The Lean Service Machine notes

Cynthia Karen Swank
Harvard Business Review
Oct. 2003

- Companies can introduce a lean system without significantly disrupting operations with a model cell – a fully functioning microcosm of its entire process, allowing managers to conduct experiments and smooth out kinks while working toward optimal design.
- Traditional production systems: large batches are processed at each step and are passed along only after an entire batch has been processed. At any given time, most of a batch in a traditional system is sitting waiting to be processed; it is costly excess inventory. Errors cannot be caught or addressed quickly, because if they occur, they tend to occur on a large scale.
- Established a baseline time for each element by determining how quickly an untrained person could do it, then challenged employees to make improvements and create shorter baseline times.
- Balancing work evenly eliminates unnecessary delays
- The key to successfully segregating complexity is to cluster tasks of similar levels of difficulty into separate groups with their own performance goals.
- Evaluated on and rewarded for objective results they could track themselves – rather than by their bosses’ subjective observations.

Always measure performance and productivity from the customer’s perspective
- Switch to measuring how its customers assess the company’s speed. Customer focused metrics help erode the ‘my work is all that matters’ mind set.
- Shop floor goals should be linked to the metrics that are applied to the CEO’s performance. Hoshin kanri, or policy deployment is the best way to align an organization’s activities with its strategic objectives.

A metric for CEO’s performance is the ratio of the co.’s total _____ expenses to he value of new ________.
The cell’s productivity directly affects this measure – as productivity increases, the _____ expense eventually decreases.
An employee may be evaluated by the # of ______ they process an hour, and the _____ team’s manager is assessed on the hourly # of ______ the team processes.
The _____ manager’s boss, the CP is assessed according to the productivity of the ____ team and all the other steps in the process. These productivity rates affect the metric for the VP in charge of __________, a measure that is the same as the performance metric for the CEO.

The CEO’s success is directly linked to each frontline worker’s productivity. In this way, you have spread accountability and rewards throughout the system, rather than concentrating them at the top.

- Vendor selection criteria; alignment with you companies objectives, aggressive annual goal setting, and adoption of lean process that fit well with yours.
- Established baselines from which cell managers could set goals for the new processes.
- Divided operations according to the status of the customers and the complexity of the tasks.
- All proposals for automating processes now include a lean analysis; do not introduce automation in an area until lean principles have been applied and the new process has stabilized.
- To ensure effective knowledge transfer to operational management and frontline employees, it needed to communicate the “why” as well as the “how.” Everyone in the company needed to understand why the new process design was necessary and that it would require continual adjustment.
- Use a game to communicate the how & why of lean, where the winner has the highest profit (minus WIP and defects), and teams move from a batch to continuous flow process.
- How is profitability measured in my department?
- Who uses my work once I’m done, and what do they do with it?
- How close do I sit to the rest of my process team?
- Is my neighbour idle while I am scrambling to keep up the pace?
- Does work come in batches that allow a single step to become a bottleneck, or does work move forward 1 piece at a time?
- Are we waiting until the end of the process to check for errors, or are we inspecting at every point in the process?
- Are there steps that can be eliminated, and am I pushing management to implement changes?
- Visible participation of senior leadership emphasized the importance of this.
- Many tools were developed in the service industries; supermarket was based on an old concept in a service industry: retailing.