Lean Manufacturing in Public Services: Prospects for Value Creation

Ayham Jaaron and Chris Backhouse

Manufacturing Organisation Research Group

The Wolfson School of Mechanical and Manufacturing Engineering

Loughborough University, UK

Presented at: IESS1.0 , Geneva, Switzerland

17-19 February 2010

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List of contents

  Research Background.   Mechanistic vs. Organic Structures.   The Concept of “Affective Commitment” (AC).   Affective commitment significance to manufacturing.   Creating lean thinking call centre (organic).   Research Case Study.   Findings.   Comparative study.   Conclusions.

Research Background

  There is an excessive focus on statistics and regulations to satisfy government targets. This has caused an entrapment to ineffective call centre’s management and design by focusing on statistics and targets.

  This causes the system to hide many repetitive tasks and procedures that is considered as waste.

  Due to the current economical pressures, the government expectations from local authorities included a demonstration for Value For Money for the operations and services they run, this alarmed managers with the need that substantial cashable efficiency savings will be required, ideally without impacting upon service performance.

  This was built upon in local authorities quest for ways to achieve its aim to save the government’s money, eventually through the application of transformational reviews of systems and managerial regimes.

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Research Background

  A shift has been noticed in public services to utilize lean manufacturing systems for potential added value.

  Many studies have studied the need for implementing lean manufacturing in service department, but many have failed to link this implementation with the effects on employees affective commitment and its role in creating a high quality service.

  Therefore, this paper aims to investigate the impact of the lean manufacturing systems on the added value to the public services departments in terms of employees' affective commitment leveraging.

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Research Background

Mechanistic/Traditional Structure:   Call centres are Mechanistic Structure

(Mass Production) models (Burns and Stalker, 1961).

  They are represented by close monitoring of words, stressful working loads, emotional exhaustion and burnout, and less empowerment of employees.

  The consequences are: High employee turnover, lower service quality and ultimately low customer satisfaction.

Lean Manufacturing virtue:   Respect for Human abilities and capabilities.   Employees are given the ability to make work decisions   Have a sense of freedom and ownership   Tasks are not governed by rigid rules and procedures   Team shares the responsibility of the work  It creates an organically structure department.

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Mechanistic vs. Organic Structures

  As a result of Mechanistic structures, employees lack the AC which is more effective than Job Satisfaction in influencing the service quality. Mechanistic structures are inward oriented structures that must be shielded from the environment but call centres are outward-facing entities (Robey and Sales, 1994).

Mechanistic vs. Organic…..Continued

  This firmly implies that call centres must be given a certain form of Organic Structure through the implementation of lean manufacturing (enabler) that will stimulate the Affective Commitment building among employees and improve work conditions (Jaaron, 2009).

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Mechanistic Structure Call

centre Lean Principles

Organic Structure Call

centre

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The Concept of “Affective Commitment”

  AC is “the employee's emotional attachment to the organization” the person strongly identifies with the goals of the organization and desires to remain a part of it because he “wants” to (Meyer and Allen 1991).

  AC is more effective than job satisfaction in influencing the service quality of customer-contact employees.

  Antecedents: employee’s personal characteristics, organizational structure, job-related characteristics, and work experiences.

Affective Commitment Significance to manufacturing

Lack of affective commitment causes high levels of turnover. This has two types of costs:

  Direct costs (i.e. quantifiable): advertising and recruiting cost, interviewing cost, orientation or training cost, and employment application processing cost.

  indirect costs (i.e. unquantifiable): reduced quality assurance, increased sick time and decreased morale. This has invaluable effect on call centre environment and customer retention (Krenzelok and Dean, 1994).

Affective commitment and Customer retention:   highly affectively committed employee is more willing to exert more

efforts on behalf of his employer to do exceptional job of delivering a quality service that retains customers.

  The longer the customer stays with the company, the more the profits gained would be (Reichheld and Sasser, 1990).

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Creating lean thinking call centre (organic)

Stages in the process Stages Definition What does it do?

‘Check’ An analysis of the what and why of the current system.

