Waste management in the managed business services environment is about identifiying and removing all those things that really don’t provide added value to the final service/product delivered to the customer.
Lean Six Sigma is the reference model for Waste Management in Business Services.
Lean Six Sigma is about quality improvement by problem management within the Service Management organization (also known as ‘operations’, ‘ongoing’, ‘production’, ‘live environtment’, or ‘business as usual’ -BAU-). The focus is on business process improvement: what quality standards are we providing today with our business services and how to improve them so that there is less ‘waste’.
This operational model requires trained operational people who will not be only focussed on everyday operations but also in continuous process improvement.
What is waste?
With the focus on business processes, waste is any non value-adding activity to the final product or service. Of course the first step is to build a detailed processes map of your organization (business org, or IT org, etc.), for later analyzing the real value of each of the activities that are performed to provide the final product or service.
Lean Six Sigma defines 8 types of waste, that can be remembered by the following acronym: DOWNTIME (Defects, Overproduction, Waiting, Non-Utilized Talent, Transportation, Inventory, Motion, and Extra-Processing).
Defects are waste caused by incorrect processing of information or production. The waste impacts on efficiency due to requiring more time and money for reworking service/product components.
Defects waste management requires dealing with complaints from the customer, identifying these concerns as an opportunity for learning what really matters, and focusing our next process improvements in that direction.
Customer satisfaction is achieved not only with non-defects in products and services, but also with non-defects in customer service support. If we don’t correctly manage both defects, the customer may reject all your service/products. And as a result, this will incur cost, time, and brand image without any income.
For example, Japanesse car companies are very well known for carefully managing defects found in their cars throughout the car’s lifecycle. If they identify any manufacturing error, they call thousands of customers in order to bring back their cars and have the problem fixed. Exactly the same is applicable for services.
Overproduction is waste due to processing more than what is needed or before it is needed. In services, this may be due to an over-sizing of the service (lack of productive capacity planning), repetitive tasks that don’t provide any value for the final service or product, or items that can be made in a more effective way.
Overproduction waste management requires changing minds, and working only on demand. The old days of full production are long gone. Today, factories and service providers deliver services and products on demand. This means that they don’t produce something if someone has not submitted a request. Overproduction impacts anticipating costs, cash-flow, inventories waste, and non value added processing waste.
For example, the game company Atari in the 1980s overproduced copies of the game E.T. in anticipation of sales from the popularity of Spielberg’s hit movie. However, not many children liked or wanted the game. And as a result, Atari was stuck with millions of worthless copies of the video game E.T. In the end, all these game cartridges wound up in a landfill in the desert – only to be discovered later by video gaming history enthusiasts.
Waiting is waste due to time waiting for the next activity in a process.
Waiting waste management requires …
Non-Utilized talent is waste due to underutilizing people’s talents, skills, and knowledge.
Waste management of Non-utilized talent requires …
Transportation is waste due to unnecessary movements of products and materials.
Transportation waste management requires …
Inventory is waste due to excess products and materials not being processed.
Inventory waste management requires …
Motion is waste due to unnecessary movements by people (e.g., walking, going to the office when it is not necessary, etc.)
Motion waste management requires …
Extra-processing is waste due to delivering more work or higher quality than is required by the customer.
Extra-processing waste management requires …