The third principle in Lean Services (or Lean for Service Operations is 1:Â Provide exactly what the customer wants.
This principle rests on the notion of Pull. Rather than relying on large, expensive, centralized forecasting systems (which are almost always wrong), Lean for Service Operations looks at the situation with a rapid and frequent replenishment mindset. This approach also makes judgment against ordering large quantities of inventory, but instead relies on a total systems approach beginning with the customer pull and replenishment upstream.
In Womack and Jones’ words, sharing an experience from Tesco:
How does Tesco do it? By replenishing everyÂ store continuously, over a 24-hour day, to eliminateÂ the need to hold stock either at the backÂ of the store (as does Wal-Mart) or in high-bayÂ storage (like Home Depot). Tesco reordersÂ from key suppliers that produceâ€”in a matterÂ of hoursâ€”items that have just been purchased.
Whatâ€™s more, Tesco picks up directlyÂ from suppliersâ€™ shipping docks at precise timesÂ and takes the goods to regional distributionÂ centers where fresh products and fast-movingÂ items are cross docked onto vehicles deliveringÂ to stores. In a further lean innovation, TescoÂ satisfies Web-shopping orders by having storeÂ personnel fulfill orders from the shelves duringÂ lulls. This process has reduced personnel costs,Â avoided the cost of separate warehouses forÂ Web orders, and made Tesco the worldâ€™s largestÂ Internet grocer.
Lean techniques have helped Tesco to growÂ its share rapidly and become the UKâ€™s marketÂ leader in groceries, fueling its global expansionÂ in Eastern Europe and East Asia as well. TheyÂ have also allowed the grocer to increase customer satisfaction and loyalty by giving shoppersÂ what they want (and, as we shall see, byÂ providing it where and when they want it)â€”without wasting their time.
This approach requires there to be a very coordinated and tight supply chain – both in communication, expectations, and also in geography, with the over-riding principle: produce closest to the customer.
Without doing so, this approach goes against the outsourcing mindset, chasing low cost producers. The Lean mindset is in favor of producing closest to the customer instead.
- the principles of Lean for Service Operations are: Solve the customerâ€™s problem completely by insuring that all the goods and services work, and work together, Donâ€™t waste the customerâ€™s time, Provide exactly what the customer wants, Provide whatâ€™s wanted exactly where itâ€™s wanted, Provide whatâ€™s wanted where itâ€™s wanted exactly when itâ€™s wanted, Continually aggregate solutions to reduce the customerâ€™s time and hassle. ↩