The Lean methodology methodology is an integral part of operational excellence, and has been on the manufacturing scene for decades. Over recent years, Lean has been introduced to a variety of service sector industries and the benefits speak for themselves.
Since Lean was first introduced to the world of manufacturing businesses, they have learnt to appreciate it’s all about removing waste from processes and it doesn’t stop there. Continuous Improvement is key. Results are measured using dates, employees are empowered and the customer is at the forefront.
The major difference between manufacturing and the service sector is that improvements are visible. Workers shirking can be seen, bottlenecks obvious and defective products returned. Lean has been described “as the most revolutionary management principle of the second half of the 20th century, encompassing ways to work smarter and more collaboratively.”
Whilst market specialists don’t specifically call out insurance, there’s clearly some benefit the industry can gain from introducing Lean principles into business processes. And many of the practices they describe already are unfolding in parts of many insurance companies. From our perspective we have seen a huge drive for Lean and CI professionals over the course of the year on both a permanent and contract basis and we expect this over the course of 2014. A number of the major players within the Lloyds market are looking for top talent and we do not expect this surge in demand to slow down anytime soon. Benefits are being realised and pound signs being cashed in.
There are four words that describe the Lean approach: “Simpler, faster, better and cheaper.” The methodology continues to grow and will continue to evolve in future.
In the service sector, it all comes down to the creation of data and sensors. “For example, an unprecedented amount of product-performance data is now available through machine telematics. These small data sensors monitor installed equipment in the field and give companies insights into how and where products are used, how they perform, the conditions they experience, and how and why they break down.”
The value comes from linking this information back to product design and marketing, they continue. “Savvy companies will use the data to show customers evidence of unmet needs they may not even be aware of and to eliminate product or service capabilities that aren’t useful to them. Applying lean techniques to all these new insights arising at the interface of marketing, product development, and operations should enable companies to make new strides in delighting their customers and boosting productivity.”
The bottom line in Lean is not the data and machines that are proving this information, but the corporate culture that exists that provide front-line teams with the latitude to make changes they feel are necessary. This is the most important link in Lean. To some degree, insurance is ahead of the pack in these capabilities — much of the industry is structured with both independent and captive agents who are empowered to make judgment calls on the accounts they service. Just as an assembly line worker in a Lean environment has the power to shut down the assembly line if he or she spots a problem, front-line decision-makers in insurance also can save carriers countless time and costs in misguided coverage or even fraud prevention. This needs to extend within carriers’ organizations as well.
Lean doesn’t have to start everywhere at once and within the insurance space there is a lot of ground to cover. For process improvement to take off it always makes sense to ‘pick the low hanging fruit’. Let’s consider “Lean IT,” it focuses on an emerging discipline, taking waste out of IT processes. If we think about it, IT is a great place to start.
By: Ivor Stratford