th

th

SAIIE25 Proceedings, 9 11 of July 2013, Stellenbosch, South Africa 2013 SAIIE

LEAN IN SERVICE INDUSTRY

MG. Kanakana1*
1

Department of Industrial Engineering

Tshwane University of Technology, South Africa
kanakanamg@tut.ac.za

ABSTRACT
Lean Manufacturing (also referred to as Lean) has traditionally been associated with
manufacturing industries; lately many service industries have adopted the methodology with
the aim of improving their processes and customer satisfaction. This study seeks to explore
whether implementing Lean manufacturing principles in the service sector is feasible or
viable and whether those organisations that have implemented these principles have gained
from utilising the methodology. The qualitative approach was utilised to assess service
organisations that have implemented lean manufacturing principles and the study revealed
that although the methodology was designed for manufacturing industries, service industries
could implement Lean principles as well, thereby gaining organisational competitiveness and
increasing customer satisfaction.

Corresponding Author

574-1

th

th

SAIIE25 Proceedings, 9 11 of July 2013, Stellenbosch, South Africa 2013 SAIIE

INTRODUCTION

Lean manufacturing was made popular after the book The machine that change the world
by Womack and Jones was published. They explains how Toyota developed a production
system that improves efficiency and increases their competitiveness using the Lean
manufacturing principle Womack and Ross [1]. Liker [2] claims in his book that many
organisations adopt Lean manufacturing principles to improve productivity. Womack and
Ross [1] reviewed the history of the development of Lean manufacturing, primarily at
Toyota, but did not explicitly indicate how to achieve the methodology Moore[3], Standards
and Davis [4] . Other studies were completed recently by Standards and Davis[4], Liker [2],
Womack and Jones [5]. Key points of emphasis emerging from the book by Standards and
Davis[4] appear to be reducing process variability, reducing cycle time and above all
eliminating waste in the manufacturing process and supply chain. Liker[2] focuses on
managements responsibility on Lean, making decisions based on long term philosophy even
at the expense of short term financial goals. He also outlines that production levelling,
standards, employee involvement and problem solving are the main aspects of Lean
methodology. Womack and Jones [5] concur with Liker[2], and Standards and Davis[4]
regarding placing the emphasis on Lean thinking throughout the organisation.
Toyota Production System (TPS) provide the basis of what is known as Lean thinking by
Womack [5]. The development of this approach to manufacturing began after World War II,
and was pioneered by Taiichi Ohno and his associates while they were employed by the
Toyota motor company Womack[5]. Forced by shortages in both capital and resources, Eiji
Toyota instructed his workers to eliminate all waste Piercy and Rich[6] . Waste was defined
as anything other than the minimum amount of equipment, materials, parts, space and time
which are absolutely essential to add value to the product Paper and Spedding [7] . The
foundation of the Lean vision is similarly focused on the individual product and its value
stream and to eliminate all waste in all areas and functions within the system.
The successes of Lean manufacturing principles were never questioned because Toyota had
taken control of the market shares in automobile production as a result of these crafted
principles. Studies by Standards and Davis[4], and Womack and Jones[5] reveal other
organisations who have implemented Lean manufacturing successfully and gained a
competitive advantage.
2

DISCUSSION

2.1 Lean Manufacturing Tools

Lean is the identification and elimination of process waste in order to maximise customer
value Farrington et al.[8] . Allen and Laure [9] , and Bon and Rahman [10] outline seven
forms of waste which must be identified and eliminated:

Over production producing products which customers do not require at that

moment
Defects failure to conform to specifications or to customers needs
Unnecessary inventory too much stock which is not required for production
or by the customer
Inappropriate or over processing unnecessary activities or features that do
not benefit the customer
Excessive transportation unnecessary movement of material
Waiting failure to deliver products when needed downstream, employee
idling or waiting for stock.
Unnecessary motion - unnecessary movement by employees.

