STK Restaurant Focuses on the Customer

A few weeks ago, I was in Las Vega, NV for a conference.  One night a colleague and I at the STK restaurant in the new Cosmopolitan Casino.  The food was phenomenal.  Just an incredible meal.

The meal is not the reason for writing about the restaurant though.  The service is excellent also.  But, the service wasn’t your traditional restaurant service.  It was choreographed to be efficient and provide the customer with incredible service.

Typical restaurant service, no matter how nice the restaurant, is to have one waitress/waiter and maybe someone different bring out your food.

Not at STK.  We had 2 waitresses and at least 3 servers.  That is a total of five people servicing us and the area we sat in.

There was NEVER any confusion about what was going on at our table and we were never asked the same questions twice.  In fact, everything ran so smoothly that we were almost done with our meal when I asked my colleague if she noticed the five different people serving us.

At one point, one waitress came up to our table and asked, “I know (waitress’ name) is getting you more drinks.  Is there anything else I can get you right now?”  They had communicated enough to know what one was doing for our table so as not to repeat it.  Keep in mind, they are doing this for a section of the restaurant.  Not just us.

As we finished our appetizer and had five minutes to chat, a server came over and asked if we were ready for our main course.  He did not ask if we were done with the appetizer.  He specifically asked if we were ready for our main course.  His focus was on what we, as the customer, wanted.  We replied, “yes.”  The server removed our appetizer plates and utensils.  Within 60 seconds, a second server was at our table setting the utensils for the main course.  Within 2 minutes of him leaving a third server brought our food out.  In 3 minutes our table was cleared, reset and food brought to us by 3 different people.

These are just a couple of examples of how the restaurant focused on the customer and serving their needs in a very efficient way.

The process guy in me asked the waitress at the end how they do it.  She said they have a plan and understand how long it takes for the food to be prepared.  They have a wall where the drink station is and communicate on an ongoing basis throughout the night where no one can see so it is seamless to the customer.

This was a great of example of Lean’s #1 focus…delivering value to the customer.  The seamless effort and great service along with the great food made it an incredible experience.

The Answer is Easy…Better Forecasting

Image courtesy of Danilo Rizzuti / FreeDigitalPhotos.net

Have you ever sat in a meeting where the discussion is about the high (sometimes low) inventory levels?  Do you frequently hear the answer of, “Once we get our better forecasting tool in place our inventories will be better.”?

This is a strong sign the company has not fully embraced lean thinking.

A lean company would not even have a discussion where forecasting tools are the solution.  A lean company is closely connected to their customers.  The goal is to make one product when one product is bought by the customer.  I know this isn’t easy for all companies, but the discussion would be around how to move in this direction.  Not how a better forecast can be generated.

There is one thing I can guarantee about a forecast.  It is WRONG!

I have never heard anyone say, “Man, I nailed that forecast!  I hit it right on the nose!”

Don’t misunderstand me.  I do believe there is a use in looking forward and understand what is coming.  A company would like to understand if a peak or a valley of the product sales might be coming.  This can help set and adjust maximum kanban levels for that period of time.

A forecast is good to understand directionally where volumes are heading.  Forecasting is not a good basis for your entire inventory strategy.

It is a difficult mindset to change.  When you do and act on that new mindset, the dividends it pays are enormous.

H&H Color Lab – American Company Growing Through Lean

H&H Color Lab began in the basement of Wayne and Shirley Haub’s residence in a suburb of Kansas City, Missouri, in 1970. Wayne and his brother, Ted Haub, owned a portrait studio that had just landed its first high school senior contract. With a background in and love for color printing, Wayne chose to install his own color processing equipment in the basement of his home.

Business increased, and so did the need for additional space and employees. What began with Wayne doing everything from his basement has grown to 165 people and 55,000 square feet of space over 40 years later.

H&H customers are primarily school/portrait/wedding photographers.  The offer a wide range of products from photo prints to books to Leather bound albums and digital products.

In 1999, H&H Color Lab started is Lean journey led by Lee Gabbert.  Lee had been with the company for 5 years at the time and was chosen to learn more about lean and teach others at H&H.  They started by reading “Lean Thinking” by James Womack and Daniel Jones.  H&H also decided to get a sensei to help them learn as they traveled the bumpy road down the lean path.

H&H Color Lab started by setting up work cells, going away from a department mentality. H&H moved to smaller batches, moving cells closer to the monuments (that they couldn’t move), standard work, and lots and lots of 5S.

