Service Matters from MCA Solutions

Service Management 365 just published an article by Graham Best, Managing Director of MCA partner The Service Business titled Implementing Lean in the Field Service Supply Chain.  The Service Business is a UK consultancy dedicated, as the name implies, to the aftermarket supply chain.  Graham notes that lean principles have been applied to production processes by many leading manufacturers, and makes a compelling case for its value in creating a "lean, mean, successful customer service machine.  The article highlights 3 key principles of lean and how they apply to service:  process mapping, eliminating waste, and a lean organization, and the article is very worthwhile in aligning service improvement with broader lean initiatives. 

While there are some principles of lean that can be applied to a service supply chain, the approach is a bit different than in a manufacturing environment.  Wikipedia provides a history of lean manaufacuturing that goes back to Benjamin Franklin!, Henry Ford, and more recently to the Toyota Production System (TPS).  A key component of the TPS process is reducing process variability to improve flow, and reducing waste, typically in the form of inventory.  

As a former manufacturing consultant at PRTM, I did several implementations using lean or "Just-in-time" techniques in manufacturing environments. While inventory reduction isn't easy, in a repeatable manufacturing process with a limited number of steps and processes, buffers can be reduced significantly, and a 'manual' kanban approach can be very effective.

In aftermarket service, demand is extremely variable, the volume of parts is high, and depending on the type of service entitlement, many stocking locations may be required to ensure rapid response to equipment downtime.  In this environment, determining the inventory stocking levels or buffers is impossible to do with manual techniques, and even with traditional planning techniques, inventory is much higher than it needs to be.  Inventory optimization in an automated process combined with effective service design can be of significant benefit in minimizing the "buffer" to position inventory to ensure desired service levels in an environment of very unpredictable demand.

So while lean techniques of waste reduction and flow improvement apply in many areas of service, a "just-in-time" approach must be tempered with tools that can determine optimal inventory buffers across a global service network.  The CFO must realize that because of the nature of the business, aftermarket inventory will never turn as quickly as production inventory, but organizations who have applied inventory optimization to aftermarket spares have seen significant results in inventory reduction while improving customer service.  Combining this approach with lean process consulting from companies like The Service Business can result in even greater benefits to the service business.