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November 12, 2009

Creating Level Pull in Lean Services

Despite the title of this blog, I actually think that it is only rarely possible to create a truly balanced level schedule of customer demand in service situations. The nature of service is such that being available when your consumers want or need your service is something which adds considerable value.

 

Nevertheless, service managers can do a great deal to understand and, at least, “smooth” demand. To do that you need to understand the four types of demand in service processes:

  1. Demand that cannot be managed. This is demand which arrives in the service process when is needs to. “Emergency” type demand (fire, police, accident and emergency etc) is typical of this category, though many services experience “it must be done now” demand fairly regularly. There is little you can do to “smooth” this type of demand (educate users, perhaps), but good data analysis and forecasting, coupled with cross-skilling will help you plan capacity to meet the peaks.
  2. Demand which can be incentivised. This type of consumer demand arrives when the consumer wants the service, but is not urgent and, therefore, may be open to incentives to move to an off-peak period. Promotions in the retail and hospitality sectors are a good example of this, but a wide range of services can benefit from persuading some consumers to move to off-peak periods. For example, GPs may put on specialist clinics at certain times to move non-urgent demand from peak times. A web portal, with incentives to use it such as quicker turnaround, may also help move demand. This is a great opportunity to work with your service team to brainstorm ideas to “smooth” such demand.
  3. Demand which can be managed. In some cases the service provider can specify when they will meet the consumer’s demand to meet capacity. Timetabling of appointments is common way of achieving this in the health, local authority and other arenas. This does help achieve a level schedule though it may do so at the expense of customer value as people do not like to have to wait a long time for service. Properly used, however, this approach can actively improve customer value by giving the consumer a clear time when their service need will be met.
  4. Failure demand. “Failure demand” is a term coined by John Seddon in relation to services. It is the demand which arises as a result of a failure by the provider. Essentially it is rework caused by the provider’s failure to get the service right first time. This can be surprisingly high (nearly 50% in one service I’ve recently studied), and eliminating failure demand will go a long way to helping balance capacity with true consumer demand.

 

Remember also that the characteristics of the demand will also vary. Different consumers will have different needs, and may have differing competency levels in dealing with the service. Segmenting or triaging demand may help deal with these differences, though we need to be careful about the social acceptability of this – a stream for “old people and simpletons” may not add customer value !

 

Analyse the demand for your service, and work with your team to understand it. Then work together to devise strategies to “smooth” that demand as much as you can and to balance capacity with consumer demand.