Towards Improving Banking Services Quality - 15 - Waste Sensitization – Identifying Waste

Towards Improving Banking Services Quality 

15.

 Waste Sensitization – Identifying Waste

 

Introduction

 

In Lean management, waste refers to any activity or process that consumes resources without adding value to the customer. Identifying and eliminating waste is crucial for improving efficiency, reducing costs, and enhancing customer satisfaction in any organization, including the banking sector. Waste can take various forms, and understanding its root causes allows businesses to streamline operations effectively. This chapter explores the three categories of waste—Muda, Mura, and Muri—and the eight specific types of waste, providing relevant examples from the banking industry to help identify and address these inefficiencies.

 

Non-value-added non-essentials are waste.  Waste is unwanted or unusable materials or unwanted process. Let us understand three main points of Waste philosophy.

 

1.       Waste exists in all processes at all levels in an organization.

 

2.       Waste elimination is the key to successful implementation of Lean management.

 

3.       Waste reduction is an effective way to improve efficiency and profitability.

 

Three Categories of Waste

 

Three categories of Waste are:

 

1.       Muda – Any activity that is wasteful and does not add value to the process or is unproductive.

 

2.       Mura – Any variation leading to unbalanced situations.

 

3.       Muri – Any activity asking unreasonable stress or effort from personnel, material or equipment.

 

1. Muda

 

Muda refers to wastefulness, unproductive activities, or any process that consumes resources without creating customer value. It is further categorized into two types:

 

·       Muda Type 1 (Incidental Work): Non-value-added activities necessary for compliance or safety.

 

o   Example: In banks Compliance audits, such as Know Your Customer (KYC) checks, are necessary but do not directly add value for the customer.

 

·       Muda Type 2 (Non-value-added Work): Unnecessary activities that do not benefit the customer and should be eliminated.

 

o   Example: Manually reconciling accounts when an automated system can achieve the same result faster and with fewer errors in banks.

 

There are eight categories of waste under Muda Type 2 that follow the abbreviation TIMWOODS. The eight wastes are (1) Transport (excess movement of product), (2) Inventory (stocks of goods and raw materials), (3) Motion (excess movement of machine or people), (4) Waiting, (5) Overproduction, (6) Over-processing, (7) Defects, (8) Skills under-utilized. The eight categories of waste under Muda Type 2 are explained below by example:

 

·       Transportation:

Example: A bank branch requiring customers to visit multiple counters for banking related work. Consolidating these steps into a single service counter reduces unnecessary movement.

 

·       Inventory:

Example: Excessive physical forms stored in archives instead of digitized records, leading to inefficient space utilization.

 

·       Motion:

Example: Bank staff frequently moving between departments or branches to access records, files or printers. Setting up centralized printers or digital records can reduce this waste.

 

·       Waiting:

Example: Customers waiting in long queues for simple services like account inquiries. Introducing self-service kiosks or easy online platforms can address this issue.

 

·       Overproduction:

Example: Printing extra copies of financial statements for meetings when digital presentations would suffice.

 

·       Overprocessing:

Example: Requiring customers to fill out lengthy forms for minor account changes. Simplifying documentation would improve efficiency.

 

·       Defects:

Example: Errors in customer information, such as incorrect spelling of names on debit cards, requiring costly reissuance.

 

·       Skills (Under-utilized):

Example: Placing skilled employees in repetitive, low-value tasks instead of leveraging their expertise for innovation or process improvement.

 

2. Mura

 

Mura means unevenness, non-uniformity, and irregularity.  Mura is any variation leading to unbalanced situation. Mura is the reason for the existence of any of the wastes. In other words, Mura drives and leads to Muda.

 

For example, in a manufacturing line, products need to pass through several workstations during the assembly process. When the capacity of one station is greater than the other stations, you will see an accumulation of waste in the form of overproduction, waiting, etc. Likewise in banking services, particular activity may have several steps at various points that can be merged. The goal of a Lean system is to level out the workload so that there is no unevenness or waste accumulation.

 

Mura can be avoided through the Just-In-Time ‘Kanban’ systems and other pull-based strategies that limits overproduction and excess inventory. The key concept of a Just-In-Time system is delivering and producing the right part, at the right amount, and at the right time.

 

In short, Mura is variations and variability in work methods or the output of a machine’s capacity. In banking, Mura refers to unevenness or inconsistency in processes, leading to inefficiencies and bottlenecks.

 

·       Example: Inconsistent workloads in bank branches, where some employees handle a high volume of customer interactions while others remain underutilized. Implementing a workflow management system can balance workloads effectively.

 

Mura can be minimized through Just-In-Time (JIT) principles, such as introducing digital scheduling for customer appointments, ensuring resources are allocated efficiently based on real-time demand.

 

3. Muri

 

Muri means overburden, beyond one’s power, excessiveness, impossible or unreasonableness. Muri is any activity asking unreasonable stress or effort from personnel, material or equipment. Muri can result from Mura and in some cases be caused by excessive removal of Muda (waste) from the process.

 

Muri also exists when machines or operators are utilized for more than 100% capability to complete a task or in an unsustainable way. For machine, muri mean expecting a machine to do more than it is capable of or has been designed to do. For people, muri mean too heavy a mental or physical burden. Muri over a period of time can result in employee absenteeism, illness, and breakdowns of machines. Standardize work can help avoid Muri by designing the work processes to evenly distribute the workload and not overburden any particular employee or equipment. In short, Muri occurs when the load exceeds capacity – exertion and overworking of a person or machine.

