Wednesday, December 22, 2004

Lean and Green

Booz Allen Hamilton’s strategy+business website (registration required) recently published an article about the lessons that service companies can learn from “lean” manufacturing operations.

The article (The Lean, Green Service Machine, by Narayan Nallicheri, T. Curt Bailey, and J. Scott Cade) develops these four main ideas:

  • Improve operations and reduce costs by engineering business processes for speed and quality.
  • Separate common from unique product characteristics to extract the most value from commoditized processes and to maximize the gains from variety.
  • Adopt tailored business streams to segment simple and complex offerings and to industrialize the routine while saving more flexible processes for products targeted at the few customers who demand them (and will pay for them)
  • Push decision making and responsibility to frontline managers who interact directly with customers.

Well, we should check what is being done right: productivity in US manufacturing companies has almost tripled since 1970, but for service providers, it has only increased by 40%.

Quite a long way to go.