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IJOPM
29,1

Lean transformation in the pure

service environment: the case
of the call service centre

54

Niall Piercy
School of Management, University of Bath, Bath, UK, and

Received May 2006

Revised December 2007,
June 2008
Accepted September 2008

Nick Rich
Cardiff Business School, Cardiff, UK
Abstract
Purpose Service businesses are struggling with customer demands for better quality service and
managerial demands for cost reduction. There is evidence to suggest that service businesses are in
practice failing on both these counts, seeing increased costs and reductions in service quality.
The application of lean production approaches to the service context has been suggested as a means to
resolve these problems, reducing costs and improving quality. Despite the validation of lean
approaches in the product-service context, the application of lean approaches in the pure service
environment remains largely untested. The purpose of this paper is to assess the suitability of lean
production methodologies in the pure service context.
Design/methodology/approach Three financial service companies in the UK were followed
through a common programme of lean transformation. The improvements observed in each company
were recorded. The change programme is evaluated to determine the leanness of the initiatives. The
suitability of lean for the service context is discussed.
Findings The papers findings highlight significant improvements in quality and cost positions
with minimal investment through adoption of lean tools in the pure service context. The paper
proposes the suitability of basic lean methodologies such as value understanding, process mapping
and problem solving for the pure service context.
Originality/value The lean approach is well established in the manufacturing sector and certain
product-service contexts. Evidence on lean in pure service environments is very limited. The paper
addresses this shortcoming.
Keywords Call centres, Lean production, Organizational change, Service industries
Paper type Research paper

International Journal of Operations &

Production Management
Vol. 29 No. 1, 2009
pp. 54-76
q Emerald Group Publishing Limited
0144-3577
DOI 10.1108/01443570910925361

Introduction
Services now constitute the majority employer and source of income for developed
economies, accounting for approximately three quarters of gross domestic product in
the USA and UK (Zeithaml et al., 1990; Zeithaml and Bitner, 2003; Hill, 2005). Despite
the importance of services for the economy, the quality of services delivered by the vast
majority of organisations is not of the level required by customers. In the USA,
research has reported customer satisfaction rates to be at an all time low (Fournier et al.,
1998, p. 43; Fornell, 2008, pp. 1-30) while in the UK, a 12 month study of British adults
found 86 per cent complaining of having personally received poor quality customer
service (Acland, 2005). Most worryingly, indicators suggest that the level of service
quality is actually declining, with year-on-year service deteriorating by significant
amounts (Dickson et al., 2005).

Service research has highlighted a parallel between the increasing cost and
declining quality seen in services and the same trend previously observed in the
manufacturing sector (Quinn and Gagnon, 1986; Zeithaml et al., 1990). The similar
pattern in these two areas may be attributable to the common operational and
organisational designs used in structuring both service and manufacturing
organisations. Service organisations have focused on replicating mass-production
logic (such as strict management control, narrow task definition, low-skill and low-pay
workers) (Thompson, 2003; Slack et al., 2006; Johnston and Clark, 2005). Some have
suggested that the focus on cost-efficiency within some service areas, such as the call
centre sector, is so great that there may be even greater enforcement of Taylor-istic
principles than in manufacturing (with associated increased negative effects on staff
morale, process performance and customer service) (Ellis and Taylor, 2006). Increasing
customer demands, competitive pressures and rising operational costs are beginning to
force a dramatic rethink of the management of operations in this area (Allway and
Corbett, 2002).
In the manufacturing sector, which is seeking to resolve these same issues, attention
has focused on post-Tayloristic approaches to management, most notably the rise of
the lean operational model which has helped manufacturers realise significant cost and
quality gains (Womack et al., 1990; Womack and Jones, 1996). The application of lean
approaches in the service sector has been underway for several years (Bowen and
Youngdahl, 1998; Abdi et al., 2006; Atkinson, 2004). However, lean approaches have
predominantly been limited to service contexts where a physical product exists (such
as retail supply chain management) or to healthcare. Applications of lean to the
pure-service environment, and specifically the call service centre, are unproven. The
purpose of this paper is to evaluate, using data from three financial services call centres
that underwent lean change, whether the lean approach is directly and explicitly
beneficial to this pure service sector of the economy.
The origins of lean thinking
With many differing and conflicting definitions of lean thinking in practice (Buzby
et al., 2002), it is necessary to briefly recap the origins of the lean paradigm. By the
early 1980s a clear quality gap between western and Japanese products was emerging,
with the most pronounced differences observed in the automotive sector. The most
comprehensive investigation of the superiority of Japanese management was
undertaken in this sector by the International Motor Vehicle Programme (IMVP) at
the Massachusetts Institute of Technology. The investigation by the IMVP into
automotive manufacture highlighted that Japanese-based companies were delivering
higher quality products at lower costs than western businesses. Exemplified by
Toyota, a gap of 2:1 in productivity and 100:1 in quality (measured as number of
defects found at first inspection at the end of the production line) was observed versus
western automotive manufacturers. This was attributed to a fundamentally different
operating paradigm in use by Toyota. This approach was referred to as lean
production (Womack et al., 1990). To assist companies around the world in emulating
these practices, five lean principles were identified to guide organisations in all sectors
of the economy, including service, in lean transformation (Womack and Jones, 1996):
(1) Value. Determine what it is customers value (specifically, what they are
prepared to pay for) in the product or service.

