Service Industry Lean Manufacturing – Implementation Guide

Non-manufacturing industries have not embraced lean manufacturing to the same extent as those producing a product. Some service industries have found the same principles apply, although the use of lean manufacturing tools is different.

For example, a value added analysis is just as easily conducted with a worker talking on the telephone as someone using one.

The 5S tool can be used to organize the surroundings in the telemarketing office. All materials the telemarketer uses should be organized and within reach without having leave the area. This 5S organization enables the telemarketer to continuously utilize any material in front of them as well as keep an eye on a computer.

The same SMED tools can be used with a administrative assistant as a machine operator. The process map and movement will show the waste in each. The assistant’s travel shows the motion waste. The waiting waste is often huge in any white collar or service job. For example, the waste from waiting on a colleague, manager, supplier, or anyone else can be eliminated. There are ways to minimize it by removing the root cause as well as finding activities to fill the time. These activities should be of short duration, such as data entry, filing, or printing.

Line balancing is easy in a service environment. The key is flexibility. For example, two tellers at a bank may be required 6 out of 8 hours per day, but the trained lean expert or industrial engineer is required to notice it. The additional two hours of waste comes in buckets of 1-2 minutes throughout the day. Again, this time must be filled with value added activities in a standard work format. If the job isn’t standardized, the two individuals may absorb the time and appear 100% busy. There are many other instances where job combinations are obvious.

The value stream map is an excellent tool for service industries. Rather than the traditional macro level view of the system, the value stream map can be used in a department or area of the business. An example would be the service desk at a department store. Begin with the information flow and trigger for activity, which might be a customer. Break the map into various segments showing the few activities that comprise 90% of the work, such as returned goods, request for information, or complaints. Standardized Operations should be utilized for returned goods to minimize motion and waiting, such as a decision flow diagram. If the manager is called a large percentage of the time, the decision flow diagram needs improved. Obviously the 5S and SMED tools are also relevant, as well as root cause problem solving to eliminate the complaints.

Service industries often use kanbans without knowing it, such as ordering supplies. The same pull systems can be used in service industries as the manufacturing sector. The supply distribution center is one obvious example. Inventory waste can be eliminated using pull systems beginning with the end downstream customer.

When implementing lean manufacturing in a service industry, it is important to tailor the training to the business. Most SMED (single minute exchange of die) training is developed using examples of setup activities for equipment. It is easier for people to understand and see the waste in their processes when the training has obvious applicability.

One of the best long term lean manufacturing tools to apply in a service industry is the kaizen event. Kaizen means “incremental improvement” in Japanese. The kaizen team is comprised of a cross functional team developed to quickly and substantially improve a business issue. For example, a kaizen might be developed to reduce hospital check in time for testing. The team might include the individuals conducting the check-in, a nurse, manager, an IT representative, and a couple customers. If the average check in time is 35 minutes (the elapsed time from walking into the building until seated in a private room), the kaizen objective might be to reduce the check in time to 20 minutes within 5 days.

Cellular manufacturing can be used in many service businesses. Rather than placing individual pieces of equipment such as the postage meter, copier, fax, and file drawer throughout the area for everyone to use (and wait on), consider placing these items together in a U shaped cell to minimize movement.

The “One Piece Flow” concept is a great tool for processing items such as quotes, bills, or mail pieces. For example, if four people must review a quote, and the first person processes 500 prior to moving to the second individual, and so on, the cycle time is going to be very long. Also, if the fourth person notices a mistake the other three missed, all 500 are bad and much labor was spent unnecessarily. Moving the piece in a flow of “one” or in small batches minimizes the error cost and reduces cycle time.

Service industries have a terrific opportunity to reduce waste. Sometimes it is simple and obvious, while other times it takes the same creativity as in the factory.

Citibank’s Transformation of Traditional Money Management Into E-Business

Citibank’s strategic intent is to convert its traditional money management business into an e-business framework. How does Citibank transform its traditional assets into digital assets? What issues, if any, do you envision that Citibank must overcome in order for the implementation to be successful?