A framework of Lean manufacturing as outlined by Liker [2], Moore [3] Standards and
Davis[4] and Womack and Jones[5] are:

574-2

th

th

SAIIE25 Proceedings, 9 11 of July 2013, Stellenbosch, South Africa 2013 SAIIE

2.1.1 Value stream mapping

Value stream mapping provides a graphical flow of the process and supports the related
value stream analysis tool. It also provides the scope for the project by defining the current
and future states of the system. Moreover, it includes time diagrams and identifies process
steps that add value as well as those that are non value adding. And, finally, it facilitates a
communication flow from customer to supplier and a resource flow from supplier to
customer Allen and Laure[9]. Both Allen and Laure [9], and Paper and Spedding[7] concur
that a value stream map is essential for the identification of waste in the process; therefore,
this Lean tool is extremely significant in yielding speedy results in the system.
2.1.2 Visual Management:
Visual management is essential for quick referencing work standards and creating a visual
environment that supports safety and guides process activities. It includes 5s ( sort, shine,
store, standardise and sustain) activities for maintaining a clean and uncluttered work area
Taghizadegan[11].
2.1.3 Error proofing:
Error proofing, a technique to reduce the likelihood of a damaging mistake, is a concept
outlined by Womack and Ross[1] and identified as a Lean tool used by Toyota to ensure
product quality within the process.
2.1.4 Quick changeover methods:
Quick changeover methods facilitate the reduction of lost time during product changes. This
principle resulted from the concept of Single Minute Exchange of Die (SMED). This was
considered to be impossible at the time, but Moore [3] assert that by having quick setup
times, the need for batches is eliminated and less material is retained in the work in process
cycle.
2.1.5 Standardised operation:
Standardised operations assist in organising and documenting the process so as to permit
workers to effectively use material and machinery, resulting in a flexible work force which is
cross functional within the organisation Moore[3]
2.1.6 One piece flow:
One piece flow production is designed to reduce the size of batches or eliminate batch
processing in order to convey output to the customers more rapidly while total productive
maintenance ensures that factory and equipment are available so that production and
service are not interrupted by equipment breakdowns Levitt[12].
2.2 Lean in service Industry
Lean production in the service industry was advocated by Levitt[12] and Levitt[13] in their
articles Production line approach to service and The industrialisation of service
respectively.
Since then there have being many attempts at implementing Lean in the
service industry. Bowen and Youngdahl [14] state that Lean in service only started gaining
momentum in the late 80s as a result of McDonalds utilisation of the Lean production flow
concept in order to meet their customers expectations and Taco Bells being recommended
as an example of a Lean production line in the service industry by Psychogios et al.[15].
Piercy and Rich[6] outlined Lean as a concept comprising a set of principles, practices ,
tools and techniques which, when implemented by following a systematic approach, would
improve resource utilisation, quality and delivery with respect to products and services.

