The service industry has its own special characteristics, which differentiate it from
manufacturing and make it harder to apply Lean Six Sigma tools, which can be summarized
in the following main areas (Kotler, 1997; Regan 1963; Zeithmal, Parasur and Berry 1985):
Intangibility: Although services can be consumed and perceived, they cannot be measured
easily and objectively, like manufacturing products. An objective measurement is a critical
aspect of lean six sigma training, which requires data-driven decisions to eliminate defects and reduce
variation. The lack of objective metrics is usually addressed in service organizations through
the use of proxy metrics (e.g. customer survey).

Perishability: Services cannot be inventoried, but are instead delivered simultaneously in
response to the demand for them. As a consequence, services processes contain far too much
‘work-in-process’ and work can spend more than 90% of its time waiting to be executed
(George, 2003).

Inseparability: Delivery and consumption of service is simultaneous. This adds complexity
to service processes, unknown to manufacturing. Having customers waiting in line or on the
phone involves some emotional management, not present in a manufacturing process.
Variability: Each service is a unique event dependent on so many changing conditions,
which cannot be reproduced exactly. As a result of this, the variability in service processes is
much higher than in manufacturing processes, leading to very different customer
experiences.

Owing to these inherent differences, it has been harder for service organizations, such as
financial companies, health-care providers, retail and hospitality organizations, to apply
Lean Six Sigma to their own reality. However, there are also great opportunities in the
service organizations (George 2003):
- Empirical data has shown the cost of services are inflated by 30–80% of waste.
- Service functions have little or no history of using data to make decisions. It is often
difficult to retrieve data and many key decision-makers may not be as ‘numerically
literate’ as some of their manufacturing counterparts.
- Approximately 30–50% of the cost in a service organization is caused by costs related to
slow speed, or carrying out work again to satisfy customer needs.
In the last few years, successful applications in service organizations have come to fruition
and we will illustrate three possible applications: in a call centre, in human resources, and
finally in a healthcare provider.