About 20% of the $10 trillion in GDP generated by the private service sector in the United States is non-value added costs.
Why use lean in the service industry? The potential cost savings lean can bring to trade, transportation and utility services, information services and finance, professional and business services, education and health services, leisure and hospitality services, marketing services, etc. 80 percent of the country’s GDP, or $10 trillion a year, is generated by the private sector in the United States. Non-value-added work typically accounts for 50% or more of the costs in most service organisations. Figure out how much $4 trillion in service sector operating expenses would cost if they were all accounted for by the 40 percent average figure. Non-value-added costs amount to $2 trillion a year if they account for half of all costs.
Twenty percent of the GDP of the service sector could be non-value-added costs. Doesn’t this justify the use of Lean in the service sector?? An additional benefit of lean in the service industry is that it can reduce costs while also improving productivity and customer satisfaction.
No longer confined to the manufacturing sector, lean is now a method for streamlining all aspects of a company’s operations. It has the potential to significantly improve efficiency, quality, and cost while also allowing an organisation to stand out from the crowd.
The service industry can reduce delays in work in progress, unanswered phone calls, and incomplete reports by analysing and improving its processes. All of these factors contribute to lower levels of client satisfaction.
In order to stay ahead of the competition, service companies must implement systems like Lean, Six Sigma, and practical problem solving within their own organisations. Individual service providers may be able to rise to and then surpass the challenges of their competitors by utilising such systems. A service firm can cultivate a process-oriented way of thinking and developing strategies that ensure continuous improvement involving people at all levels of the organisational hierarchy if it adopts a philosophy of continuous process improvement. A system like this necessitates a shift in organisational culture, one that values adaptability over complacency.
Lean can be implemented in a service company when there is widespread dissatisfaction with the current operating model. Dissatisfaction is heightened in profit-making service organisations when red ink or market share losses occur. This type of competitive pressure does not apply to non-profit service organisations such as the government and public education. As a result, the leadership team must be the ones to instigate organisational dissatisfaction.
When it comes to making the service sector more cost competitive in the US economy, traditional methods like restructuring and reorganisation are no longer sufficient, according to the authors. Quality and productivity can only be improved with a more targeted approach. Lean process improvement can be implemented in service organisations as a way to boost their competitiveness. When it comes to running a business in the service industry, you might want to think about implementing lean thinking. Your non-value-added costs, employee motivation, customer value, and business efficiency are all going to improve as a result of adopting a more productive approach.