574-3

th

th

SAIIE25 Proceedings, 9 11 of July 2013, Stellenbosch, South Africa 2013 SAIIE

In the early 1990s, Lean was successfully implemented in service industries such as banking
sectors and public sectors, and even hospitals and airlines were adopting this methodology
to improve efficiency within their organisations George[16].
It is a fact that some aspects of Lean manufacturing do not apply to all service industries;
however, studies by Bowen and Youngdahl[14], Psychogios et al.[15], Allyway and
Corbett[17], and Maleyeff[18] outline core Lean principles which apply to any industry,
including service industries as: value - customer focus; identifying the value stream;
establishing flow or continuous flow; implementing a pull system; and striving for
perfection. Organisations can then transfer these principles to fit their environment and
ensure compliance to other service standards. Maleyeff[18] further avers that many of the
Lean manufacturing tools are recommended to service environments with the understanding
that service industries vary in their mandate and that organisations have to apply tools that
are suitable to their organisations, as they see fit. Some of the Lean principle tools which
apply to service industries are the 5s methodology, 7 wastes of Lean and value stream
mapping according to Piercy and Rich[6]. Allyway and Corbett[17], however, argue that
there are more specific tools which apply to service as well as to manufacturing, such as:
load balancing, complexity analysis, throughput analysis, touch time analysis, line balancing
and functional analysis. Other tools such as Visual aid management and Just in time are also
considered to be applicable for service environments, according to Liker[2]. It is therefore
important for service industries to understand all these tools and to utilise them as they are
required, just as is the case for manufacturing industries.
George[16], and Allyway and Corbett[17] report on companies such as McDonalds and Taco
Bell who have implemented Lean principles and tools effectively and have gained a
competitive edge and increased their productivity. The question is, can call service sectors
implement Lean effectively to such a level that will increase their competitiveness and
profitability? Applications of Lean in service industries is gaining momentum as there are
currently more than 90 academic papers on Lean in service applications in the industry.
However, some of these studies are contradicting since some argue that Lean cannot be
applied effectively in service industries. Therefore, the focus of this study falls on assessing
the implementation of Lean manufacturing principles and tools in service industries in order
to establish whether they can be applied to service industries effectively and whether their
implementation will result in increased competitiveness, just as it did in the manufacturing
industries.
3

METHODOLOGY

A qualitative approach was used in an attempt to explore Lean implementation in service

industries Leedy and Ormrod [19]. Many scholars have studied Lean implementation in
service industries to date. Available literature was reviewed in order to investigate
industries where Lean had been implemented successfully throughout the world. This
analysis is considered to be limited in scope as we believe that there might have been other
organisations that have implemented Lean practises but did not publish their results and
therefore the researchers did not have access to those results. Nevertheless, an analysis of
service industries that had implemented Lean principles was carried out and secondary data
from literature was used to draw conclusions.
4

RESULTS

The results of the review on the application of the Lean principle in the service industry are
presented in Table 1.
4.1 Lean in the Hospital Sector
Burgess and Radnor[20] in their study on evaluating Lean in healthcare, claim that Lean
implementation at the English National Health Service has been successful and continues to
be popular in English hospital trusts and also continues to spread. Burgess and Radnor [20]

574-4

th

th

SAIIE25 Proceedings, 9 11 of July 2013, Stellenbosch, South Africa 2013 SAIIE

outline that Lean in healthcare has been studied by many scholars; since 2001 about 90
publications have been published on Lean in healthcare services. It is thus evident that Lean
is being successfully implemented in health sectors. Burgess and Radnor [20] maintain that
this success is due to the fact the Lean focuses on customer satisfaction and employee
involvement which suits the culture of most healthcare services Aronsson at al.[21].
4.2 Lean in the Public Sector
Arlbjorn at al. [22] concur that Lean can be implemented effectively in the public sector
just like in any other service industry even though this environment is more complex; its
customers are more diverse and customer demands are often defined by different
stakeholders such as experts, politicians and users. Therefore, despite Lean implementations
being successful in public sectors organisational development and cost efficiency must
remain the main focus. Pedersen and Huniche[23] assert that the success of Lean in the
public sector is determined by the following factors:

Goals and values;

Complexity and importance;
Balance of power; and
Resource and capabilities.

It is therefore important to ensure that these factors are considered in order to guarantee
the successful implementation of Lean in the public sector. For an effective implementation,
Radnor proposes the use of the house of Lean concept and also emphasises that the purpose
of these Lean tools must be employed for assessment, monitoring and improvement.
Table 1: Review of Lean in the Service industry
Sectors

Author

Results

Hospitals

Allway
and
Corbett[17],
Burgess
and
Radnor[20],
Aronsson et al.[21]

Successful implementation in
Hospitals particularly in the
USA

Public sector

Arlbjorn et al.[22], Pedersen

and Huniche[23],Radnor[24],
Drew and Bhatia[25]

