Possibilities of Using Lean and Efficiency Improvement Methodologies in Service Area

Abstract: According to The Toyota Way (Liker, 2004), Lean is a philosophy that was initiated by Henry Ford and later finalized by Toyota in Japan in the 50s and 60s. years. Lean helps to gain a competitive advantage, reduce production costs, deliver high quality products to the customer, and ensure profitability by implementing Lean thinking and tools. Lean and related efficiency improvement methodologies (Lean) are used most in the industrial manufacturing companies and operations, there is little work that researched use of Lean in the service industry. The main goal of the study is to research use of Lean among service area companies in Latvia, define prerequisites for success and measure relevant key performance indicator for Lean and pre-/non-lean organizations to get insides on how companies in the region could benefit from Lean, what is needed to build up a Lean culture.Methods. The work is benchmarking relevant research in other countries, comparing case studies and empirical analysis to show the starting effort and gains that service industry company could get. Lean allows to use the company's resources efficiently and wisely and to plan the delivery of services. All companies, not just those operating in the industrial manufacturing area, can benefit from the implementation of Lean. Results. Now companies have access to a wide range of methodologies and tools that allow them to improve performance and achieve lower cost levels in the long-term run. Large companies use one or more methods. There are many tutorials and books that describe each methodology and tool, but not always revealing the details of process how company executives perform selection from this large variety of choices. Many companies in the service area are familiar with the methodology, but do not know how to get started and get first “quick wins”, although they could achieve as good results as industry and manufacturing. The topicality and necessity of such study in Latvia is determined by the fact that most of the companies there are the representatives of service area, including state institutions. A lot of effort is applied to “push” Lean into organizations (especially in public sector), but success rate is low. For example, in Scandinavian countries, the Lean and Process Improvement methodology is recognized at the national level and is actively integrated in both education system and business life. This trend is less significant in Latvia. Conclusion. The entry threshold for implementing Lean is lower than many organizations originally think it is. There are many examples showing that the initially wrong choice of the methodology application strategy makescompanies tend to fail and drop the use of Lean. There are several major factors that need to be in place to start Lean transformation in service industry and adopt both culture part and tools in order to succeed. Lean has also high impact on the service industry with rather more complicated visualizations of gain, but it is proven to bring good results both in financial and organizational aspects of the company.

Keywords: LEAN, tools, effectivization, service industry, strategy, operations

DOI: 10.54941/ahfe1002656

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