When speaking of
Lean Production, it usually refers to manufacturing industry such as
auto-mobile. However, with its great success, it has been adopted across
industries including health care and IT outsourcing. Wipro did a great job of
translating “Lean Principle” to IT outsourcing.
When the chief
global delivery officer at Wipro wanted to deal with rising wage inflation and
growing complexity in large outsourcing contracts, McKinsey suggested the Lean
Principle. With further investigation at options that included the Malcolm
Baldridge National Quality Award criteria, TRIZ (short for Theory of Inventive
Problem Solving in Russian), and Toyota's Lean, Wipro decided to apply the Lean
exercises.[i] What Wipro tried to do is
more than just reduce their cost, but differentiate itself from its peer
competitors based on quality and delivery of its software products as well.[ii]
To kick off the
project, they define the value of outsourcing which is to provide solutions to
the challenges the outsourcing buyers needed to solve.[iii] They also adopt the
tenets according to their needs. They focus on three aspects:
1)
Continuous Improvement
Go see yourself to understand
thoroughly
Make decisions slowly by consensus,
thoroughly considering all options, implement rapidly
Continuous organization learning
through kaizen
2)
Approach to People: Respect, Challenge,
and Grow
Grow leaders who live the philosophy
Respect, develop and challenge your
people and teams
Respect, challenge and help your
suppliers
3)
Process Flow and Eliminate Waste
Create process flow to surface
problems
Use pull systems to avoid
overproduction
Level out the workload
Stop when there is a quality
problem
Standardize tasks for continuous
improvement
Use visual controls so no
problems are hidden
Use only reliable, thoroughly tested
technology
With the above
tenets, Wipro established a four-step process to adopt TPS. Firstly, it
identifies the tasks in great details so that people know exactly how to
accomplish the work. Secondly, Wipro streamline communication by establishing
direct communication pathways between people to eliminate miscommunication or
delay so that waste is reduced. Then Wipro simplify the process architecture.
Thus, people can understand the interconnections. A side effect may be the standardized
process for continuous improvement. Finally, it adopts hypothesis-driven problem
solving. The team is hold together to discuss possible improvement on the work and
test hypotheses by comparing with real-world results. With this final step,
quality control is achieved.
With the factory
model drew upon the principles of TPS, Wipro can standardized process and reuse
codes. Given a lot of similar small projects, reusing components not only increase
the productivity of project, but also improve quality of product. Since
components are reused across projects in a large scale, more feedbacks will be
taken into account for further development. Potential problems of existing
components will become more and more transparent after being used by more
users.
To make this
process more successful, Wipro pay a lot attention on communication as well. It
makes decisions as late as possible but delivers it as fast as possible. By giving
the outsourcing buyers some intermediate delivery, it can get feedback from them
and then eliminate the unwanted or unnecessary features of the product which in
turn eliminate waste. Moreover, this fast delivery cycle also gives the buyers
flexibility of changes. With this service oriented process rather than focusing
on pure technology, Wipro would deliver products with high customer
satisfaction rate.
With all the
efforts put into lean practices, according to Staats, for every $1, Wipro makes
savings of 20 cents on an average. "For one of the customers, the gains
stretched to over 70% after we used Lean for minimising efforts (read
engineers) while delivering the project," recalls Staats. [i]
Wipro did
successfully apply the lean principle into IT outsourcing. Before adoption of TPS,
Wipro had implemented Six Sigma quality control system as well. The questions
remained is whether Wipro will be able to differentiate itself from its
competitors given its peers may replicate this lean production system. Or another question might be is what are the industries that Lean Principle may be suitable for.
[i]http://articles.economictimes.indiatimes.com/2011-04-15/news/29417976_1_third-biggest-software-exporter-new-project-sambuddha-deb
[ii] http://hbr.org/product/lean-at-wipro-technologies/an/607032-PDF-ENG
[iii]http://www.outsourcing-center.com/2010-02-how-wipro-translated-toyotas-lean-principles-to-it-outsourcing-article-37268.html
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