According to Porter two main ways for a company to compete are on cost advantage or on differentiation. Citibank chose not to compete on price, but instead chose to compete on differentiation.

Since many other companies have similar products and services, Citibank bases its differentiation on customer service. Traditionally, this involved “offering telephone hotlines, relationship managers who understood clients’ needs, product consultants who provided service expertise and most important, continuous investment in technology to support both the front-end and the back-end electronic banking systems”. In order for “successful” transformation of traditional assets into digital assets the company must maintain or enhance its differentiation. Since the company’s differentiation is based on customer service, that means that in the transformation from traditional to digital assets the company must continue to be highly responsive to the customers’ current and future needs, and must do so to a higher level than the competition.

One main way that Citibank achieved transition from traditional to digital was via alliances with such technological companies as Oracle, Commerce One Inc, SAP AG, Wisdom Technologies and Bolero.net. Earlier the company invested millions of dollars on its own in multiple areas of e-business, and failed. Technology is not Citibank’s area of expertise, and it found dealing with constantly changing technology to be an expensive struggle, which it ultimately lost. However, by 2000 Citibank had changed its strategy to one of garnering alliances and using its partners’ strengths to create the technological infrastructure that the company needed to access markets and meet its customers changing demands. Working through alliances reduced Citibank’s risks and costs, increased its effectiveness, and allowed it to remain flexible in meeting changing technological and customer demands.

Customer demands varies, both in the short term and long term. According to McCauley and Kahn, one of the most important obstacles for Citibank to overcome in migrating customers from traditional to digital service was meeting their deep seated concerns about security. While to some degree this hindered Citibank’s efforts in rolling out Web-based applications, Citi did actively implement “multi-layered security architecture… public and private access keys, single-use passwords and multiple authorization controls” in order to meet customer needs (2002, p. 9). In addition, with digital processing it looked to transform repeatable processes that could be “commoditized” into an efficient digital factory. Commoditizing repeatable processes improves efficiency, but also allows resources for additional regional focus — localization. So too, Citibank’s strong brand name is a resource that translates into increased trust as a “trusted provider” when competing with Deutche Bank and other competitors. In fact, most Fortune 500 companies assign value to Citibank’s specific offerings, and prefer it to other international payment providers. Citibank, then, offers multiple areas of value to customers.

The key question, however, is whether this value translates into a competitive advantage which translates into additional profits. Though Citibank met their customers’ needs in the area of information technology, how unique is what it offered? Cutting edge technological capabilities can soon become “hygiene factors”, which are considered to be required, rather than a competitive advantage. These then, do not qualify for differentiation or competitive advantage. While at one point Citibank may have offered cutting edge technological capabilities, the competitive advantages these afford can quickly be eroded. Customer service and transactional efficiency are important. However we need to ask what other areas of business require attention in order for Citibank’s ultimate success. If these are not met, the corporation will not meet its growth goals.

Novel Netware Network Operating System

This is an operating system that has the capabilities of supporting information and resources sharing between network computers. It provides an influence between workstation in a network.

Network Operating System Services includes:

File and resource sharing – Is the fundamental requirement for a network ie is the reason behind networking computers.

Configurability and usability – configuration and use should be easy paper documentation, electronic format, books should be provided for a first time user to get the network up and running.

Support – any kind of useful information should always be available.

Types of Network Operating System:

Novel Netware
• It is the first NOS to support the multiple platforms
• It was the first NOS to support multiple and varying topologies and routines between this different topologies
• Novel Netware servers typically outperform other network servers because it is by design network operating system

Features of Novel NOS include:

• Novel directory services (NOS)

NDS offering is what makes a novel a strong competitor of Windows NT. It uses X.500 standard and therefore prevent the creation of duplicate objects. Each object has a distinguish name (DN). Because NDS directory services is displayed in neat graphically arranged order, objects such as users, printers, workstations and application servers are sharing an organization structure to the system administration user. You can log in as the administrator user from any workstation. This enables you to manage the entire directory tree. You can add and remove user's services and other network resources. Users need to log only once in order to gain access to all network resources.