Muda (waste), lead times, late work and quality all had improved. In fact, the gains from lean had now freed up space that was once occupied by manufacturing departments.  It allowed H&H to take the space and use it as a training facility to help customers from all over the United States. Thus, H&H University was born. Roughly 3,000 square feet of space was now designed and transformed into a learning center, working photographic studio with equipment, mock up photography sales room, photography studio work area, kitchen to host all day training, library sitting room with sample products that H&H produce on the book shelves and restrooms. By providing training for customers (mostly free of charge), you truly can engage in a partnership that can grow.

All of this work allowed H&H Color Lab to make a success transition from the “Age of Film” to the “Digital Age”.  Understanding their customers and providing training and education others companies do not, shows how the most important part of lean, focusing on the customer, helps you innovate, grow and thrive.

Here are results that H&H Color Lab have seen from their lean implementation.

	1999	2012	% Change
Late Orders	3,076	25	99% reduction
WIP	10,421	1731	83% reduction
Redo	5.3%	1.3%	75% reduction
% Shipped Late	49.3%	5.8%	88% reduction
Time in Plant	7 days	1.1 days	84% reduction
Sales			22% increase

Understanding Single Piece Flow

One of the first concepts that pops up when learning about lean is single piece flow.  This is a great concept and should be considered when it is appropriate.  Cooking my french fries might not be the time to use single piece flow, but downloading songs may be.

My wife runs a small business of her own.  She sells products online through her website and Etsy as well as events in our local area.  Selling online and brick-n-mortar poses problems from time to time.  One issue is wanting to provide a wide range of scents for customers, but not having large amounts of inventory on-hand because of the batch process of making the soaps in loaves.

After a year and a half, we think we find a solution to this issue.  Most of her requests for custom scents come through her online sales.  Typically, she has the fragrance available but can’t justify making 8 bars in a batch because the other 7 may sit for a year or longer.  She has found a mold that works very well and is the size she needs that allows her to make one soap at a time.  My wife can now fulfill the requests of her customers and offer more fragrances to her line in her online shop without the expense of carrying a year’s worth of finished product.

What about the live events to sell the inventory?

Good question.  The events are always in the Sept – Dec time frame.  So, if a customer orders a special scent in January, the rest of the finished goods would sit until September at the earliest.  She could have used the raw materials for other products.  The soaps that are high volume sellers and do well at the live events can be made in batches right before the event.  Any finished product that is leftover after the event season can be sold online.

It is a good mix of using single piece flow and batch processing when it best fits the situation.  It is about understanding your business needs and trying to meet those needs.  Not forcing everything to one solution whether if fits or not.

What makes sense for your business?

Lean Says, “Do the Right Thing”

A question that I get quite often is “What does lean say to do?”

My short answer, “Do the right thing for your situation at this time.”

When lean is not understood people think lean has magic answers for them.  This is easy to do when the mindset is lean is a bunch of tools and concepts that just need to be put into place.

They think lean can answer their questions.   Lean does not answer your questions.  Lean helps you to be able to answer your questions.

When lean is understood to be a way of thinking, a set of principles to help guide how you go about solving a problem then it is easier to understand that lean says, “Do the right thing for your situation at this time.”

A popular example is when people think “Lean says I have to have level flow, because I have to eliminate waste.”  If their business does not allow level flow or it does not make sense at that time they can get discouraged and believe lean is not for their business.

Hospitals are a great example.  Early on they tried to implement level flow, but they couldn’t because people getting sick is out of their control.

When it is understood that lean is about creating value for the customer, people have a different lens.  One way to deliver value is to eliminate waste so I have more capacity to do value added activities.  Level flow is one way, but in a hospital there are many other ways.  Once the thinking was understood, hospitals started to embrace lean.

The next you you hear someone ask, “What does lean say to do?”  Answer by saying, “Think in a different way and do what is right for your situation at this time.”

Guest Post: The Importance of a Quality Management System

Today’s post comes from Alice Rose.  Alice is a freelance copywriter working for QMS International plc, a business certification company specializing in ISO 9001 http://www.qmsuk.com/iso-9001.php.

As the recession hit many businesses began to think of the best ways to cope and short-term solutions such as cutting staffing levels and reducing marketing costs were some of the most popular. But, as time has progressed and consumers are still being very cautious with their spending, I want to touch on some other ways that you can try and beat the big squeeze.

What is a quality management system?

A Quality Management system is the processes, procedures, organizational structure and resources that come together to ensure that a business provides a consistent and reliable service. It emphasizes different principles within a business such as leadership, continual improvement, staff involvement and different approaches to decision making.

