The lean service machine.

Abstract

Jefferson Pilot Financial, a life insurance and annuities firm, like many U.S. service companies at the end of the 1990s was looking for new ways to grow. Its top managers recognized that JPF needed to differentiate itself in the eyes of its customers, the independent life-insurance advisers who sell and service policies. To establish itself as these advisers' preferred partner, it set out to reduce the turnaround time on policy applications, simplify the submission process, and reduce errors. JPF's managers looked to the "lean production" practices that U.S. manufacturers adopted in response to competition from Japanese companies. Lean production is built around the concept of continuous-flow processing--a departure from traditional production systems, in which large batches are processed at each step. JPF appointed a "lean team" to reengineer its New Business unit's operations, beginning with the creation of a "model cell"--a fully functioning microcosm of JPF's entire process. This approach allowed managers to experiment and smooth out the kinks while working toward an optimal design. The team applied lean-manufacturing practices, including placing linked processes near one another, balancing employees' workloads, posting performance results, and measuring performance and productivity from the customer's perspective. Customer-focused metrics helped erode the employees' "My work is all that matters" mind-set. The results were so impressive that JPF is rolling out similar systems across many of its operations. To convince employees of the value of lean production, the lean team introduced a simulation in which teams compete to build the best paper airplane based on invented customer specifications. This game drives home lean production's basic principles, establishing a foundation for deep and far-reaching changes in the production system.