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(2) The value stream. Map out (with a process or value stream map), how value is
delivered. Use this as a basis for eliminating any area that does not add value.
(3) Flow. Ensure products and information seamlessly flow from start to finish of
the value stream. Remove inventory or buffer zones with the use of structural
enablers such as modular designs, cellular working, general purpose machines,
multi-skilled workers.
(4) Pull. Only deliver what is actually demanded (pulled) by the customer rather
than serving from stocks or buffers.
(5) Perfection. Continually seek to improve the processes and systems with the
above principles, striving for perfection.
The development of lean service
Womack and Jones (1996) proposed a major role for lean improvement in the service
sector and many researchers and practitioners have echoed their call for lean adoption
in services (Abdi et al., 2006; Atkinson, 2004; Corbett, 2007; May, 2005; Ehrlich, 2006).
While Bowen and Youngdahl (1998) highlighted early on that lean approaches such as
work redesign, increasing training and a focus on process mapping in retail, airline and
hospital management could generate positive results for companies, their investigation
was based not on explicit lean improvement but a more general set of change
principles, many of which share commonality with some aspects of lean thinking.
Extensions and applications of explicit lean principles beyond automotive
manufacturing are first identifiable in the application to general supply chain
management. The management of inbound and outbound supply is a major part of
lean production (Womack et al., 1990). By the mid-1990s, several researchers were
proposing benefits of a lean supply strategy beyond the manufacturing context (Avery,
2003; Sandelands, 1994). These included Hines (1996) early proposal that developing a
network of key suppliers and moving to closer relationships with them would enable all
companies to gain from a mutually beneficial arrangement where a sense of shared
destiny would support information sharing, innovation to reduce costs, more dependable
supply and an easier to manage supply base. Reviewing lean supply strategies, Lamming
(1996) noted that different supply systems exhibited different characteristics, but that the
benefits of lean application may become a potential competitive priority for all
organisations. The largest single interest in these approaches, has been seen in the retail
sector. The efficient consumer response (ECR) movement has supported the development
and propagation of lean tools throughout global retail supply chains since the mid-1990s
(Lamming, 1996; Efficient Consumer Response, 2005). Activity has focused on bringing
supply partners closer together to reduce stocks throughout the retail supply chain, from
store to original manufacturer. Benefits have included a reduction in the costs of holding
stocks, reduced write-off costs on perishable items and an increased ability to pull
products quickly through the supply chain based on unpredictable customer demand
(Jones and Clarke, 2002; Fernie and McKinnon, 2003; Abernathy et al., 2000). Tools such as
process (value stream) mapping and problem solving have been relatively easily
transferred from the automotive (supply) to retail supply contexts due to the common
focus on product-flows (Bicheno, 2004).
The second key area of lean service has focused not on the handling of commercial
products but the handling of patients in healthcare systems. One focus of research has

been on the purchasing or supply chain inputs to the healthcare system, applying lean
supply partnership and inventory reduction approaches to improve responsiveness
and cost (Jones and Mitchell, 2007; Kollberg et al., 2007). The greater body of research
has focused on the movement of patients through the treatment process. This research
has treated patients as products, being moved through a transformation (treatment)
process inside the healthcare system. Similar to a product progressing through an
assembly line, patients (materials) are seen as entering the operation, having
operational activities performed on them (such as admission, initial assessment,
treatment regime) with an output being produced (a person cured or otherwise). This
perspective, while not without critics, has allowed the use of established lean tools such
as mapping techniques and waste reduction (Seddon, 2003; Womack and Jones, 2005a).
Focusing on the flow of activities through the healthcare system, approaches to lean
improvement have successfully adopted process mapping and then the use of these
maps to identify areas of waste and inefficiency (Swank, 2003; Jones and Mitchell, 2007;
Towill and Christopher, 2005; Esimai, 2004; Massey and Williams, 2005).
Lean in the pure-service context
Several aspects of the lean approach are becoming validated in the pure service
context, for instance: the use of lean in office procedures as part of manufacturing
company transformation; process mapping in the consumer sector; and, increasing
trade reports of lean service processes.
Several researchers have noted the extension of lean into pure service,
administrative areas as an extension of shop-floor level manufacturing change.
These have included office systems such as order-receipt, quotation, sales processing,
accounting or human resources, all of which it has been found to be possible to improve
with the application of the same lean principles and basic tools as in manufacturing
(Juroff, 2003; Holmes, 2007; Demers, 2002). There are several examples of
manufacturing companies succeeding with lean in plant operations transferring the
same toolkit to non-production areas of the organisation. For instance: Vinas (2004)
highlights Kato Engineerings successful application of mapping and problem solving
to reduce sales-order processing time and quotations processes; Chaneski (2005)
highlights brent river machine contract manufacturing using value stream mapping to
look at order and accounting systems; while Wallace (2006) reports on a major focus on
lean efficiency within Boeing that is being transferred into office and administrative
systems to support shop-floor improvements.
These works suggest the applicability of lean in a pure service context. Looking
beyond the back-office of the manufacturer to the customer marketplace, Womack and
Jones (2005b) described a process of consumption to model consumers interaction with
the products and services of a company, proposing that mapping out the steps
involved in customer delivery is easily applicable to any service encounter and is the
best way to identify improvement opportunities. Trade reports have also highlighted
aspects of lean in services, including: Tischlers (2006) report on the use of process
mapping to the admissions process in the authors own university, implementing a
streamlined approach to improve performance or Jones et al.s (1999) report on the use
of process mapping and problem solving to streamline the processing of customer
orders for telephone services. The use of process mapping in service has been proposed
outside of lean application. Early service research proposed blueprinting the steps

