Dec 28 2013
Manufacturing is Making Things — Service isn’t
With services being the dominant source of employment in advanced economies, more and more consultants are turning to this area as the next frontier for Lean, and engaging in debates as to which of Manufacturing or Service has the greatest variability. The level of variability, however, does not strike me as the fundamental difference between the two.
It is more obvious: Manufacturing is about making things, while Service is not. In manufacturing, a physical object is the output. In service, if there is a physical output, it is only an information support, a licence, a boarding pass, a stamped form, a prescription, or a report.
High volume/Low mix and Low volume/High mix activities exist on both sides. In manufacturing, you have plants making 1 million identical electricity meters per year while others make 200 custom-designed machines and fixtures. In service, you have organizations that issue drivers’ licences all day, every day, and others that provide advice on interior design that is custom for each home and occupant.
Manufacturing needs the appropriate technology and management to make things, including expensive facilities, often with large, noisy, dirty, and even dangerous machines, and a support structure for logistics, maintenance, quality, etc. It attracts some people and not others, and the experience of working together in production creates a level of camaraderie that is rarely found in service… I could go on and on.
The consequence is that improving Service is a different challenge from improving Manufacturing. I never bought the notion that a system like TPS, developed to make cars, could be a panacea for all business activities, and this is why I remained focused on Manufacturing.
Whether Lean is an expanded or watered down version of TPS, I consider that it has to prove itself in every new domain, even in Manufacturing. In Service, it seems to help in hospital operations, and the crossover value of industrial engineering in this field has been established since Frank Gilbreth redesigned operating room procedures 100 years ago.
Would it help in the organization of distribution centers for eCommerce? Perhaps, but it is not a foregone conclusion. Does Amazon use Lean? The closest I could find to a positive answer is one sentence by Jeff Bezos in an Harvard Business Review interview quoted by Pete Abilla on Shmula:
“I literally learned a bunch of techniques, like Six Sigma and lean manufacturing and other incredibly useful approaches.”
Unlike other Shmula readers, I can’t jump from this to the conclusion that Amazon are based on Six Sigma or Lean. Instead, what I hear Bezos saying is “We studied what’s out there, and went our own way.” And that way is a game changer in retail worldwide, worthy of study in its own right.
December 28, 2013 @ 11:12 am
To what I hear from consultants in the lean arena is all too often that the only “real” gemba is the shopfloor of a manufacturing company. I can’t say that is wrong (seen from their perspective) but there is lots more out there where lean thinking is applicable. From automobile dealer to the bank service, social media (including this blog) the gemba (the value creating) can be almost anywhere.
However when you are trained to see machinery, and production technology at large scale it makes no wonder not to see, and taking seriously into account the other areas. Service for sure becoming much more prominent as machines are overtaking jobs across the globe. Federico Pistono’s book “Robots will steal your job but that’s o.k.” http://robotswillstealyourjob.com/ points out what you also have touched on.
There will be a much different time in the not so far future – lots of work ahead of us all.
December 28, 2013 @ 3:32 pm
I see the opposite: consultants declaring “mission accomplished” on the manufacturing shop floor, fleeing towards offices and service organizations, and claiming that Lean is applicable everywhere.
The problem is that, to get it to the point of universal applicability, you have to gut it to the point that it becomes little more than general goodness. The specific technical and managerial content that restricts its range of applicability, however, is also what makes it effective. Lean is not both a dessert topping and a floor wax.
December 28, 2013 @ 12:03 pm
I have not worked in a facility, that produces and constructs machines, however,
anyone who works nearby or works in the construction industry knows that
machines are important more than ever. First, to make the work more safe,
and to increase the speed of the operations.
December 28, 2013 @ 8:37 pm
Wasn’t any book written about Toyota’s service operations?
I think I remember their US warehousing operations were described in Lean Thinking. But I guess there are other books out there on this topic.
December 30, 2013 @ 11:00 pm
It is interesting to see what Amazon continues to do. I think you are right that they have learned good things and are applying them there way. Often Bezos does much more core lean thinking than those that spout the term a great deal.
For example, Bezos going to the gemba, Bezos root cause analysis (from Shmula’s site). Bezos understand the weakness of traditional accounting more than most any executive (he was a Wall Street analyst), this is way more important than I ever see mentioned in what makes him, and Amazon, different.
Bezos practices long term thinking better than nearly every “lean” company (though Toyota, and some others do this very well). From this mindset many things spring – focus on long term customer value, invest in value stream (Amazon’s purchase of Kiva robots for example). Willingness to go against the current fashion, being directed by Wall Street analysts what is in the businesses, etc..
There are also job announcements, over the years, looking for lean experience and expertise I have seen from Amazon (which is a clue they are interested in lean).
July 28, 2014 @ 2:15 pm
Here’s one recent example of Jeff Bezos and Lean Thinking – in this example, he writes to shareholders and explains the idea of a “customer service andon cord” and goes on to explain what an andon is.
Bezos spends 2 weeks out of the year participating or leading Kaizen in the warehouses – that is unprecedented, given the scale and size of Amazon and its CEO is on the shop floor.