Successful
implementation
after strategic direction from
Top management

Food

Bowen
Youngdahl[14],Kundu
al.[26],
Kundu
Manohar[27]

and
et
and

Problem
during
initial
implementation;
however,
improved after review of
some Lean tools

Airline industry

Bowen and Youngdahl[14],

Parast
and
Fini
[28],
Rhoades[29],Tiernan[30]

Successful
implementation
with good rewards

Financial

Allyway and Corbett [17],

Ahlstrom [31]

Successful implementation
in many insurance companies

Comm and Mathaisel[32]

Successful
implementation
with
challenges
on
implementation strategy.

sectors
Education

574-5

th

th

SAIIE25 Proceedings, 9 11 of July 2013, Stellenbosch, South Africa 2013 SAIIE

4.3 Lean in the Food Sector

Lean can be applied effectively in service sectors focusing on food. Although this industry
uses its own standards, Lean principles can still apply. McDonalds and Taco Bell are said to
be amongst the first service industries to utilise Lean manufacturing principles Bowen and
Youngdahl[14] . Bowen and Youngdahl [14] argue that these organisations have implemented
the production line concept in their food service industry with the aim of improving
customer satisfaction and efficiency.
4.4 Lean in the Financial Sector
Financial sectors have also implemented Lean successfully, particularly in call centres.
Studies by Ahlstrom[31] indicate how financial sectors have implemented Lean principles
and tools purely in call centres. Financial sectors such as banks, and insurance and revenue
services can utilise Lean principles effectively and gain substantial benefits; the major
benefits being improved efficiency, deduction of costs and improved customer satisfaction
Ahlstrom[31]. The concepts can be applied to any industry with a call centre, thus,
industries such as telecommunications can utilise these principles at their call centres and
reap the rewards. Lean can also be applied to improve organisational processes internally in
financial sectors. Maleyeff[18] avers that Lean tools and principles can be utilised to
improve internal systems within the organisation, thereby increasing the organisations
efficiency and profitability.
4.5 Lean in the Airline Industry
Quality service in the airline industry is an important driver for success and profitability.
Parast and Fini[28] maintain that the profitability of the airline industry is determined by
labour productivity; therefore, there is a need to ensure that productivity is always at the
desired level if the airline industry is to be profitable. Lean principles and tools can be used
to improve productivity, thereby also improving profitability Parast and Fini [28]. Airline
service quality has been a focus for many years now, with airlines focusing on customers as
their main objective for improving profitability. Airlines such as Southwest airline have
implemented Lean effectively and are subsequently reaping the financial benefits Comma
and Mathaisel[32].
4.6 Lean in the Higher Education Institution
A study conducted by Comm and Mathaisel [32] on Lean and assessing the best Lean
sustainability within higher education forms the foundation of Lean in higher education
institutions. Institutions that are forced to implement cost reductions or containment were
initiated in the USA in order to improve the sustainability and effectiveness of higher
education institutions Comm and Mathaisel[32]. Effective implementation of lean principles
in higher education depends on the following aspects, according to Comm and Mathaisel[32]:

Educate employees on Lean concepts;

Apply Womack Lean principles;
Define appropriate metrics for success; and
Continue developing outsourcing, collaboration and technology initiates.

Comm and Mathaisels[32] state that if higher education institutions can define values, map
processes, eliminate waste and reduce flow by applying Lean principles, then the institution
will define its niche and be able to provide a product second to none to meet the demands
of its students. Administrative and academic processes could be developed to deliver
efficient and cost-effective services to students, thereby increasing value. Processes could
be streamlined and waste could be minimised by tapping into the resources at their disposal,
particularly those from specialised niche professors. Lean in higher education can be
implemented effectively, particularly if the focus falls on the principles and tools, and the

574-6

th

th

SAIIE25 Proceedings, 9 11 of July 2013, Stellenbosch, South Africa 2013 SAIIE

application of these tools focus on problem solving and improving customer satisfaction
Comm and Mathaisel [32].
5