Provides a sound understanding of the system as it is and identifies potential causes of waste.‘Check’ asks:• What is the purpose of this system?• What is the nature of customer demand?• How does the work flow?

‘Plan’ Exploration of potential solutions to eliminate waste.

Provides a framework to establish what the purpose of the system should be and how the flow of work can be improved to meet it.‘Plan’ asks:• What needs to change to improve performance against purpose?• What action could be taken and what would be the predicted consequences?

‘Do’ Implementation of solutions incrementally and by experiment.

Allows for the testing and gradual introduction of changes whilst still considering further improvement.‘Do’ is concerned in:• Developing redesigns with those doing the work.• Experimenting designs gradually.• Reviewing changes.• Working with managers on their new role.

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Creating lean thinking…….Continued

Adapted from: (Seddon 2003)

Lean Thinking

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Research Case Study

Research Background:   A case study was conducted at the Information and Communication

Technologies (ICT) department of Stockport Council in England. The council has a call centre that supports 6000 customers across the council departments for their IT needs and problem solving.

  The call centre has a total of 18 employees working on phones and emails.

  The ICT department was a part of a transformation programme followed lean manufacturing principles and covered all functions of the ICT department.

  The case study aimed at answering the following research question:

How does lean thinking for call centre service operations affect front-line employees’ affective commitment ?

Research Case Study.......Continued

Activities of Case Study:

  In depth interviews were used to explore the relationship between improving the service operations using lean manufacturing and the affective commitment level of frontline employees.

  Studying employee’s working experience after the project.   Organizational Commitment Questionnaire (9-items Version) was used

to measure employees’ affective commitment level.

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Findings

The In depth interviews analysis revealed the following central themes:

Theme 1: working experience Employees enjoy Wider scope of demand, authority to make decisions, share

responsibility of the work, informal communication, no monitoring or scripts were used.

Theme 2: performance measurement Evaluation is on the basis of sticking to working principles of meeting customer

demands. They are evaluated on the number of calls that have been met one stop (value demand).

Theme 3: departmental integration value Open channels of communication were initiated at managers and departmental

levels. As a result, employees were given quick feedback and support from other departments when needed to serve a customer.

Theme 4: operational value Cutting down waste, save resources, 85% of calls are done one stop, focus on

customer service rather than maintaining the system.

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Findings   Results from the Organizational Commitment Questionnaire (OCQ)

provided a net mean of 3.77 out of a maximum score 5, this reflects a high level of Affective Commitment.

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Findings.......Continued

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Item No. Minimum Maximum Mean Std. deviation

Q1: I am willing to put great deal of effort beyond that normally expected to this company be successful. 18 3.00 5.00 4.0588 0.8726

Q2: I talk up this company to my friends as a great organization to work for. 18 2.00 5.00 3.8125 1.0740

Q3: I would accept almost any type of job assignment in order to keep working for this company. 18 1.00 4.00 2.9375 1.0289

Q4: I find that my values and this company’s Values are very similar. 18 2.00 5.00 3.8125 1.0178

Q5: I am proud to tell others that I am part of this company. 18 2.00 5.00 3.8750 1.1143

Q6: This company really inspires the best in me in the way of job Performance. 18 1.00 4.00 3.6250 1.0416

Q7: I am extremely glad I chose this company to work for over others I was considering at the time I joined. 18 2.00 5.00 4.0000 1.0226

Q8: I really care about the fate of this company. 18 3.00 5.00 4.2500 0.7859

Q9: For me, this is the best of all companies for which to work 18 2.00 5.00 3.5625 1.0431

Overall mean Internal Reliability (coefficient α)

3.77 0.94

Comparative Study

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Organic call centre 76%

Conclusions

  A correlation between the use of lean thinking in call centres and the Affective Commitment of employees has been demonstrated.

  The manufacturing enterprise has achieved a significant value added (the emphasis was on one stop calls).

  The main feature of work under such condition is that the general moral system of the workplace will control the human resources behaviour and not the traditional technology surveillance.

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Thank you