Can We Apply Lean Six Sigma in Service Industry?

Is Lean Six Sigma suitable for service sector? Since this is one of the most frequently asked question in Lean Six Sigma world, I thought of writing an article to clear some of your doubts.

Firstly let’s try to understand what service process is. The products coming out of a manufacturing process are tangible which you can touch and feel. On the other hand, the outcome of a service process is intangible which you cannot see. Banks, Telecommunication, Healthcare, Tourism, Defense, Software are good examples for service industry. The supportive functions such as HR, Finance and Customer service are also part of service processes. So apart from service sector organizations even within manufacturing organizations you will see service functions! This shows the importance and the criticality of service industry to the economy.

Now let’s try to understand some of the key challenges in service processes compared to manufacturing processes.

In manufacturing process, the actual product is going through the process and the customer sees it only at the end. In contrast in service process it is the customer who is going through the process. So the possibilities of the customer seeing the problems and inefficiencies in the process is very high in service sector. To understand this further, let’s take an example from the financial sector. Consider a bank loan process. Here the sequence of operations are applying for loan, document submission, negotiations and final approval and the customer interacts with the bank throughout these sub processes.

The second point to highlight, in manufacturing process the waste can be seen physically so it is easy to capture. Product defects, work in progress, inventory build-u up and unnecessary movements are some of good examples. But in service sector it is very hard to see waste as most of the processes are running on systems. You will be able to see these wastes only if you carefully map using lean techniques. SIPOC, VSM and flow charts are some of killer tools you can use to screen the process in front of your eyes!

Finally, for any business it is always important to keep the customer happy. For manufacturing companies, even if they produce defect products they still can repair and finally deliver a good product to satisfy the customer. But it is not possible in service sector as the customer is a part of the entire process and a problem in any part of the process will immediately make the customer unhappy.

Considering all these unique features of service processes, we can conclude that Lean Six Sigma plays a very critical role in any service organization or service function to deliver results!