It’s all about the consumer

The first thing to remember is that if you provide a great product or a brilliant service to the consumer then they are going to keep coming back. One way to check that your company is running a high quality business is to put a quality management system into place. Quality management systems often incorporate a ‘customer service’ element to them, ensuring that there are procedures in place so customers can record a complaint which means that issues can be addressed and reduced in the future.

Manufacturing industry

If you are manufacturing a product there are certain steps that you can take to ensure that the final product will arrive with the consumer in a high quality state. This can start at the beginning of the production chain, in the factory for example. Simple tasks such as ensuring your workplace is clean will lead to the creation of a better final product. As the product progresses along the chain if simple manufacturing tasks are conducted in a more streamlined fashion the consumer is more likely to receive a high quality product – which will also lead to less waste on your part, reducing costs.

Service industry

The services industry is not immune to the economic downturn and there are simple changes that your company can take to ensure that the customers are still happy. One of the simplest ways to find out if you are providing a good service is by encouraging customer feedback – if you know where you are falling down it’s easier to pick yourself back up.

Setting an example

It is important that quality management systems are considered as a priority by business management who have the facility and knowledge to implement these systems and who, leading by example, will encourage greater productivity and performance across the board as well as locating new areas of the business for growth.

Listen to the Customer Input

The main tenet of lean is to deliver value for your customer.  The customer is someone that uses the product or service whether it is internal or external.  The customer helps to define if something is value added or not.  It is critically important to listen to the customer and understand their needs and how to deliver that value.

Sometimes the designer of the product/service can get too caught up in what they want to deliver to the customer or what they believe they need and miss what the customer needs.  When this happens the customer can become frustrated and will not adopt or use the product/service.  This leads to less credibility of the designer.  Over time people will go around or cut out the designer.

An example.  A group of designers build a process without input from the users of the process.  When rolled out the users don’t use the new process because it is not a process that can not be executed in reality.  The designers should have had the users of the process in the sessions helping to build the new process.  During this time, the designers should be listening to the users and asking questions to gain clarity of what would work not trying to convince the users of how they should work based on their thoughts.

There is a fine line (or grey area) though.  The designers should ask questions and push for improvement where they think it can happen, but with input from the users.  If you are taking the time to improve something then push for all the improvement you can get.  The designers should help to do this.  It is a fine line to walk but when the designer crosses over it is usually easy to tell.

The customer input is the most important part of designing anything.  A product.  A service.  A technology.  A process.  Anything.  Listen.  Ask clarifying questions.  Understand the customer needs.  Deliver value for the customer.

Poll Results – Thanks for the Feedback

I want to thank everyone who participated in the polls about a month ago.  The information helped me learn more about who is reading the blog and what topics are preferred in order to drive to a higher satisfaction rate of the readers.

Who is reading Beyond Lean?

1. Mid-Level Managers = 40%
2. Senior Level Managers = 20%
3. Consultants = 20%

I suspected this may be the case.  Part of the reason, I am a mid-level manager so my natural perspective is that of a mid-level manager.  It is great to see so many senior level managers reading the blog also.  What encouraged me the most was seeing the fourth largest group to read the blog was direct line employees (17%).  I try to write so it relates to all levels and positions.  Seeing the wide spectrum of positions reading Beyond Lean signals that we are relating to a variety of people well.

What features/topics are favorites?

1. Posts on Principles/Concepts/Tools = 28%
2. Posts by Matt and Joe = 25%
3. Lean Series Week = 14%

Seeing the lean series week get a good response is encouraging because it was something we added this year.  It seems it has been a success.

Do people enjoy the posts on principles/concepts/tools because the posts help the reader address something they are working on and how to apply it?  I hope that is at least part of the reason.  We strive to make the posts applicable and easy to relate to.

The feedback does not mean we will stop posting topics and features that rated low.  The feedback allows us to focus our content.

If you have any other feedback on how to improve the content, please leave a comment.

 

Apple Will Fail if Manufacturing is Moved to U.S.?

Last week, I caught a blog Why Apple Has to Manufacture in China.  I read hoping to find some practical reasoning as to why it was critical that Apple manufacture in China.  I read the post twice and I couldn’t find any reason it was critical for Apple to manufacture in China.

The post does say labor cost is not a reason to manufacture in China.

It is not an issue of labor costs. In fact, labor costs play a very small role in the equation — both for Apple and for Timbuk2.

The post compares Apple to Timbuk2, a company that makes custom bags.  Two different business models, Timbuk2′s custom production versus Apple’s mass production.  Here is what the post has to say about this.