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and activities from start to finish of a service, representing each activity as a box on a
chart connected together in order of the customers experience (Shostack, 1984, 1987).
Research highlighted that these maps could be easily constructed and used to visually
represent the service production process as a basis of identifying inefficiency and of
beginning improvement (Baum, 1990; Polonsky and Garma, 2006; Coleman, 1989;
Berkley, 1996; Bitner et al., 2007; Fliess and Kleinaltenkamp, 2004).
Beyond the initial process or value stream mapping of services, the applicability of
lean tools for improvement has been considered. Analysing the suitability of lean
approaches in service, Maleyeff (2006) conducted a meta-analysis of 60 service systems,
finding significant overlap in the process-system of manufacturing and service
businesses. These included structural similarities and common problems to the extent
that it was possible to transfer the seven lean wastes to services, noting: delays time
waiting in queuing or waiting for information; reviews inspection of work for errors or
omissions; mistakes errors and omissions that cause work to be redone or customer
defection; duplication activities in different parts of the system that could be performed
together; movement transportation or movement of information or personnel that is
unnecessary; processing inefficiency ineffective use of resources in performing tasks or
continual reinvention of potentially standard processes; and, resource inefficiencies
management of personnel, equipment or materials that are wasteful.
Despite a wealth of conceptual applications of lean to service, evidence of aspects of
lean in service (such as service-blueprinting or waste reduction) and evidence of
success in the trade press, the academic coverage of explicit lean implementation in the
pure-service context remains limited. Consideration of the call centre, an increasingly
important area of economic activity (Dixon, 2002), remains under analysed. Research in
this area is still emergent. For instance: Allway and Corbett (2002) describe how a
single insurance quotation business had realised major cost savings and speed
improvements from applying adaptations of the lean principles, however, the case
presentation is focused on a single company and an overview of change rather than
specific lean implementation. Similarly, Buzby et al. (2002) also report on the use of
lean to streamline a quotation process in a single company, but focus on two specific
lean tools, measuring only cycle and takt time of quote processing which was then
optimised using general improvements such as increased automation, paperwork
reduction and an electronic reminder system to report delays. While this research
reported a reduction in cycle time and takt time, by focusing solely on these efficiency
measures without a wider application of lean principles there is a danger that a focus
could emerge on efficient speed (of quotation) over accurately delivering an effective
quality product.
Conducting a multi-company examination of call centre management Sprigg and
Jackson (2006) found negative consequences for worker morale and performance in
leaner call centres. This work however also suffered from a limited interpretation of
lean application with very unusual definitions used to measure leanness. Two key
features of lean were proposed: process simplification (which was realised through
increased work standardisation and the use of greater dialogue scripting); and,
improving workflow (proposed as based on the increased use of electronic monitoring
systems to improve efficiency, predominantly through offering incentives to reduce
call times). It has been noted that there are many different, often conflicting definitions
of lean (Buzby et al., 2002), however, those used by Sprigg and Jackson (2006) appear

directly opposed to the established notion of lean organisation which reduces top-down
control such as dialogue scripting and focuses on value-effectiveness rather than
overly simplistic efficiency-based performance measures such as call duration (Seddon,
2003; Womack et al., 1990; Womack and Jones, 1996).
Greater research is still needed to verify real lean application in the pure service
sector. Lean application in this environment is still emergent, with a focus on a small
volume of projects, on one or two specific aspects of the lean toolkit and with different
interpretations of lean. There is a need for further examination of the explicit and
directed application of the lean principles of operation to the pure service environment.
Within this paper we seek to therefore resolve one key research question:
RQ. Can the lean principles and practice of lean thinking be successfully applied to
the pure-service context?
The success or failure of lean in this context has many implications for the study and
practice of service operations management.
Research methods
This research seeks to evaluate the use of lean principles in the pure service
environment. There is currently little empirical knowledge about lean application in
this context such that the research reported in this paper is exploratory. The lack of
validated knowledge in this area and the inability to fully describe such systems with
quantitative investigation presents a requirement for qualitative analysis to fully
describe the complex and often chaotic system at work. The use of the case-study, as a
research tool for exploratory investigation and to generate new understanding, is well
established within social science research (Yin, 2004; Perry, 1998; Voss et al., 2002). The
use of single or small numbers of case studies as knowledge building tools is
increasing prevalent in the operations management literature (Hines et al., 2002;
Krishnamurthy and Yauch, 2007; Strijbosch et al., 2002; Towers et al., 2005; Waring
and Wainright, 2002; Acur and Englyst, 2006; Decoene and Bruggeman, 2006).
Reviewing the use of research methods in operations management, it has been
suggested that the relative rarity of case research (when compared to quantitative
investigation) is not driven by a methodological bias but by the poor rigour of much of
the case research being conducted (Stuart et al., 2002; Mentzer and Flint, 1997; Naslund,
2002). To improve rigour in operations management case research, Stuart et al. (2002)
and Voss et al. (2002) recommend similar frameworks, each of which follows several
distinct phases: definition of the research question; selection of cases; development of a
measurement instrument; data gathering; data analysis; and, results dissemination.
The research question, developed from a conceptual review of the literature, has
been stated:
RQ. Can the lean principles and practice of lean thinking be successfully applied to
the pure-service context?
To address this question it was necessary to select companies for investigation.
The criteria for selecting each case company were driven by the research questions
rather than random sampling (Eisenhardt, 1989; Yin, 2004). The aim of the research
was to investigate the success of lean in pure service, therefore it was necessary to
select companies which were firstly implementing the lean approach and second,

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for comparative purposes, were using a common framework for implementation.

Three separate instances of lean improvement in pure service were identified to
provide an in-depth analysis as is required for exploratory research (Voss et al., 2002;
Perry, 1998; Yin, 2004). The use of multiple cases also allows for some degree of
triangulation in the research (Easterby-Smith et al., 2002).
The study was conducted between January 2002 and June 2004 and involved
studying the claims process of three UK-based call service centres in the financial
services industry. An overview of the background of the case companies is provided in
Table I. Each company was facing management pressure for reduction in operating
costs and customer complaints about poor quality service. Each company used
electronic or telephonic interaction with customers and each case represented a
large-scale operation employing many hundreds of staff in British call centres.
To ensure a cross-comparative research study, a common process that was shared by
the three different organisations was selected to focus the study. While the product and
actual customer services differed, the operations process selected in each case was that
of a claims procedure. The standardisation of operational processes within the service
centre sector (electronic menu screening, call routing to staff with skills in limited
areas, and referral areas for atypical customer requirements) meant that each company
adopted a nearly identical process. Each company, experiencing the same problems on

Business
Ownership type

Organisation type
Establishment of site
Core business

Location
Motivation to
improve

History of change
initiatives

Table I.
Case company
background

Process studied

Case A
PolicyCo

Case B
BankCo

Case C
ClaimCo

Financial services
Insurance firm
Mutual

Financial services
Banking corporation
Public limited
company
Shareholders
Call centre
1980s
Administration of
personal banking
and personal
insurance products