• Security Services

All passwords flows back and forth from the Netware server to the client workstation in an encrypted format, even the administrator can not look at user's password on the server. The administrator can remove and add users permission but only the users know their own password, even if users get to physical Netware server, they have no greater access to resources that would have on their own workstation is build into the network system because Netware security is build into the Netware system of the lowest level. All attempts to access information or resources on the network go through on the network security system.

• Database services

Provide a central repository for information on the server, the major database management system available is
Netware C – a database record management system index with a database key for easy development for vertical application.

Netware SQL – standard used for accessing records stored in relational database system.
Oracle DBMS – it is SQL based system used primarily business critical application in different lines of business.

• Messaging services

Provide a messaging service called Netware message handling service. This provides ease of message, transmission between many fronted applications. This application can share data over the LANs and Novel word.

• Print services

Allows up to 16 printers to be shared per print server on the Network and therefore a real flexibility of printing, Printers need not to be attached to the actual print server in order to be operated.

• Netware loadable machine (NLM)

Netware loadable modules are maintained by Novel Netware operation. It provide the power needed to support hierarchy used network services in the server. have the same access to the Netware security services making them same to control and monitor.

Advantages of the Novel Netware
Has the print and file server software in the business and its sharing of files and printers that makes a network important and useful. Has the best LAN NOS directory service.

Disadvantages
As an application server its failures as Windows NT beats it on this case. Poor at printing data / information network status and management. It has build in network management tools that are not powerful.

Introduction to Fixed Asset Management

There are obvious benefits from implementing and maintaining a record and control over assets. Savings can be obtained from being able to both see current asset deployment and thereby maximizing their use. Monitoring assets will reduce unauthorized use or misappropriation and insure employees leaving a firm return assets under their control. In some cases a system is mandated by government regulations, terms of lending, public grant terms, insurance terms etc. One person can maintain and manage all fixed assets of a business if they have software to assist them. Computer systems and software available reduce complexity, save time and prevent mistakes. Why use an asset management software program?

While paper and pencil methods can be used, software programs assist in the recording, maintenance and auditing of assets. This saves time and gives a clearer picture of assets since sorting and viewing in different ways is quick and easy.

The most basic ‘solution’ would be using a spreadsheet program such as excel. Even after migrating to software specifically designed for asset management there are times that a spreadsheet program may continue to be useful.

What is an Asset?

What you call an asset often depends upon your business activities. The first thing that comes to mind is fixed assets such as computers, production equipment, office furnishings etc. You might even wish to consider employees as assets or even service and maintenance contracts. A flexible asset management software program can provide a way to track many things most of us would not consider to be assets.

What are my first steps in setting up a system or ‘solution’?

1: Decide what assets will be managed.

The more assets the more work in setting up your system. Limiting assets to only those over a certain dollar value is a good idea.

2: Deciding what characteristics of assets it is important to record within the software.

Your choices will not only have an effect upon the amount of work required but also the extent to which you can manipulate and view asset information by sorting on asset information field or combination of fields.

For example if you setup a field for ‘location’ then you can sort data to see what assets are in each location. If you also have a field for ‘type’ or ‘class’ then you could further sort and display to show only certain types of assets such as computers at one or more location.

As in every aspect of life one has to make tough choices between what is ideal and what is feasible. Your choices will have an effect upon data entry when new assets arrive as well as collecting information about existing assets. Choices you make will also have a bearing upon your choice of software since some may not handle everything you want. One such a limitation is found within the AssetTrakker Pro software program. TrackitSoftware does not provide a method of tracking depreciation because it was felt this added too much complexity requiring the collecting and maintaining of a lot more data. Additionally, they felt, handling depreciation requires superior knowledge of government rules and regulations beyond the expertise of the very people that stand to benefit most from asset management. Accounting departments already calculate and account for depreciation. *Some software does promote depreciation calculation but only offers limited functionality that in most cases is not the way regulations demand.