 

In banking Muri refers to overburdening personnel, equipment, or processes, leading to stress, errors, or breakdowns.

 

·       Example: Requiring employees to process loan applications beyond reasonable working hours, increasing the risk of mistakes. Automating repetitive tasks or redistributing workloads can alleviate such pressure.

 

Muri also applies to systems or machines.

 

·       Example: An ATM overloaded with software beyond its processing capacity, resulting in frequent downtimes. Upgrading hardware and maintaining regular system checks can address this issue. 

Figure 6 – Three Categories of Waste

Relationship between Muda, Mura and Muri

 

The three categories of waste are interconnected. Addressing one often impacts the others. For instance, reducing Muda (waste) can inadvertently lead to Muri (overburden) if not managed properly. Similarly, addressing Mura (variations) can help prevent the emergence of Muda and Muri. In banking, identifying and balancing these interrelations is essential for building efficient and sustainable processes.

 

Eight Types of Waste – TIMWOODS or DOWNTIME

 

One corporate executive is fond of saying, “Waste is all around us, yet we walk by it every day.” There are two popular acronyms that are used to describe the eight most commonly identified wastes. The first is TIMWOODS and the other is DOWNTIME. The elements in both the acronyms are exactly the same in content but with slightly different terminology and order.

 

Figure 7 – Eight Types of Waste - TIMWOODS (Courtesy Source - Google Search – shmula.com)

 

Let us discuss these wastes looking to a service industry environment with a few examples.

 

Transportation: Unnecessary movement of people, products or information, multiple approvals or movement of paperwork – Too much physical back-and-forth movement is one of the problems that effected a process. Reduction of excess transportation is important because every move from one activity to another adds time to a process – and world-class organizations are passionate about reducing time. In many service processes, it is not uncommon for paperwork to loop back several times… waiting in queues in a virtual or actual in-box every time it goes through again. For a service industry, examples are movement of files / documents from one location to another, excessive e-mail attachments, multiple hand-offs. Examples – In a bank branch, if an officer concerned attached to lockers is sitting at a far place from the locker-room then there will be wastage of time, as the customer needs to first visit the officer concerned, sign the locker attendance register and then go to the locker-room. Such arrangement requires unnecessary movement of people. This unnecessary movement can be reduced by placing the officer concerned seat near the locker room. Customers or staff physically transporting documents between branches for approval. Introducing digital submission portals can eliminate this waste.

 

 

Inventory: Items and information not having value added to them. Inventory in service areas is just as big a problem, but more insidious because it is not as readily apparent. Look for physical piles of forms (in-boxes, for example), a list of pending requests in a computerized email program, callers on hold, people standing in line at a branch, and the like. This excess inventory is often the result of overproduction. The goal, from a Lean standpoint, is to have on hand only what is needed immediately or in the short-term. Some of the inventory problematic situations include excessive data storage, unnecessary historical records, overstocked store, over purchase of office supplies. Just-in-time (JIT) purchase is a solution, files / documents awaiting to be processed, excessive promotional material, more servers than required. Example: Stockpiling promotional brochures that quickly become outdated. Using on-demand printing or digital marketing materials is more efficient.

 

Motion: Motion waste is unnecessary movement of people within a workspace (or process). When movement of people does not add value. In a service industry, examples are switching between applications, looking for data and information, looking for files and documents, for filing, fax or xerox. It also includes transferring a customer to multiple points to resolve an issue. Example: Bank staff walking frequently to retrieve files from distant cabinets. Creating an organized workspace with accessible resources reduces motion waste.

 

Waiting (Wait time): Wait time waste is waste of time waiting for people, equipment, materials, and information to arrive. Example: Customers waiting for approvals due to system downtimes or waiting for information. Investing in reliable IT infrastructure ensures seamless operations. 

 

Overproduction: Producing too much, too early and/or too fast. Example: Printing numerous hard copies of reports, when electronic versions restrict overproduction.

 

Overprocessing: Doing more than the customer wants, needs, or is willing to pay for. Example: Verifying the same customer information at multiple steps during a mortgage approval process. Implementing centralized databases can streamline verification.

 

Defects: Production of a defective product or delivery of defective service. Defects are created not meeting requirements. For a service industry like banking, examples are software bugs, incorrect data entry, incorrect name printed on credit / debit card, email sent to wrong email-id. Other Examples: Processing errors in credit card applications, leading to customer dissatisfaction and rework. Training staff and automating checks can minimize defects. System not providing correct rate of interest to depositors, particularly senior citizens and ex-staff.

 

Skills (under-utilized): Skills (under-utilized) are the waste of not using people’s talent, knowledge and experience to improve the organization. This is a situation when employees are not leveraged to their own potential. For a service industry, examples are placing skilled staff on low value process, placing employees in roles that does not match with their skills, not empowering employees to innovate, not involving teams in improvement projects, skilled staff with limited authority and responsibility, not delegating powers.

 

Conclusion

 

Waste sensitization is vital for building an efficient, customer-focused banking system. By identifying and addressing the three categories of waste (Muda, Mura, and Muri) and the eight types of waste, banks can streamline operations, reduce costs, and enhance service quality. Practical examples from the banking industry demonstrate how even small adjustments can lead to significant improvements. Ultimately, waste reduction aligns with Lean management principles, fostering a culture of continuous improvement and delivering better value to customers. 

I welcome your comments, questions and suggestions.

Warm regards,

Keshav Ram Singhal