Monday, September 16, 2013

Agile and Lean Methodology in Service Industry.

While we will be studying in class about the Lean methods, I was curious about understanding the advantages Agile and Lean methodology can offer in the service industry. 

Some of the key differences between manufacturing and service industry could be : 
- Input in the manufacturing industry includes labor and all other raw material production costs, whereas the only major investment in service industry is for labor. Hence the capital investment would be very much less in service industry.

- The optimization in case of manufacturing can be done at various stages like inventory management, the lean time. The speed can be improved by proper inventory management, improving transportation. Whereas in case of the service industry, the main driving force is labor. The optimization can be brought in the service industry by correct utilization of labor force.

Out of the 7 types of waste mentioned by the TPS(Toyota Production System), the two major waste found in the service industry, offices to be more specific, are overproduction and waiting. The reason behind this seems to be specialization. When an employee is specialized in a particular field, unless he gets work pertaining to that field, he would have nothing to do. Once he gets work related to his field, he would be overloaded with work for some time. Having worked in a consulting firm for two years, I have experienced this personally. There would be never a time in office, where you will have consistent amount of work, any day. You might be either overloaded with work or else, you will have nothing to do for the entire day.

This inconsistency in work also leads to other waiting for your work to be finished off, as their work depends on the completion of your work. Hence, when you are overloaded with the work, there would be others who will be waiting for your work to be completed.
One of the solutions for this, as per the Agilean Company, is cross-functional training. As per this method, the person will be trained in more than one field, so that when he does not have work in the field he is specialized in, he could take over the work belonging to some other field, he was trained on.One of the other approaches followed is also the CPI(Continuous Performance Imporvement), where each employee is encouraged to improve the process he is working on, reduce the waste in the processes he is working on. 

This leads me to thinking, would not this approach decrease the overall quality of the work. The work now would be done not completely by the person specialized in the field, rather other employees who might be recently trained, would be doing the work. If we see from a different perspective, if the specialized person would have been doing the work all alone, he would have been overloaded with work and then he also might not be so efficient in delivering the work he was best in. Hence, cross-functional training might be a good option to reduce waste.

As we saw in the readings, the main scope of improvement in Agile methodology is project management whereas for Lean it is the process management. Hence, the Agilean Enterprise combines both the methodologies and leverages the benefits of them.
The Agile method improves the processes of creating customer value. It helps in creating self- organized teams, which requires less management, specialization, more modularity, and can produce range of services.
Whereas the Lean methodology, improves the way each individual improves the customer value. It focuses on what would be the next most important thing the person would be working on, and ensures that maximum value is obtained from each resource.

Having worked for two years, I have personally seen the advantages of Agile methodology as mentioned above. It increases the level of confidence of each employee when they are allowed to work independently, allowed to give opinions, and are not constantly managed by the management.

But I have yet not seen the effective application of Lean in the offices to a greater extent. We could consider, the approach to be applied in the cases where, if a person is not having much work in Project X, he would be asked to work for Project Y, where the resources might not enough or each resource is overloaded with work. Here, the firm definitely benefits from the approach, but in my experience there were no distinguished benefits for the employee himself. In many cases, his extra efforts would not be even recognized by the firm, when the year-end evaluation comes into picture. Many a times, you could see an employee jumping from one to another project in similar scenarios, and he would always end up working on an on-going project on temporary basis, rather than being working for a particular project from scratch. This might not be liked by the employee, and it discourages him. Is this due to the wrong implementation of Lean methodology or excess implementation of Lean?

How could this be changed so that the employee would also benefit from the Lean methodology ?
I think one of the approaches could be rather than only higher management involved in implementing the methodologies, the firm should even involve the employees who are considered resources for implementation. This would increase mutual trust in the company, the employees will be more responsible now, as they have also played a part in the implementation of Agile and Lean methodology, and hence they will try to make the implementation work towards success.

Looking forward to your opinions or the articles you came across, where the firms would have benefited from the application of Supply Chain Management in the Service Area.   



  1. An interesting and thoughtful post.
    There comes a point at which lack of resources, be they materials, manpower or machinery, limits a supply chain's ability to respond. The relationship between lean and responsiveness becomes inverted. Process and service industries tend to be more susceptible than assembly operations - one critical factor being the dependency on specialist resources.
    Readers may be interested in my post "Lean vs Agile Supply Chain... or can we have both?"

  2. Hi Kairavi,

    Please explain in detail on how to handle the situation(which you have mentioned) - 'Employee moved to another project on a temporary basis and thereby leading to employee getting discouraged'.

    Probably a case study should help.


  3. Your post is really good providing good information.. I liked it and enjoyed reading it. Keep sharing such important posts.
    Supply chain management services


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