Some help!

Below is a listing of Asset Attributes ‘fields’ for your consideration. You will not want to use all of them for your own ‘solution’ and may well have additional ones you need.

Asset #: The key identification reference used to track assets. They can be straight numbers or a number with an alphabetical prefix. (0001 or A001). This number is used for audit purposes and perhaps for cross-reference.

Make: Manufacturer

Model: Useful when arranging service or buying parts. Useful as allows grouping by model type.

Serial #: Specific asset identification. Needed when making warranty or insurance claims.

Cost to Repl.: Estimate of the cost of replacing an asset. Useful for planning, risk assessment and insurance.

Cross Ref. #: Reference other asset number or tie together group of assets.

Type: Can be used for a general grouping such as furniture, computer, shipping, etc.

Condition: Helpful to see what is likely to require replacement or decide on service needs.

Description: Other detail in addition to make, model, and serial number.

Memo: Additional information about the asset. If a computer you might want to list details of the hardware configuration or even the programs installed on it.

Department: This is helpful for sorting assets by department to assist in auditing.

Location: Good field to have so that a search/sort can give you a clear view of where assets are located.

Used by: Necessary if you have assets in the personal possession of an employee and/or assets off business premises.

Date Assigned: Useful if assets are moved around or for telling how long an asset has been at its current location.

Expected EOL: The anticipated date when the asset will no longer be useful.

Funded by: Source of funds if provided by Bond Issue, or outside funds (loan) or a grant.

Cost: Total cost of acquiring an asset.

Date Acquired: Helps give some idea when replacement might be required.

Disposed: Indicates an asset has been disposed of.

Disposed Date: Date asset was disposed of.

Business Use %: Used if an asset is not used full time by the business to break down asset use. Not for everyone, but a field that imagination might find an indispensable use for.

OUT: Used for Tool/Equipment Tracking,

Taken By/In From: Used for Tool/Equipment Tracking to indicate who is taking or returning item.

Date Due: Used for Tool/Equipment Tracking to show when an asset is due back.

Recovered Value: Net proceeds of the disposal of an asset.

Disposed Detail: Notes on how and where an asset was disposed of.

Warranty: Indicates if asset is covered by a warranty or could be used if covered by a service/maintenance contract.

Warranty Expiry: It is useful to see what expiries are approaching for tracking maintenance or service agreements. Helps prevent paying for service covered by warranty as well as prompting the repair of items before expiry.

Image: Can assist in asset identification or where ‘look’ is an important feature. Useful if insurance claim ever made.

Value: Could be amount the asset is insured for. Risk exposure control.

Leased: Helps keep track of Leased vs Owned assets.

Lease End: Used to warn when assets have to be replaced or the lease has to be renewed according to the terms of the lease.

Lease Start: Commencement date of lease on leased equipment.

Lease Co: The name of the company from which an asset is leased.

Audit Date: This column records the date the batch scans of assets were made for audit purposes.

Auditor: Record the name of the person who performed the audit.

What next?

By now you have a good idea of what asset information you want to track. Before looking at the various software packages available you should consider how many people will be entering data and how many will be accessing the data. For a smaller organization it is likely that just one person will be involved but in larger firms perhaps a number will wish to participate. Your situation could require purchasing more than one software license and the software must support multiple users.

Use a Barcode Scanner?

A barcode scanner can be used to speed data entry and auditing. This will add to the cost and most lower priced software packages offer limited support for barcode scanners. If properly incorporated into software a scanner can provide excellent value and save a lot of time, particularly for annual audit purposes.

Below are outlined the types of barcode scanners used with asset management software.

A ‘dumb’ tethered ccd scanner is cheapest and purchased for around $70. This can only be used when plugged into the computer and acts similarly to a keyboard in that you scan a barcode and it is put into whatever cell or space you are in.

