What Are Lean Services?

The term lean services refers to the application of lean manufacturing ideas to service industries. In relation to lean manufacturing, lean services focus on the elimination of waste and the improvement of 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 lean strategy is often successful in increasing profits in the services, it has also been criticized for reducing flexibility and creating problems in some industries.

The Japanese automobile company Toyota originally developed the lean manufacturing management concept as the basis for the Toyota Production System (TPS). In TPS, Toyota executive Taiichi Ohno outlined seven factors of wastefulness that could be improved through management to increase company profit. The original seven wastes have been redefined to include service factors such as delay in customer service, duplication of data entry, inventory errors, communication errors, and lack of professionalism in interactions with customers. Lean services endeavors to reduce or eliminate these wastes.

Continuous improvement, also commonly known as Kaizen®, is another key concept in the implementation of lean services. In addition to eliminating waste, lean services encourages employees to continually seek 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 continuous, minor ideas generated by the employees rather than from infrequent, sweeping changes generated by a research and development department.

The application of lean manufacturing principles to the service industries has been controversial in some cases, since these two types of businesses are so different in nature. Service industries, unlike manufacturing industries, usually produce intangible products through activities in which the consumer partially participates. In streamlining a service infrastructure to reduce waste, a company runs the risk of reducing its own ability to serve customers promptly or react to external changes.

An example of the downside of lean services occurred in February 2007, when the commercial airline company JetBlue Airways Inc. encountered massive delays and cancellations of flights due to a storm in the eastern U.S. JetBlue’s lean business strategy had already cut the number of flights running, as well as the number of staff and the communications infrastructure available. Normally such cuts would eliminate waste, but in this special case, the lean strategy failed because the airline service faced an unpredictable event. Unlike a fairly standardized and predictable manufacturing production line, a service industry often must adapt quickly to changing conditions to serve customers.