1. The Lean Service Machine

2. •
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JPF was a US service company.
Top managers were looking for differentiations
It identified superior service as a key.
Problem were delay in processing, service,
quality which undermined the value of
policies
• JPF decided to adopt practices and tools of
‘Lean Production’.

3. What is Lean production?
• Lean production is a management philosophy
derived mostly from the Toyota Production
System (TPS) and identified as "Lean" only in
the 1990s
• Its operation involved the processing of
tangible like service product.
• JPF appointed a team of five members
• Outcomes contributed to remarkable 60%
increase.

4. Lean production in a service context:
Building the model cell
 Companies can introduce lean system without disrupting operation
 Lean production is built around the concept of continuous flow
processing.
• Placing linked process near one another
 All steps in a process the “value Stream” should be located close to one
another
• Standardizing procedures
 Files should be stored alphabetically and in the same drawer at each
workstation i.e., physical work space for data was standardized.

5. • Eliminating loop backs
 Work returns to a previous step for further processing creates delay
 To solve a loop-back problem in receiving, the receiving team was split
into two parts so that one group of workers received applications while
another group assembled policies
• Setting a common tempo
 Work flow was smoothed by applying the concept of "takt" time.
 Takt time refers to pacing work based on customer demand.
 The business established a takt time of six minutes per application or ten
applications per hour and challenged employees to make improvements
to reduce the time required.

6. • Balancing loads
 The old policy of allocating applications alphabetically was replaced by
sequential allocation so that every team received the same number of
applications.
• Segregating complexity
 Cluster tasks of similar levels of difficulty into separated into groups with
their own performance goals.

7. Setting performance goals
Hourly productivity rates and expectations
were displayed on large white boards for all
employees to see. These boards became
rallying points and encouraged employees to
improve the system.
Measured performance and productivity form
customer’s perspective

8. Process Step
Metric
Purpose of Metric
Applications input per employee per hour.
Individual performance.
Applications input by the staff per hour.
Unit performance.
Input
Underwriting support
Number of follow-up calls for medical tests and Performance of unit supplying medical
records per week.
tests and records.
Phone calls answered per day.
Number of new cases, follow-ups, or approvals
per week.
Individual performance.
Frequency of physician statements ordered
from doctors.
Cost management (a cost is associated
with each physicians statement).
Percentage of cases issued, declined, or rated.
Individual performance.
Policies issued per person per hour.
Underwriting
Unit performance.
Individual performance.
Policy issuance
Policies issued by the entire issue staff per hour. Unit performance.

9. Rolling out the new system
 Divide operations according to the status of customers and the
complexities of the task
Convincing the skeptics
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Everyone in the company needed to understand the new process design
It would require continual adjustment as the business environment
changes and improvement.
Explained through “The Airplane Game”

10. The Airplane Game
Getting
Started
Digging In
Analyzing
the Process
Fixing the
Process
Redesigning
from scratch
Capturing
Lessons

11. Conclusion
• Although lean production is usually viewed from the
manufacturing perspective, many of the concepts and
tools were originally developed in service organizations
(e.g., the visual system used by supermarkets to
replenish shelves) and can be effectively applied to
service organizations.
• The Jefferson Pilot Financial case provides considerable
support for the argument that lean production
concepts can be beneficial to any organization, and it
provides an approach others can use to become lean,
more productive and subsequently more competitive.

12. Thank you