A ‘laser’ tethered scanner is more money but will be able to scan smaller barcodes and perhaps have a deeper field of view (easier to scan a barcode quickly).

A ccd or laser scanner which has built in memory so scans can be made and then the scanner can be brought back and plugged into a computer, and those scans uploaded. This is extremely useful for audit purposes. For maximum utility your software should be optimized to take advantage of this ‘batch’ memory capability. A capable unit can be obtained for around $150.

A laser scanner with internal memory, as well as an input screen and keys, means that after scanning a barcode you can add additional information. These are more expensive and again their use has to be integrated into your management software. While prices are coming down you are looking at units in the pocket pc price range plus scanner cost. It is usual for software utilizing these units to also, for some reason, be priced higher.

Asset Management Software

The range of prices for asset management software is $200 to $10,000 and all require you to do the entry of existing asset data as well as some setting up for your requirements. Some offer telephone advice at additional cost but hands on assistance only comes with expensive packages (this level of software requires expensive sales force and marketing expense so perhaps their price, for the features provided, may seem high).

Purchasing Criteria a lot of people seem to use. You may have more.

1: Price 2: Ease of implementation of system 3: Ease of use 4: Ability to fit the business 5: Functionality 6: Potential to handle growth

What you can obtain for a reasonable price

A program with full relational database, such as MS SQL Server Express, or open source database. Today there is no reason to settle for less power or quality. Microsoft provides their SQL 2005 ‘Express’ DB version at no cost.

A program that allows you to attach images of assets. While not necessary for everyone it is something that someday you might want to use.

A program that integrates the use of inexpensive ‘batch’ memory barcode scanners because, if not now, at some point in the future such an accessory will save time and money. Used in auditing it assures an asset was actually seen as barcode had to be scanned.

A program that will permit the management of 10,000+ assets. With decent memory in your computer and a fast full relational database engine there isn’t much of a limitation anymore and while certain functions might slow down a bit even a low cost program should handle over 10,000 assets.

A program that is flexible so you can take advantage of features later instead of having to implement everything at once.

*If more than one person is to be given access to the database then you should ensure that different levels of access can be set for different users to prevent unauthorized changes to data.

What you can get but not cheaply.

A program that integrates directly into your current accounting system.

A program that has full professional depreciation calculations.

A program that runs directly off your company server (lower cost software runs off workstations and while a central database can be located on your server and accessed by individual workstations this is not the same as complete software being server based with applets on workstations.

Hand holding and in house training to get your system up and running. There are firms that will sit down with you and ask you all the right questions, set up your software, audit and list all your assets and then train your staff how to operate and maintain your ‘solution’. Most, to my knowledge, will recommend a mid to high priced software because it is easier to sell (commission higher as well) and easier for them to install due to their familiarity with it.

Nuts and Bolts

Gathering your Asset Information How you perform this step depends upon your situation. In our discussion below we assume you do not have existing asset information, in an existing excel spreadsheet or other format. If you do then you would save work by export/importing that data into your asset management software.

Starting your Asset Listing and Numbering from Scratch

This is an advantage because you are not limited by inherited constraints. Of course it is more work, as you cannot just load in existing asset information but have to collect everything yourself.

Collecting asset information is time consuming. Getting this information accurately, with as little work as possible is important. Thinking about how to do the job and planning will help make this big job easier.

The following is how I suggest doing this but you may have your own, perhaps better plan.

Create data entry sheets that you will have people write in information about assets under their control. Your asset management software may create these or you could make up an excel spreadsheet to obtain them.

Try and obtain some ‘buy in’ from the department or location manager with control over assets. The closer to the asset you can allocate some responsibility the better that asset will be controlled. ‘It’s my department’s asset’ is more powerful an incentive than ‘it’s I.T. Dept’s asset’.

Final steps

After entering data, that your co-operative managers helped you obtain, it is time to work with that data within your asset management software. It should not take long to become familiar with how it can present information to you on screen and in reports.

Now sit back and enjoy how easy it is to administer your assets.