Financial services
Insurance firm

UK region
Increasing UK centre
costs (percentage of
product cost)
Customer
complaints and
referral to regulator
1990s Team work

BPR 2000s lean

methods

UK region
Improve
performance and
reduce the likelihood
that key processes
would be exported
abroad
1990s Team work
and customer
empathy
programmes
2000s lean and six
sigma

Claims process

Claims process

Policy holder owned

Call centre
1980s
Administration of
life assurance,
pensions,
investments and
personal banking
UK region
To prepare the
business to become a
traded company
owned by
shareholders
1990s Team work
and quality circles

Call centre
1980s
Administration of
life assurance and
pensions-related
products

2000s Team work

and process
management
Claims process

the same process, undertook improvement with a common change agent using a
standard change process.
The lean improvement activities at each company were implemented by an
independent consultancy team. The role of the research team was as observer of the
improvement process. Observations included: the initial briefing sessions with
company management, the training of senior managers and change teams, as well as
discussions and meetings of each change team which were all observed and recorded.
In addition to observation of the activities taking place, the researchers were able to
interview managers and the change team in each company, before, during and after
lean improvements took place. Interviews were informal (unstructured), recording
subject views on the company, problems and changes taking place. Between six and
ten interviews in each case company were undertaken, varying between brief
discussions to one hour in length. The researchers were also able to review information
collected by each change team (for instance, statistics on process performance).
This investigation proved adequate to support the resolution of the stated research
question.
Learning to see
Each company had previously engaged in improvement programmes, most recently
attempting to implement six sigma. In each company the initiatives had failed to
yield positive results. The outcome of the six sigma activities was to convince
management that traditional efficiency measures and management designs were
inappropriate for their situations and a process orientation was needed, leading
the managers to a major review of corporate strategy and the role of UK service
centre operations in 2002. Based on organisational and personal dedication to
UK-based service, their experiences with process-based organisation and in
consultation with external experts, the senior management at each business decided
to engage a lean change programme.
Staff and management at each company were aware that there were major problems in
customer service and operational costs. Each company suffered similar problems:
increasing call volumes, increasing lead-times to resolve customer issues and increases in
the number of issues that were being referred for special processing. Customer service was
deteriorating with recorded customer interactions (call monitoring) highlighting
weaknesses in the manner in which customers were treated. At the workplace level,
each centre showed higher than average levels of absenteeism and staff turnover relative
to industry norms. In each of the call centres, customer satisfaction was declining while
queuing times, work-in-progress and staff costs escalated. Despite a general awareness
of the problems that existed there was however little quantification of the specific
levels of failure at each stage of the system or of how errors across the system interacted
together.
To assess the improvements to the operations that were implemented it is necessary
to describe the pre-lean operations processes. Many of the specific problems in each
company were quantified for the first time only through the mapping out of the process
of value delivery. Before any lean implementation could begin, even quantifying the
current state, a comprehensive training programme was required for all those staff
involved in the lean change activity. Visualizing the current state in a systems-process
perspective is for many organisations a radical departure from their traditional

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performance measurement systems and a period of re-education is required to

familiarise them with the concepts behind such visualization and the actual tools to be
used in the construction of the current state analysis.
In each individual company, a ten person performance improvement team was
formed from staff in the claims processing units and their immediate internal
customers and suppliers. Both this team and the senior management underwent a
rigorous training schedule. Senior management were briefed on the nature and
rationale for the lean activities to be undertaken to ensure corporate level support
would be provided to their change team. The improvement teams were each trained in
more detailed mapping and improvement techniques. The initial emphasis of the
programme was to visualise, with process mapping, the current state of service
operations and value delivery to the customer. This was followed by a structured
approach to systems thinking and problem-solving, with the teams learning how to
improve the service process. The aim was to provide staff with the tools to describe the
current state of operations and conceive a new, future state to correct service failures
and redesign the entire claims process. The activities undertaken within the education
and training programme are listed in Table II.
Pre-lean operations
After completing a period of training, each of the three improvement teams conducted
a six week study to quantify the current state of operations within each centre. The
standardisation across the call centre sector meant that each of the three case
companies shared a nearly identical operational design of the customer processing
system. This is shown in Figure 1. When contacting a call centre, the customer first
selects a routing option from a list of choices (for instance, press one for policy sales,
two for policy amendments). The customer would then be placed in a queue until an
agent became available in the area of activity they had selected from the menu system.
Connected to an operator, the customer would explain the nature of the call, the adviser
would assess the customers problem or issue and select the appropriate pre-designed
set of activities to solve the customers problems. This included a script which defined
what questions should be asked to resolve the problem. Each script was assigned a
time for completion for performance measurement purposes. If a customer issue could
not be successfully resolved within the limits of the script or employees ability, the
issue was stored in a customer case file which was moved into a work-in-progress
(WIP) buffer area where more skilled staff could access the file and re-contact the
customer to complete their query.
There were many problems within this process. The average time to complete a
customer request was very long, varying on average from 39 to 80 days and at worst
from 54 to 310 days across the three call centres. Examination of the generic call
centres process suggested that the long delays were due to failures of the customer
handling system at various stages of the process. Examining this process, the
researchers, after discussion with management and staff identified three key areas of
failure common in each company:
(1) Class one errors: problems at the entry stage. At entry to the process, customers
selecting an inappropriate option from the electronic routing system (either due
to mistakes or due to their actual problem not being an option and selecting the
closest approximation).

