Applying lean manufacturing principles to information intensive services

Abstract

Lean manufacturing principles have been successfully applied to manufactured products for several decades to significantly reduce inventory in the supply chain and to increase productivity as well as the quality of the products. However, it is not clear whether such principles can be similarly applied to information intensive services that usually do not carry inventory. In this paper, we use an example of insurance claims handling process to illustrate how the lean manufacturing principles can be beneficially applied, albeit with some modifications, to information intensive services. Since such services do not have significant amount of inventory, we argue that minimising cycle time plays the same role as reducing inventory. We also show that a slightly different but parallel set of metrics should be used to evaluate the performance of the system after the implementation of lean principles to information intensive services.