CONCLUSION

Lean manufacturing principles and tools were found to be applicable in the service industry.
Although in some service environments some Lean tools had to be adjusted Ahlstrom [31],
applying these tools results in the organisation improving its efficiency and effectiveness.
The application of Lean in the service industry has been studied by many scholars and the
following scholars concur that Lean applications in this industry is realisable, regardless of
the nature of the service rendered, customer satisfaction or financial return Piercy[6],
Bowen and Youngdahl[14], Allyway and Corbett[14], Burgess and Radnor[20], Aronsson et
al[21], Arlbjorn [22], Radnor[24] Kundu and Manohar[27], Ahlstrom[31], Piercy and Rich[33]
The results indicated that different service industries have attempted to implement Lean in
their organisations. Although this analysis is limited in terms of the number of organisations
and quantification of financial returns, it shows that various service industries such as
hospitals, Finance and higher education have utilised the principles and tools to increase
their competitiveness.
It is evident that Lean in higher education has not made the same inroads as other sectors;
the reason being that higher education institutions are not knowledgeable about Lean
concepts although they utilise similar tools to maintain efficiency and effectiveness but
these are not termed Lean initiatives. They also have complex customer and stakeholder
relationships which makes the implementation of Lean more complex. With this in mind, the
next research area should focus on how Lean tools can be adjusted to suit all service
environments, particularly in higher education institutions.
6

REFERENCES

[1]

Womack, J.J., D.T. Jones, and D. Ross, The machine that change the world, The
story of Lean Production. 1991, New York: Harpert-Collins.

[2]

Liker, J., The Toyota Way. 2004, New York, NY: McGraw-Hill.

[3]

Moore, R., Selecting the right manufacturing improvement tools. 2007, USA:
Butterworth-Heinemann. p.359.

[4]

Standards, C. and D. Davis, Running today's factory: a proven strategy for lean
manufacturing 1999.

[5]

Womack, J.P. and D.T. Jones, Lean Thinking: Revised and Updated. 2003, New York,
NY.: Simon & Schuster.

[6]

Piercy, N. and N. Rich, Lean transformation in the pure service environment: the
case of the call service centre. International Journal of Operations & Production
Management, 2009. 29(1): p. 54-76.

[7]

Kksal, G. and A. Eitman, Planning and design of industrial engineering education

quality. Computers & Industrial Engineering, 1998. 35(34): p. 639-642.

[8]

Farrington, P., D. Utley, and G. Harris, Integrating Lean and Six-Sigma into the
Industrial Engineering Curriculum: An Engineering Management Perspective. IIE
Annual Conference. Proceedings, 2007: p. 625.

[9]

Allen, D.K. and P. Laure. Exploiting Lean Six-Sigma Quality Tools to Improve Test and
Other Processes. in Autotestcon. 2006. IEEE.

574-7

th

th

SAIIE25 Proceedings, 9 11 of July 2013, Stellenbosch, South Africa 2013 SAIIE

[10]

Bon, A.T. and N.A. Rahman. Quality measurement in lean manufacturing. in

Instrumentation, Communications, Information Technology, and Biomedical
Engineering (ICICI-BME), 2009 International Conference on. 2009.

[11]

Taghizadegan, S., Introduction to Essentials of Lean Six Sigma (6[sigma]) Strategies:

Lean Six Sigma: Six Sigma Quality with Lean Speed, in Essentials of Lean Six Sigma.
2006, Butterworth-Heinemann: Burlington. p. 1-6.

[12]

Levitt, T., 'Production-line approach to service'. Harvard Business Review, 1972

(September - October ): p. 41-52.

[13]

Levitt, T., 'The industrialisation of service' Harvard Business Review, 1976

(September - October ): p. 63-74.

[14]

Bowen, D.E. and W.E. Youngdahl, Lean service: in defense of a production-line

approach. International Journal of Service Industry Management, 1998. 9(3): p. 207225.

