Services need to be delivered efficiently if an organisation is to thrive. And digitisation can deliver many efficiencies. But it is important to ensure that as much waste as possible is stripped out of services as they are digitised. Otherwise digitisation can simply be an excuse for avoiding hard decisions about existing wasteful processes.
“Muda” in service delivery
Ideas of “lean” production were developed in post-war Japan by companies like Toyota and helped lead to that country’s reinvention as a commercial dynamo.
Lean production involves stripping waste (muda in Japanese) out of the production process to maximise profitability. How can this powerful idea be used when considering digital transformation?
According to Shoichiro Toyoda (President of Toyota until 1999) waste is “anything other than the minimum amount of equipment, materials, parts, space, and workers’ time which are absolutely essential to add value to the product”.
Toyota identified eight “wastes” in their production process. With a little imagination these can be matched with potential wastes in service processes.
The eight wastes
1. Defective processes
Accuracy is fundamental to manufacturing and so it is to services. Defects in processes can include clerical errors in data entry (for example the wrong data being recorded) or a lack of the data necessary for a complete record.
Alternatively, defects might involve the wrong data being used to service an individual: a call centre employee might pull up records for the wrong person or when the records available to a retailer might not match the promises being delivered elsewhere in the organisation – for instance when an advert promises something but the retailer can’t offer this to someone who requests it.
The most important form of over-production in service delivery is the failure to retain existing customers; this results in an expensive search for new customers. Waste here could be caused by a failure to service customers properly but is just as likely to be caused by a failure to generate loyalty through communications (for instance when offers are targeted only at new customers) or a recognition of a customer’s status as an existing customer.
Within the service itself, over-production could involve the creation of records that are not required e.g. keeping records of people who are not customers may be a waste if they are not (legitimately and ethically) used for other things. Alternatively requiring unnecessary data fields to be completed is a waste e.g. in a sales form a requirement for a telephone number in addition to an email address may be unnecessary (as well as being off-putting to the customer). This seems to be a fairly common issue in e-commerce forms where data is gathered unnecessarily “just in case” it might be useful. If unnecessary data is collected and stored then there is a data compliance issue in Europe as data rules state that data should only be held when necessary.
3. Damage during production
When you are building a car it is easy to see how damage to delicate components can happen. It is not immediately obvious how waste can be caused during the process of providing the service.
But it could be generated by someone accessing and changing customer data used in a service. For instance if someone access your file and makes changes to, adds to or deletes the data, then if this is done without any appropriate record being made the record could be damaged as it would no longer be complete.
4. The use of unnecessary physical resources or inventory
Using too much steel in a motor car is an obvious waste of resource. Keying data in twice is an example of an unnecessary use of resource in a service process. For instance if a salesperson takes down the details of a prospect on a paper form and then those details need to be transposed to an online system there is an obvious waste, as well as an increased risk of inaccuracy when transposition errors occur.
Waste is a big problem in any service where the service provider isn’t using their own money to provide the service. The bloated management seen in many public service organisations is a manifestation of this.
Examples include the use of unnecessary equipment such as expensive tablet computers bought for reasons of fashion rather than function, or decisions made about unnecessary software, or software upgrades, that cause unnecessary expenditure. Note that the use of unnecessary software could also act as a cyber risk by expanding the “risk surface” of the organisation while the use of non-standard computing equipment could have a similar effect: another reason for rooting out this type of waste.
Another important resource is information. Making it unnecessarily hard to find information could be very wasteful: knowledge workers have been estimated to spend up to 20% of their time looking for information. Thinking of ways to reduce this – better file structures, efficient desktop search engines, more effective knowledge management, even a library of books – could reduce this waste considerably as well as making employees feel better about their jobs.
Related to this is the waste associated with unnecessary work – such as emails where people are “copied in” for no reason and unnecessary “meetings about meetings”, or meetings where everyone is given a chance to speak even if they have nothing to say! (Holding meetings standing up is a good way of speeding them up.) The creation of long meeting minutes rather than brief outlines of decisions made is often wasteful. Compulsory training can also be wasteful – where it is provided to people who don’t need it, perhaps because training plans are not granular enough and fail to distinguish between different types of worker.
