Lean Concept in Service IndustriesOrganization TheoryOutlineRecently, importance of service industry is being emphasized. Thus, there are increasing interests for improving the productivity of service industry. As a result, a number of methods for improving management of service industry are being developed. Among them, ‘Lean System’, which was developed in car industry, is being applied to service industry and even spreading to finance, law, and public administration. This essay organizes about the concept of ‘Lean System’ and introduces how the ‘Lean system’ is being used in the service industry.What is Lean System?The history of Lean system goes back to the JIT (Just In Time) system which was developed by Japanese car company, Toyota. In order to overcome scarcity of resources after the Second World War, Toyota had been constantly endeavoring for reducing waste in every operating area. In 1980s, Toyota’s effort showed remarkable achievements surpassing western manufacturer. Thus, cogoods also cause costs to the firm. When they are not used they utilize valuable warehouse space, they may become useless.3. DefectsRework is needed when components and products are damaged and defective. Thus, they have to be reworked. Additional time is needed for rework and thus increases production costs of the final product.4. Waiting timesIn a manufacturing process, each action is dependent on the downstream and upstream stage processes. If equipment, employees, materials of production process or information is delayed, manufacturing time is wasted and the production cost will be increased.5. (Unnecessary) TransportationUnnecessary transportation includes the unnecessary movement of products or components, and information from one area to another.6. (Unnecessary) MotionUnnecessary movements occur when worker is moving around his work space and as thus wasting effort and time. All sort of unnecessary motions are caused by poor process design or work area layout or poor working sta means the connections of specific activities from concept design to the delivery of complete products. A company should be able to remove the waste from the processes in the value stream.3. Create FlowIn order to eliminate the waste, processes need to be changed and reorganized. By doing so, the product or service flows through all the value adding steps in the most effective and efficient way possible.4. Customer PullCompany should understand the demand that customers put on their processes. So that the company would be able to produce products and deliver them to the customers in time and also would be able to prevent overproduction.5. Pursue PerfectionWorld is constantly changing and thus processes need to continue to meet the changing needs and demands. By checking processes frequently and making some feedbacks to the processes, a company would be able to anticipate customer needs not only in the present but also in the future.Example of Lean system application in service industryn model cell.1. Linked processes were placed near one another. In other words, they set value streams to adjoin with each other. Under the old system, work was organized by function in separate departments creating delays in transferring applications to other areas2. Procedures were standardized. The new system required all files to be stored alphabetically and in the same drawer at each work area. Before applying lean concept, workers were permitted to choose their own systems for storing files which caused hardship of finding stored files among new employees.3. Loop-backs were eliminated. For example, to solve a loop-back problem in receiving, the receiving task was divided into two parts. And the company was able to receive applications and to assemble policies at the same time. Consequently, delays and waste were reduced by eliminating the confusion.4. Set a common tempo or pace. The flow of work was smoothed like ‘tact’ system applied in manufacturing industry. Tact system refers oncepts of the Lean Concept and checked how they were applied to the service industry. As mentioned earlier, history of lean system goes back to the JIT system of Toyota, and it was evolved by Womack in 1990s. Thanks to Womack’s developments, nowadays Lean concepts were able to apply in the service industry resulting in reduction of waste, improvement in consumer response.Nowadays, proportion of service industry is greater than that of manufacturing industry. And it is still increasing in a rapid speed. Thus, we should recognize necessity of R&D in the application of lean concept.ReferencesF. S.K. Shavarini and S.M.S. Hoseini(2006), “Glean Lean: How to Use Lean Approach in Service Industries?”.Growth Machine, “Womack and Jones’ 5 principles of lean” Hyperlink "http://saurabh-growthmachine.blogspot.kr/2012/06/womack-and-jones-5-principles-of-lean.html" l "!/2012/06/womack-and-jones-5-principles-of-lean.html" http://saurabh-growthmachine.blogspot.kr/2012/06/womack-and-jones-5-principlesl.
