03. Jul. 2013

Losses in SERVICE Industry

by KII

The Indian service sector accounts for a large part of the Indian economy – be it in terms of employment potential or its contribution to the national income. While India is distinctive among developing countries for its fast-growing service sector, sceptics have raised doubts about the quality and sustainability of this service-sector growth and its implications for economic development. Foreign direct investment (FDI) inflows into the services sector declined by 3.5 per cent to USD 4.66 billion during the April-January period of last fiscal, according to the Department of Industrial Policy and Promotion (DIPP). “The global economic situation is still not healthy. Investors are hesitant to invest their money in the sector.” An indicative list of some important domestic regulations in India which need to be examined for suitable policy reforms in the services sector include Trade and Transport services, Construction, Accountancy services, Legal services and Education Services.

In terms of operations and improvements, the service industries in general are a long way behind manufacturing. Not all Kaizen/lean manufacturing ideas translate from Gemba (Shop floor) to office cubicle. Financial services are the ones who have adopted Kaizen/lean principles and Healthcare organizations are starting to learn it but implementations are rare. In fact Government of Gujarat is the only state where Kaizen/Lean has been implemented in all 26 district hospitals. Talking about tourism, hotels, and restaurants none of them is implementing Kaizen/lean.

The more time goes by, the more competitiveness increases between manufacturing companies or service organisations. For the last decades, a lot of manufacturing companies have followed the trend of implementing Kaizen/lean production – with success or not – in order to decrease wastes, improve quality, speed, & customer satisfaction and therefore profits.

Because Kaizen/Lean implementation is not that much prevalent in service it is very important to understand the losses in service industry so that the organization can focus on top losses.

Typical losses that can be seen in Service industry are as follows

WORK SYSTEMS

  • Environment: Too much printing (excessive use of toners, cartridges), too many paper documents/ copies, noise pollution, no trash segregation concept (e.g. batteries), Less car pool, stand by AC/ lights.
  • Clarity of Information: Missing information, long delayed decisions, many interfaces/ hand-offs, bureaucratic procedures, cheque bounces, and unclear responsibilities.
  • Unclear Targets: No policy deployment to the level of each employee, no personal targets, missing or unclear targets, target conflicts.
  • Technology: System error (computer, printer, copier), defective equipment, Inadequate training to use.

BUSINESS PROCESS

  • Inventory: Too many varieties of office material, too much qty., obsolete forms, double filing, overloaded in/ out trays & mailboxes.
  • Interfaces: Too many hand-offs, missing standards, unclear responsibilities/ rules, missing continuity, data transfer mistakes.
  • Work procedure: Too much bureaucracy, missing training & documentation, inadequate delegation, old manual processes computerized, too many approvals.
  • Errors: In master data, part lists, mistake in documents (drawings, calculations, offers), wrong/ obsolete documents.

WORK TIME

  • Waiting time: Waiting for colleagues, decisions, information, material; waiting through IT systems, IT availability; Non reachable colleagues.
  • Search Time: Search for files, documents, information, people, office material, facilities.
  • Interruption: Disruption due to short notice/unscheduled meetings, unnecessary phone-calls/ emails, disruption through noise.
  • Information overload: Long meetings, too much paperwork, full tables, full hard disks, archives, binders, mailboxes, incomplete information.
  • Transport: Change in format (print then fax); hand-offs; import & export of files/ material; long distances between people who interface, internal postal system.

EMPLOYEE

  • Creativity: Unused creativity, missing idea management, no improvement programs; less benchmarking activities/ idea transfer/ exchange.
  • Know How: No skill/ qualification matrix, no formal skill building activity, no regular training/ dev, mentoring activity.
  • Health: Poor ergonomics, high noise, low light, narrow workspaces, work stress, missing active health care.
  • Please take note that above mentioned losses may vary from organization to organization.

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