Office costs may also be very wasteful – heating and lighting left on in empty rooms,unnecessary use of printer ink and paper etc; these can add substantially to the cost of delivering services. Comfortable working conditions are of course important for maintaining staff morale and staff efficiency but where some parts of an organisation are seen as getting special treatment this can cause resentment.
5. Unnecessary transportation costs
Generally services are not “transported”, unlike motor cars. However the people who deliver them are: wasteful costs here therefore could involve unnecessary offices that are physically near to consumers when the service could as well be delivered remotely. This can be part of the case for digitising processes: for instance a customer consultation or an internal meeting held over Skype might be far more time efficient than a face to face meeting.
There could also be “transportation” wastes caused by the inability for people to access records remotely once they are created, requiring people to visit a separate location to access the information they require or download data to a system. I have seen this caused by inefficient (i.e. over secure) security protocols that allow people to log on to a system from one work location but not from another.
6. Unnecessary time taken
If parts of a service takes an unnecessarily long time to deliver it can mean other people involved in the service wasting their time as they wait. It can also mean the customer waiting for something to be ready for them – and waiting will reduce their loyalty.
Time waste can be caused by inefficient “critical paths” where actions dependent on other actions are not ordered as well as they could be. In addition unnecessary processes such as the duplication of data entry can cause delays in the delivery of services. A large numbers of versions of a “version controlled” document could indicate inefficiency in the way that document is handled.
One technique to uncover unnecessarily complex processes is “process mining” where the relationships between different parts of a process are mapped out and any loops or repeated steps can be identified.
7. Unnecessarily high quality of components
We want our motor cars to contain components of the appropriate quality. For instance some European motor manufacturers experienced quality problems when they decided to save money on components during the economic downturn.
In service processes, of course consumers want an appropriate quality of customer service. But if the delivery of customer service elements don’t actually generate extra sales or loyalty then they are wasteful. For instance interactions with call centres by customers who have queries about a product they have bought may be seriously wasteful compared with creating a good FAQ online.
Timing is also important here: asking a customer at a restaurant “is everything satisfactory” may well show appropriate customer care when it happens just after they have been served; but asking the same on the way out after they have paid (rather than just saying “goodbye”) could be considered wasteful and indeed unnecessarily risky.
8. Failure to use staff skills
Where the wrong people are doing the wrong jobs, e.g. where professionals are doing admin jobs, there is a clear waste of talent and resource. This can happen if tasks are not allocated properly or if weak management allows people who should be undertaking routine tasks for more qualified colleagues to “delegate upwards”.
Even if professionally qualified people are employed at a cheaper rate because they have been employed to perform a routine task, you can argue that this may be wasteful for an organisation because they are likely to be bored and less efficient – unless they know they are being trained up to do a harder job in the future.
Finding the bottlenecks
Waste can occur anywhere in a service process. However some waste is worse than other waste. In particular, when the waste is happening in a part of the process that is already struggling to perform effectively then this waste needs to be prioritised.
Most processes are as strong – or as efficient as their weakest (or most inefficient) part. Therefore it is sensible to locate any bottlenecks that are reducing service efficiency or extending delivery times and start identifying waste there.
Let’s take a process that is required to deliver a service in a particular time – say the delivery of groceries in a particular time slot. There may be waste in several areas – receiving the order, picking and packing, loading the van, getting to the customer. But if there is a resource problem around loading the van that is effecting the ability to meet promised delivery times, solving a resource issue in the picking and packing area won’t solve the problem of late delivery.
Waste and the digitising of processes
Digitisation does not in itself guarantee efficiency. Any project to digitise a business process needs to identify waste in the process and then consider ways that digitising the process could reduce that waste. It is important to avoid digitisation that merely makes processes more complex – for instance paper is an excellent interface and in some circumstances (e.g. where data doesn’t need to be shared or stored for any length of time) can be an excellent part of a process.
In addition it is important to consider any risks (especially around security and data compliance) that might arise as a result of digitising a process. If these risks outweigh the advantages of the digitisation, and are not capable of being reduced, then the case for digitisation is also reduced.