency from station to station. This also includes workflows throughout the organization
  • Reducing excess order touch points from customer service to operations, which is performed through the traditional order fulfillment such as unnecessary reporting, possibly product reconciliation before shipping or waiting for a supervisor to administer the orders.
  • Inventory holding costs should be balanced to a pull model for consumer demand, thereby controlling production and minimizing time delays. Bill of materials rationalization can be gained and ultimate customer satisfaction can result.  This applies directly to procurement and the amount of capital expense that a company holds

  • Rework of excess material can be reprocessed and reused. An example of this is from an automotive stamping plant, where parts are stamped and the excess material is melted and used for raw material. This will also assist in any green initiatives. This can be as simply starting a recycling program within your organization and reduce paper waste for a greener office.

  • For service-based organizations, methods of service delivery and customer support can be optimized to reduce waste throughout the cycle within the delivery of that service. If there are too many touch points for an order cycle or steps and phases within the project cycle that do not add customer value and cannot efficiently be charged for during delivery of a service are points where wastage may occur. 

  • Benchmarking addresses all areas of the lean philosophy, as it establishes the base measurements in which your organization perform today. Once this is established, the organization can forge a plan to increase key performance indicators throughout the company.

  • The areas of systems, administration of systems, and system functions are easily overlooked, as they are less tangible and are harder to quantify.  Systems Administration often creates redundant data and duplicate services to end users without realizing it.  Administration should be assessed and reworked to deliver efficient delivery methods in a timely manner.  

  • Possible solutions for systems, administration, and optimization can be handled by simulation software to optimize processes and configurations without the actual cost and disruption of making the physical change. This allows organizations to implement the changes and streamline operations that can save money and or create extra revenue.
  • Cloud computing can offer additional storage, reduce system administration costs, reduce capital expenditure, rapidly add additional functionality, and can reduce administration of the processes itself.
  • Process mapping and after-market service are areas that can be investigated and have the lean principles applied to them. By mapping a business process from end-to-end it allows a holistic picture to emerge as to what the organization is currently doing.  By having this as a reference for historical or intellectual value such as a proprietary process or intellectual property can illuminate areas of waste.  Companies that provide after-market services such as repairs to out of warranty appliances can look to automate, track parts and employees more effectively, dispatch properly trained workers for the correct jobs and the best ways to get there, develop and implement a proper procurement method to source parts and suppliers and track work orders and time per project more closely to increase revenues and cut costs. 

These are just some methods of how applying a lean or six sigma approach can maximize efficiencies and drive out waste from your organization.  In today’s economic climate companies may just need to re-evaluate their waste, priorities and efficiencies. If a new system is then required to address the new requirements then feel free to give us a call to discuss your needs.

Eval-Source is an Analyst/Consulting consulting firm that offers enterprise software evaluation, benchmarking for companies and strategic consulting to the business marketplace. Our innovative professional services combine to make your life easier whether it is to acquire enterprise software , or benchmarking to add critical decision support to your technology investments using the Tru-Eval and Tru-Benchmark systems.  Follow our blog at or on twitter @eval_source or our site

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Jim Love, Chief Content Officer, IT World Canada

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