Senior management
Business strategy
Awareness raising

Change teams
4 week period (internal
coaches)

Experiential learning to
create current state

Content

Purpose

Outline of strategy to be a
recognised world leading service
centre
One day senior management
course including data drawn from
the workplace
Emphasis on systems thinking
and management as a team. Also
introduction to the lean model
and its relationship to the
corporate six sigma programme

Part of corporate planning and

deployment process. Management
focus
Generate enthusiasm and
awareness amongst senior
management
Demonstrate alternative business
model

Half-a-day interpreting business

strategy seminar
One day systems thinking course
One day voice of the customer
analysis
One day lean course
One day process and change
Management seminar

Raise interest in new project as a

means of supporting business
strategy
Emphasise world class targets
and best employer status within
industry
Gain feedback on business
performance and outcomes sought
from the customer perspective
(team focus)
Provide techniques and methods
for visualising business processes
and engage in problem-solving
Begin process of problem-solving.
Create process of questioning
customary practice
Identify system changes to create
a stable flow of work. Redefine
system and responsibilities
Agree changes and resources
Re-engineer process and monitor
improvements to the total supply
chain

Process mapping applied

problem-solving methods
Management and team listen to
customer calls

Problem solving stage

Improve stage

Classification, quantification and

examination of failure/waste
causes
Senior management presentation
Engage changes and 1-2-1
management coaching

(2) Class two errors: problems at the processing stage:

.
customer attrition: customers exiting the system due to long wait times to
speak to an operative; and
.
back-referrals: customers being routed back into the menu-routing or
queuing system by operatives unable to fully resolve the customers issue
within their own department.
(3) Class three errors: problems at the end stage. Call termination with the customer
issue unresolved due to lack of information availability or a lack of knowledge
by call operatives. The customer case here is referred to the buffer zone for later
processing by more experienced staff.

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Table II.
Training undertaken

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Transferral back to other queues for additional services

Referral back to other queues due to incorrect selection
Queue n

64

IN

Electronic
Sort System

Queue 1

Call abandonment due to hold-time

Figure 1.
The claims value stream

Operative
Call
Handling

Customer
Processing

Issue
Resolution

Unable to resolve query

Referral to
WIP Area

In isolation, these problems at different stages of the process were reducing customer
satisfaction with the claims handling process. Customers were forced to wait for long
periods of time in queues to speak to staff who often could not resolve their issue.
Interactions between the individual errors were observed that combined to further
reduce service quality, customer satisfaction and increase costs. A viscious circle was
found to exist at entry to the system. Customers would queue for a certain period of
time before giving up and trying to call at a later time. This added to the overall volume
of calls held at any one time (and therefore queue length/time and therefore the number
of callers abandoning the queue and recalling).
With each centre operating narrowly defined work-task groupings (for instance,
policy amendment, policy termination, policy claim), the automated menu system was
created to route customers directly to the correct department, thus reducing queue
times. In practice, increased referrals back to the queuing system were observed (due to
customers incorrect selection or a single operative in a single department being unable
to resolve an issue), further escalating queue times and the customer-recall cycle.
Even when customers were connected to the correct operative to resolve an issue,
the performance measures in place, intended to improve customer service, were having
negative consequences. It rapidly became apparent to the change teams that many
employees were playing the system and using work-rounds to meet performance
objectives. At each call centre, time to answer a call was a significant performance
measure (PolicyCo 98 per cent of calls in ten seconds, BankCo 94 per cent of calls in
ten seconds, ClaimCo 92 per cent in eight seconds). Two key activities were noted:
firstly, operatives would accept calls and then place the customer immediately back on
hold, which call monitoring showed to directly dissatisfy the customer. Secondly,
operatives would accept calls and start serving a customer while still completing the
notes from their previous customer. This led to frequent problems of incorrect or
incomplete information being entered, the wrong service provision to the customer and
multiple contacts to resolve the issue. Despite positive performance on the key measure
in place (call answer time), poor customer service was being delivered and increased
work created to resolve service failures.
At each company, customer throughput per employee was measured: PolicyCo
required one customer turnaround every three minutes, BankCo required one every

four and a half minutes and ClaimCo required one every five and a half minutes. These
measures aimed to deliver prompt service and control employee activity. Each change
team noted that these measures were driving negative behaviour and supporting poor
customer service: approaching the call time limit, operatives would seek to expedite the
customers enquiry, either completing a call without all the required information,
transferring the customer to a different call team or placing them in the WIP buffer
zone. These activities were negatively impacting customer service while creating
further work to solve the customers issue through multiple contacts.
There were measures of customer service quality in place at each company, with the
common use of call monitoring. Operatives would have calls checked for conformance
to predetermined audit lists. PolicyCo required 98 per cent conformance to a 32 point
inspection audit, BankCo required 95 per cent adherence to a script and inspection
audit while ClaimCo measured 100 per cent correct data input against a 34 point audit.
Each of the three change teams reviewed a significant number of call recordings and
spoke to operatives about this process. They found that staff would modify customer
requirements to fit the inspection items or ignore those parts of customer queries that
fell outside of the set parameters. This again led to increased customer contacts to
resolve issues, creating additional work and reducing customer satisfaction.
The rigidly enforced scripting-performance system and department structure were
creating an increase in the amount of work referred to the WIP buffer zone. Call
operatives, were unable (due to the system design) or unwilling (due to the performance
measures) to resolve customer issues and were placing increased amounts of work into
the buffer area. With limited operating budgets and no additional money for additional
problem-resolution staff, operatives were drawn from the general staff group to reduce
the amount of work in the buffer area. This reduced the number of available staff to
answer incoming queries, further increasing queuing times, the recall cycle and
customer dissatisfaction.
Analysis of the current state of operations highlighted that, for the customer, the
time to speak to operatives was unacceptably long and even when connected there was
a significant chance that their query would not be successfully resolved. Rigid,
efficiency-based performance measurement systems had left staff demotivated and
disinterested in customer service. For each organisation, an increasing amount of time
was being spent on correcting service failures. Overall, the increasing queue times and
customer-recall cycle were creating a large strain in each company: of all the customers
in a call queue, more than half were making multiple contacts or referred back due to a
failure of the process to resolve their problems at the first contact. Measurement
highlighted between half and two-thirds of all activity in each service centre was spent
on serving this failure demand (demand created for operational activities by failures
in the system to resolve issues at the first opportunity (Marr and Neely, 2004)).
Lean service improvement
Having quantified the pre-existing state of operations at the three businesses, attention
turned to generating a new, lean organisational system. The first stage of this was to
determine customer value. Based on reviews of customer complaints, call recordings
and discussions with staff, the change team at each company independently
determined that the critical issue for the customer was that their call or query could be
resolved at first contact or that they were handled by a single person if multiple

