How Much (Lean) Waste is there in the Service Industry?

How much (Lean) Waste is there in the Service Industry?

Over the weekend a question was posed to me via Twitter (@theleanmanager if you’d like to follow).

How Much (Lean) Waste is there in the Service Industry? 

How much (Lean) Waste is there in the Service Industry?

It was posed as someone tried to discover the amount of waste (wasted time ⌚) in the back office of Banks/Service/Insurance Operations. Now I took this to mean the Call Centres, Data Processing Centres, Mail Rooms, Customer Response Teams, Finance, Marketing teams etc.

Now I have spent 7 years  running teams in Banking, Finance, Insurance all in the name of improvement and improving customer understanding. I had some personal experience of this.

The guys asking the questions @wisemonkeyash and @channingwalton  wanted to know could it be as high as 90%?

(Update 2015: we do know that in some legal firms the time to process matters is being improved by 50%, by using lean management, indicating that wasted time could considerable in the Professional Services sector.)

I decided I should expand upon my 140 character twitter replies, which were based on my experience.

Variation of demand is the first factor to consider i.e. what does the busiest day (for demand, not completed work) look like and what does a quiet day look like and what are the patterns? the peaks and troughs for the demand.

What causes this demand, the peaks and troughs? Our experience?  😲it’s normally another part of the same business or organisation which generates and stokes the demand. Therefore changes here can reduce the peaks.

This could be letters with incorrect details, mass direct marketing mailing, customers chasing progress etc. Think about it do you suddenly get high levels of demand because lots of your customers or clients suddenly decided to buy more?

This variation in demand, excess, causes capacity (people) required to be up to 50% more than you’d normally require to achieve the current results.

The implications here are that you can deliver improvement by changing something outside of the back offices, without changing what many individuals do – making continuous improvement more readily accepted. Your back office can be improved by controlling and improving other areas of the organisation.

Remember that so far we haven’t looked at the waste in the activities undertaken in these departments. Now as a lean person we look for the 7 hidden wastes, yes I know others have 8 or even 9 but we stick to the 7.

To give you just one example, have you rung a call centre, in the last 6 months,  to be told ” I’m sorry the system is a bit slow today”?

Sometimes that is genuine, the system is slow, it may be that the networking is slow or the server needs upgrading or the PC workstation is old. So say you have 50 agents handling 20 calls an hour? how much time are you wasting because the technology isn’t up to speed?

The more common reason for ” I’m sorry the system is a bit slow today”, that we see is that staff have two screens in front of them and they maybe running 4 different programmes at once.

The programmes, often, can’t transfer information directly to one another. Staff copy and paste info from one system, send to their own e-mail, cut and paste it into another programme and then have to delete the e-mail. ( in 2021 any GDPR concerns anyone??)

This is just one example and adding up the rest we often find that 50% of the activity time is wasted.

What does this mean  overall?

If we start with 100% and 50% is waste due to Variation demand, this leaves 50%.

Of the remaining 50%, we reckon 50% is wasted time, so we get to the figure of 25% (50% *50%), or 75% of the work can be classified as waste.

Remember this is based on what we have seen, so not as high as the 90% the guys originally asked.

Within an hour I spotted this article all Aviva shakes up it’s Customer Service  from the FT, which shows the global serving UK based insurance firm Aviva put the waste figure in call centres as 60%.

It’s also worth noting that Aviva thought it was completing work in 5 days, in reality it was taking 39.

How can this happen? well sometime companies split activities into discrete chunks and add up the time each chunk takes, assuming this equals the processing time. They forget the handoffs and delays that each happen between each activity. We’ve definitely seen office work with activities of an hour take over 10 days to complete in reality.

Okay there is a variation in the figures but should we split hairs on whether waste in offices is 50% as in the professional services firms or 60% – 75% for the back offices and call centres, the reality is that the waste appears to be relatively large, though maybe not as large as the 90% that started the question.

Do you have any views on what the waste could be?


This blog has been amended from one first published in 2011 on our theleanmanager blog.

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About the author

I Help Stabilise, Optimise & Grow your Manufacturing Operations via Lean Manufacturing, Process Improvement Consulting & Coaching | Get 25% More From Your Operations | Interim Director Manufacturing | Digital Mfg |

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