Timbuk2 manufactures in the US because it produces custom-made bags, orderable through its handy web site, and customers ordering custom bags cannot wait for weeks for a bag to come from China by boat, while shipping by air is expensive and there would still be some uncertainty due to customs clearance. A very similar logic lies behind fashion retailer Zara’s choice to manufacture in Europe, also an expensive location in terms of labor costs. Of course, Timbuk2 does also produce many bags in China but these are mass-produced, non-customized bags, sold wholesale at a fraction of a price of a custom bag, and they are not time-sensitive.

Apple does not produce custom products and so it does not need to deliver quickly — all of its products are standard and mass-produced; just like the standardized bags for Timbuk2, so there is no reason to stay close to end-customers. Moreover, Apple does not change its assortment often — the new iPhone will probably be for sale for another year or two.

There is no need for mass producers to be close to the end-customer?!  Really?  So it is OK to spend a couple of months to get new phones to the U.S. or pay for air freight (which is quite expensive), if there is a defect in a batch of phones?  Not in any business model I know of.  That delay risks the loss of customers and costs the company more money than is needed because of the big batches that may have to be reworked or thrown out.  Also, when the life-cycle of a product is coming to an end it may cause more phones to be thrown our or discounted because of the large batches.

The post is contradicting itself because it says cheap labor is only a small part of the total cost, but then does not take total cost into consideration when looking at all the freight and inventory and possible obsolescence costs.

So why else is it important for Apple to manufacture in China?

Apple is a huge company and as a New York Times article published in January this year details, its production volumes and often unpredictable engineering changes require manufacturing flexibilities and engineering capabilities on a scale that is simply unavailable in the USA.

Exactly my point about inventory above.  The post goes on…

In China, by contrast, manufacturers can deploy thousands of collocated engineers to introduce needed changes overnight, and large supply of labor allows to ramp up and ramp down capacity quickly. There is simply no factory capable of employing 250,000 workers day and night in the USA, surrounded by flexible and capable suppliers. So the location decision isn’t really about labor costs — it’s about manufacturing risk and where that risk is best managed.

Because Apple has bad processes upstream, it is OK to disrupt the lives of thousands with no regards downstream to fix the problem.  Reminds me of the saying, “A mistake by you, does not necessitate an emergency by me.”  Again, raising the cost to produce.

To summarize:

• Mass producers don’t need to be near the end-customer
• Disrespect for people is OK when fixing a problem you created

Apple may be on top of the hill today, but 2-5 years from now they won’t be.  As competitors, like Samsung, close the gap managing cost is going to grow more important. Fixing your processes so engineering changes are not needed overnight and locating close to your end-customer so when you do have an engineering change you don’t have tons of inventory to dispose of is a great way to manage your cost.

 

Lean Construction

Over the last decade we have seen lean start to permeate many different industries.  Healthcare is one of the most prominent areas.  Another more publicized area lean is permeating is government work. A challenge was even given to all the Presidential  candidates.  This is a great start.  It shows that more and more people are starting to understand lean is about the way we think and see things.  It is not about tools such as: 5S, Standardized Work, Quick Changeovers, or level loading.

Picture from Quality Digest Magazine Article

There is one industry that has been slowly adopting lean, but rarely gets mentioned.  That is the construction industry.  More and more construction companies are trying to adopt lean principles and thinking into the work they do.  Lean construction is more than just the building phase of construction, but also includes the design phase.  Lean construction involves owners, architects, designers, engineers, constructors, and suppliers.   It is all inclusive from end-to-end.

There is even the Lean Construction Institute.  It was established in 1997.  This isn’t a new concept to the industry.  It just doesn’t seem to get well publicized.

There is a good article from 2007 about Lean Construction.  In the article it says:

Lean construction provides a solution that works for all three groups-the owner, the contractor and the worker-because it’s founded on collaboration, communication and mutual respect. Not only does the conventional design-bid-build environment not produce the best results for any of the three groups, it actually pits each of them against each other and creates a downward spiral of lose-lose. Lean construction works because it focuses on maximizing value and eliminating waste.

It is a win-win for everyone with a focus on what is important to the customer.

Therefore, lean construction focuses on identifying and delivering products or services on which the client places high value. A few things that clients often place high value on are:

•     No change orders
•     High quality-meaning conformance to requirements
•     On-time delivery

It is great to see industries outside of manufacturing and healthcare understanding the lean principles and embracing them.

If anyone works for a lean construction company, I would love to hear from you and ask you questions about implementing lean in the construction industry.