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contacts were necessary. To realise the aim of one operative per customer query the
basic process of customer service had to be re-engineered, being termed one stop
shopping by the BankCo and ClaimCo teams and outside in by PolicyCo.
Examining the operational system used in each company (Figure 1), the change
teams determined from process mapping and measurement of failure demand that
improvement would be achieved by redesigning the call process and the organisational
systems that supported it. This redesign would be based on shifting the managerial
focus of the organisation away from traditional, mass production logic to a lean
philosophy. The key changes involved: creating a single pool of workers (removing the
need for the call routing system); training these staff so they could resolve queries
without constant referral to other departments or a WIP buffer; and, redesigning the
performance measurement systems of each company to reduce dysfunctional
behaviour. Underlying these practical issues were several paradigmatic shifts in
organising logic (summarised in Table III). Key issues revolved around the movement
away from a top-down control of workers in narrow job-roles with rigidly enforced
efficiency measures to a cross-skilled workforce, trained and rewarded for customer
service by a supportive rather than controlling management hierarchy.
The biggest change for staff was the restructuring of the business away from tightly
defined departments into a single organisational unit. This involved a shift by the
management of each company to view staff as being capable of achieving more than the
previous, rigid control systems dictated. Physical changes in the workplace were also
required, with a central call staff base created in a single area of the building, with staff
from both claims process and technical support areas so that when problems did arise they
could be quickly resolved. The biggest challenge the organisations faced was in retraining
staff to realise the single-contact strategy. Each company invested in multi-skilling
training programmes. At the three case companies as the programme of change was
implemented, front-line employees underwent between six to eight weeks of training to
ensure they were competent to talk directly with customers and resolve their issues.
Training aimed to widen their range of skills (to answer multiple customer issues) and also
to increase the depth of their skill base (empowering them to act independently of set
scripts based on their own knowledge of the operational requirements of each type of
customer issue or activity). The training also supported the shift to a new way of working.
Throughout the training, customer intimacy and effectiveness were emphasised.
In all three service centres, the move to the one stop shopping and a lean process
perspective required a fundamental shift in the basis of performance measurement.
Seeking to resolve the dysfunctions caused by the traditional performance
measurement systems (such as length to answer calls and time to complete a call)
management abolished these metrics. A new performance system was designed to
support customer service delivery. This was based on sampling calls and evaluating
them on a new scale which measured whether the customer requirement was totally
satisfied or not. These scores can then be plotted and used to identify new streams of
customer demand and further training that may be needed for frontline staff.
In each case, informal interviews with the front line teams highlighted that trust in
management increased as traditional and dysfunctional behaviours were replaced with
a greater affinity with the customer. The improvement in working conditions and
employee involvement in change activities in the three centres led to reduced employee
absenteeism and more generally in improved morale.

Management systems before lean

implementation

Management systems after lean

implementation

Decision making

Management prerogative and

deployed top down

Organizational design

Functional by area of specialist

repetitive activity

Key measures

Departmental budget performance

and productivity through servicing
as many customers as possible in
the shortest time period
Separated to functionally specialize
and controlled by industrial
engineering function
De-skilled to tasks with customers
routed to employee using
information technology and
advanced telephony systems.
Employees also controlled by
scripts used to guide the
conversation with the customer
Eliminate through automation and
tolerate high attrition/absenteeism

Flat structure with shared goals

and values and minimum status
differentials
Delayered management structure
with workers holding broad
worker knowledge of processes
and products. Cross-skilling and
flexible design
Value delivery measured at point
of service (customer)

Workforce strategy

Design of work
Job design

Treatment of labor
Performance expectations

Time standards established per

task with defined routines

Rewards

Individual incentives, linked to job

evaluation and productivity

Employee participation

Narrow with high levels of initial

training to ensure person is
capable of working with customers
then low levels of on-going training
in non-product/task routines.
Repetition is preferred to employee
reformulating work requirements

Lean
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67

Customer one stop shop

Emphasis on whole task, flexible,
use of teams. Employees
empowered to resolve customer
issues, acting independently

Treat as value adding resources.

Team activities with joint planning
and problem-solving
Meet customer needs effectively
(service) and reduce system
failures
Group incentives, with gain
sharing, linked to skills and
mastery of product processes
Encouraged at the team and
inter-team levels with widely
shared business information.
Constant training in process
improvement

As the programme of change was rolled out the senior management were fearful that
the shifts in organisational design and power structures would cause major stress and
upheaval, especially to managers. To support the changes taking place, in each
company the human resource management department played a key role in
counselling on a one-to-one basis the managers affected by the reallocation of roles and
the new types of performance measurement.
Overall, the new ways of working highlighted customer intimacy and effectiveness
with individual staff members being assigned to the customer for the entire cycle of the
process. The result of the change programme was a dramatic reduction in the WIP

