By Ronald D. Snee and Roger W. Hoerl
The differences between service and factory applications can be broken down into technical and conceptual differences. It is actually the conceptual differences that are most important. The first and most obvious difference is that in manufacturing you are, by definition, making something. In other words, you produce a tangible, physical product. This makes it easy to visualize the purpose of lean Six Sigma efforts; you don’t want to make defective automobiles, clothing that must be sold as “seconds” or leaky pens.
How about bidding on municipal bonds, providing day care for young children or marketing consulting services? These endeavors don’t appear to produce a tangible product, so for many people it is not clear how to apply lean Six Sigma.
The second major difference, lack of a process view of work, can be more difficult to overcome. In manufacturing, it is easy to see the process that is producing the product. All you have to do is follow the pipes! Most people who work in manufacturing are not confused about what process they work on (although even here people may not understand the overall system). In the three examples discussed above, however, day care, municipal bonds and marketing, people may not know the processes in which they work, or even that they have a process. Since there are no “pipes” to follow, it is much harder to visualize the process they are working on.
The third major conceptual difference is the fact that many service businesses and functions do not have an improvement culture or mindset. Although many counter-examples could be found, people are not generally expected to come into work thinking about how they might be able to improve their processes and results. For example, many hospital nurses are not expected, and perhaps not even legally allowed, to develop and implement improvements to standard medical procedures. Accountants are generally held accountable for adhering to generally accepted accounting principles (GAAP), rather than improving GAAP. Similar comments could be made of lawyers, software developers, underwriters and many other professionals. This is not to criticize such professionals, the vast majority of whom are dedicated, honest, and hard working. Rather, it is important to point out the difference in culture between most service businesses or functions versus what is needed for holistic deployment of lean Six Sigma.
In manufacturing, on the other hand, there is almost always constant pressure to reduce waste levels and increase productivity, at least in free-market economies. One reason for this is that manufacturing waste and production are easily seen and quantified. Once major improvements are made in these organizations, further improvements are expected. Facilities that are unable to continue such improvement are generally shut down in favor of those that can, or in favor of newer, more efficient facilities. Improvement is not an option here; it is a matter of survival.
In the U.S. (and many other countries), agriculture and athletics are two other examples of how improvement is part of the culture. “Wait until next year.” or “Next season, we’ll be better.” is the attitude. Sustained world-class performance has resulted in both instances.
We need more champions of lean Six Sigma to pursue service sectors. The right expertise will inevitably produce significant enhancements to the performance of service organizations and their bottom lines.
Ron Snee is founder and president of Snee Associates, a firm dedicated to the successful implementation of process and organizational improvement initiatives.
Roger W. Hoerl leads the Applied Statistics Lab at GE Global Research, which supports new product and service development across the GE businesses.