[15]

Psychogios, A.G., J. Atanasovski, and L.K. Tsironis, Lean Six Sigma in a service
context a multi-factor application approach in the telecommunications industry.
International Journal of Quality and Reliability Management 2012. 29(1): p. 122-139.

[16]

George, M.L., Lean Six Sigma for Service 2003: McGraw-Hill. p. 381.

[17]

Allyway, M. and S. Corbett, Shifting to lean service: Stealing a page from

manufacturers' playbooks. Journal of organizational excellence 2002.

[18]

Maleyeff, J., Exploration of internal service systems using lean principles.

Management Decision, 2006. 44(5): p. 674-689.

[19]

Leedy, P.D. and J.E. Ormrod, Practical Research Planning and Design. 8th ed. 2005,
New Jersey: Pearson Merril Prentice Hall. p. 313.

[20]

Burgess, N. and Z. Radnor, Evaluating Lean in healthcare. International Journal of

Health Care Quality Assurance, 2013. 26(3): p. 220-235.

[21]

Aronsson, H., M. Abrahamsson, and K. Spens, Developing lean and agile health care
supply chains. Supply Chain Management: An International Journal, 2011. 16(3): p.
176-183.

[22]

Arlbjrn, J.S., P.V. Freytag and H.D. Haas, Service supply chain management: A
survey of lean application in the municipal sector. International Journal of Physical
Distribution & Logistics Management, 2011. 41(3): p. 277-295.

[23]

Pedersen, E.R.G. and M. Huniche, Determinants of lean success and failure in the
Danish public sector: A negotiated order perspective. International Journal of Public
Sector Management, 2011. 24(5): p. 403-420.

[24]

Radnor, Z., Transferring Lean into government. Journal of Manufacturing Technology

Management, 2010. 21(3): p. 411-428.

[25]

Drew, J. and N. Bhatia, Applying lean production to public sector, in The McKinsey
Quarterly, 2006.

[26]

Kundu, G.K., B.M. Manohar and J. Bairi, Comparison of Lean and CMMI for service
(CMMI-SVC v1.2) best practices. The Asian Journal on Quality, 2011. 12(2): p. 144166.

[27]

Kundu, G.K. and B.M. Manohar, A unified model for implementing lean and CMMI for
Services (CMMI-SVC v1.3) best practices. Asian Journal on Quality, 2012. 13(2): p.
138-162.

574-8

th

th

SAIIE25 Proceedings, 9 11 of July 2013, Stellenbosch, South Africa 2013 SAIIE

[28]

Parast, M.M. and E.H. Fini, The effect of productivity and quality on profitability in
US airline industry: An empirical investigation. Managing Service Quality, 2010.
20(5): p. 458-474.

[29]

Rhoades, D.L. and W. Jr Blaise, Twenty years of service quality performance in the
US airline industry. Managing Service Quality, 2008. 18(1): p. 20-33.

[30]

Tiernan, S., D.L. Rhoades, and W. Blaise Jr, Airline service quality: Exploratory
analysis of consumer perceptions and operational performance in the USA and EU.
Managing Service Quality, 2008. 18(3): p. 212-224.

[31]

Ahlstrom, P., Lean Service operations: Translating lean production principles to

service operations. International Journal of Services Technology and Management
2004. 5(5/6): p. 545-564.

[32]

Comm, C.L. and D.F.X. Mathaisel, An exploratory study of best lean sustainability
practices in higher education. Quality Assurance in Education, 2005. 13(3): p. 227240.

[33]

Piercy, N. and N. Rich, High quality <IT>and</IT> low cost: the lean service centre.
European Journal of Marketing, 2009. 43(11): p. 1477-1497.

574-9

th

th

SAIIE25 Proceedings, 9 11 of July 2013, Stellenbosch, South Africa 2013 SAIIE

574-10