Table III.
Management systems
before and after lean
implementation

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buffer but also lower productivity measures as defined by the previous performance
system. Specifically, with customer satisfaction as the primary driver for performance,
call times increased (and thus productivity fell). However, as failure demand reduced,
employees were able to concentrate on the management of the process cycle, improving
productivity (for instance by deploying training as needed to improve employee
responsiveness). Overall, the effectiveness of the system, now measured by the number
of claims processed right first time, significantly improved. Dramatic improvements
were observed in every case (key metrics from nine-months into the change
programme are shown in Table IV). Across each company, major reductions in failure
demand were reported, freeing staff time, reducing cost and representing direct and
indirect improvements in service delivery. Redesign of the call process, to a single point
of contact also reduced the number of steps (and therefore time) to serve a customer
query. Improvements in staff training and cross-skilling reduced the number of policies
being referred into the WIP buffer area. The WIP buffer was significantly reduced by
training operatives to resolve the non-standard queries that could not previously be
dealt with by the rigid scripting that led cases to be placed in this area. Focusing on
resolving customers issues first time, there was also a reduction in the number of calls,
letters and emails received each day by each company as customers no longer made
multiple contacts. Focusing on solving customer issues first time, with better trained
staff, a more efficient process and greater organisational flexibility, led to major
improvements in the time taken to complete customer requests. The most dramatic
improvement occurred in ClaimCo where maximum work time to resolve a customer
claim was reduced from 310 to 84 days. Major improvements were also seen in the
other two companies, PolicyCo and BankCo, respectively, seeing a 44 and 36 per cent
reduction in customer lead time.
The reductions in rework and failure demand served to significantly reduce the
amount of staff time and cost required by the centres. At the same time, with
customers service demands successfully resolved first time or handled by a single
operative over multiple contacts, customer satisfaction drastically increased in each
service centre.
Discussion
The application of the lean approach to three financial services call centres forms the
basis of our investigation into the applicability of the lean philosophy and toolkit to the
pure service context. Addressing the key research question:
RQ. Can the lean principles and practice of lean thinking be successfully applied to
the pure-service context?
Two stages of analysis are considered: first, determining whether the change
programme that took place generated positive results (indicating a positive success)
and secondly, identifying if the change programme was in fact true to lean principles
and approaches.
Considering the overall outcome of the change programme, it is possible to
determine that the activities that took place generated major improvements for each
company. Highlighted above (Table IV), each company was able to significantly reduce
the amount of time to resolve customer issues, which was taken as the primary
measure of quality. Each company was able to improve quality while at the same time

Before lean implementation

Average number of calls per day
Average number of letters and e-mails per day
Average employee productivity (turnaround
within determined time) (per cent)
Percentage of failure demand
Longest time to complete customer request (days)
Average time to complete customer request (days)
Number of steps in total cycle (without failure)
Number of departments involved in total cycle
Average number of policy holders as work-in-process
After lean implementation (nine month stage)
Average number of calls per day
Average number of letters and e-mails per day
Average employee productivity (turnaround within
determined time) (per cent)
Percentage of failure demand
Longest time to complete customer request (days)
Average time to complete customer request (days)
Number of steps in total cycle (without failure)
Number of departments involved in total cycle
Average number of policy holders as
work-in-process

System indicator

per cent reduction)

per cent reduction)
per cent reduction)
per cent reduction)
3
103 policies
(63 per cent reduction)

35
49
21
27

28
30
23
35

(36
(36
(56
(25

103 (38 per cent reduction)

30 (30 per cent reduction)
NA

38 (37per cent reduction)

12 (37 per cent reduction)
NA
per cent reduction)
per cent reduction)
per cent reduction)
per cent reduction)
4
130 policies
(57 per cent reduction)

98
55
76
48
36
5
277 policies

97
63
54
39
44
6
302 policies

(56
(44
(42
(20

165
43

BankCo

60
19

PolicyCo

21 (68 per cent reduction)

84 (73 per cent reduction)
30 days (63 per cent reduction)
9 (82 per cent reduction)
5
121 policies
(69 per cent reduction)

48 (23 per cent reduction)

20 (57 per cent reduction)
NA

90
66
310
80
51
7
392 policies

62
47

ClaimCo

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transformation

69

Table IV.
Operational performance
before and after lean
implementation

IJOPM
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reducing the operational cost to serve each customer by reducing failure demand.
The removal of dysfunctional performance measures and rigid controls on workers
also generated positive gains in workplace morale, reducing staff absenteeism and
turnover. At the end of the transformation programme, customer satisfaction was
significantly improved, the cost of operations was no longer escalating and worker
morale was much higher. Each company had achieved such significant gains with
the transformation programme that they are extending the approaches and tools they
have learned into other areas of the business and their supply chain partners (such as
the Financial Services Authority).
Despite these achievements, it is necessary to classify whether the change activities
that took place were in fact guided by a lean philosophy and toolkit to resolve the
research question that was posed. The five lean principles, which provide a guiding
philosophy for lean improvement, were previously stated (Womack and Jones, 1996).
The application of these principles, in order, is clearly identifiable in the change
programme which took place. The determination of a fundamental definition of
customer value provided the first stage of change in each company, with each
reviewing customer intelligence to form a common definition (based on resolving
customer queries with a single operative). Second, the delivery of customer value prior
to any improvement was visually represented with process mapping tools. With this
map in hand, it was possible to analyse the operational system, highlighting the
back-flows and sources of stoppages and rework that prevented value from flowing to
the customer. Achieving a smooth flowing process, where there was sufficient capacity
to respond to customers demands (pulling services as required) was the major
challenge for each company and involved redesign the call contact process. This
re-engineering and redesign was based on achieving a smooth delivery of value to the
customer. Each organisation has continued to refine the processes, for instance,
monitoring customer calls to identify future training needs, supporting an ongoing
dedication to continuous improvement.
The tools used to achieve improvement are identifiable as being drawn from a
common lean toolkit. These included process mapping techniques, modelling of
backflows and failure demand, process re-engineering and problem solving, all of
which are key lean techniques (Bicheno, 2004). The use of process mapping and
problem solving as a foundation for lean improvement has been reported in both
manufacturing and service contexts, including retail (Jones and Clarke, 2002; Fernie
and McKinnon, 2003; Abernathy et al., 2000) and healthcare (Swank, 2003; Jones and
Mitchell, 2007; Esimai, 2004; Massey and Williams, 2005). The use of process mapping
has also been reported in administrative and pure service areas (Vinas, 2004; Chaneski,
2005; Wallace, 2006). In this paper, here we have identified a guiding lean philosophy
behind these tools, supporting the improvements as being within a lean framework.
The managerial and organisational changes seen within each company are also
congruent with the lean philosophy. Features of lean organisation have commonly
included: delayering and reducing top-down management control; the movement away
from narrow and rigid efficiency measures to focus on value and effectiveness;
up-skilling, cross-skilling and empowering workers; and, leading change from within
the business (Hines, 1999; Womack and Jones, 2003; Bicheno, 2004). At each of the case
companies, significant shifts in management behaviour were observed that followed
lean concepts. The removal of departmental and functional barriers aimed to create

a single pool of workers, with increased skills who could resolve customer issues.
The elimination of rigid scripting and narrow job roles supported a move towards
cross-skilling and increased learning in the workplace. The nature of change itself was
in a lean framework, with the role of the consulting team to provide training and
support to allow staff to transform the business from within, rather than redesigning
the process externally themselves.
The research conducted within the three service centres reported within this paper
highlights significant improvements in both of the traditionally opposing
cost-reduction and quality-improvement objectives. The change programme that
took place was observed and found to conform to both lean philosophy to operational
design and the lean operational toolkit in practice. The improvements, while dramatic
in each case, were achieved with relatively little investment and minimal training. The
opportunity for companies to replicate such validated lean approaches in the pure
service context is significant at both the organisational level and for the wider
economy.
Conclusion
The use of call contact centres as a mechanism of customer service is becoming
increasingly common across a range of service sectors (Dixon, 2002). In common with
services more generally, evidence suggests that the quality being offered is of a very
poor level, with customer complaints and defections common (Fournier et al., 1998;
Acland, 2005; Dickson et al., 2005; Fornell, 2008). This paper sought to address the issue
of lean improvement techniques in the pure service, call centre environment, addressing
the specific research question Can the lean principles and practice of lean thinking be
successfully applied to the pure-service context? Based on the examination of the lean
change process in three financial services companies, we find that the lean approach
shows much validity in the pure-service context that was studied.
There is a need to academically re-evaluate the organising and operating logic at
work in the service sector (Quinn and Gagnon, 1986; Zeithaml et al., 1990). The rise of the
lean model of operations has generated major improvements in the manufacturing
sector, enabling companies to improve quality and productivity while simultaneously
reducing operational costs (Womack and Jones, 2003). The application of lean
techniques to achieve similar aims in the service sector has been previously proposed
(Abdi et al., 2006; Atkinson, 2004). To date, the application of lean beyond the
product-service environment has received relatively little academic attention, with often
confusing and contradictory findings (Buzby et al., 2002). This paper has empirically
demonstrated the validity of the lean approach in a pure-service environment. For the
academic community this provides useful evidence for the continuing extension of the
lean approach in the service sector where traditional, classical management approaches
are failing to deliver the necessary quality and cost requirements.
The transformation process adopted within this paper has been focused around the
lean methodologies developed from Toyota. Specifically, this has included value
identification, mapping of value, workplace redesign and work-task changes. Many of
these activities in isolation and combination are supported by a wide range of business
process re-engineering (BPR) toolkits. However, examination of the end-to-end change
process highlights that the whole is greater than the combination of its parts while
benefits are attainable from many quality methodologies, bringing them together in a

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coordinated manner, in this instance, the lean approach, offers significant benefits for
the company. Indeed, each of the three companies examined had previously attempted
quality improvements and process redesign, including six-sigma tools, but had failed
to realise any benefit due to the lack of a validated, integrative framework to unite
these efforts.
For the management community, this paper has shown that the lean approach can
be relatively easily applied, with minimal investment in training, very rapidly
generating major improvement gains for adoptive companies. Call centres represent an
increasingly important service delivery mechanism for a range of service businesses.
The demanding customer marketplace is requiring better service be provided while at
the same time there are managerial pressures for cost reduction. The benefits on offer
from lean improvement are based on achieving these traditionally opposing goals.
By focusing on the identification of true value and the removal of failure demand
(additional demand for services created by a failure to perform the service correctly the
first time), simple mapping and problem solving techniques, guided by a lean
philosophy can assist companies in achieving significant improvements in operational
cost and the quality of customer service they deliver.
A major benefit in lean adoption in the call centre business concerns a reduced need to
offshore work to reduce costs. The long-term cost savings of off-shoring are
questionable. First, off-shoring can significantly damage customer perceptions
research consultancy ContactBabel (2004) for instance found savings from off-shoring
1,000 jobs would be offset by a customer defection rate of only 0.33 per cent. They further
report that 13 per cent of sampled customers stated the intention to change banking due
to the decision of that company to offshore service provision. Second, the inability of
offshore staff to deal with complex requirements can lead to work being repatriated. The
operations director of BankCo, who had for sometime supported off-shoring, noted that
the amount of work sent back to the UK from the work-in-progress buffer that offshore
staff lacked training to resolve had negated any short-run cost benefits. Exploring the
possibility for lean improvement in overseas call centres, the companies perceived
several problems: the Indian call centre sector is dominated by very large call centres
with many contract-companies so that any single company was unable to influence
change or encourage a lean approach; and, the aptitude (education, engagement and
ability) of overseas staff in the developing world for lean improvement was questioned
by each of the three companies. Lean improvement in the domestic economy may
therefore offer the best route to meet cost and quality priorities for service centre
businesses.
All research is naturally limited. In this paper, only three service centres are considered
in the single call centre sector. Further validation is therefore required across both multiple
call centre businesses and also more broadly across the service sector before we can
whole-heartedly support the lean approach in these contexts. This paper provides useful
exploratory evidence on lean endeavours in pure services but further research is needed to
support our findings. Further, a common process and common change consultants were
used. While this allowed for cross-comparison for academic purposes within this paper,
the many different approaches adopted by different lean proponents require examination
to determine if one-best-way exists for lean adoption in service or if different
methodologies may offer benefits. However, overall we remain positive about the benefits
on offer from lean adoption in the service sector.

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Corresponding author
Niall Piercy can be contacted at: N.C.Piercy@bath.ac.uk

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