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?

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.

 

Practical Visual Management

I am always on the lookout for good examples of visual management.  I like visual management solutions that are simple and solve a consistent problem especially around quality.

Here is a picture of one from my wife’s small business:

My wife makes natural, hand-poured soaps.  This is a soap pop.  It is part of the kids line of soaps she has.  They are made to look like popsicles and are a great party favor at birthdays (part of a shameless plug for the business).

She wanted to be consistent with the layer from soap-to-soap and batch-to-batch so she drew lines with a sharpie on the outside of the molds.  The mold is semi-transparent so she can see when to stop when she is pouring the soap.  This creates a uniform look that shows here customers she does care about the quality and their experience.

Visual management is a concept that can be used by anyone trying to make a problem visible no matter the size of the company or problem.  Do you have any simple examples of using visual management to solve a problem?

Have a Purpose. Don’t Innovate.

One last blog post I read that I am way behind on.

Please, Can We All Just Stop “Innovating”? is posted at the Harvard Business Review Blog.  Bill Taylor tackles how companies are over killing innovation as a business practice.

A recent article in the Wall Street Journal, which did not get nearly the attention it deserved, made the case that the word “innovation” has outlived its usefulness. “Companies are touting chief innovation officers, innovation teams, innovations strategies, and even innovation days,” the hard-hitting piece noted. “But that doesn’t mean the companies are actually doing any innovating. Instead they are using the word to convey monumental change when the progress they’re describing is quite ordinary.”

Innovation is used everywhere for everything today.  I agree with the WSJ article.  A lot of the “innovation” is a quite ordinary change.

Here are three examples in the post about truly innovative work.

Southwest Airlines never said, “We want to be the country’s most innovative airline.” Its leadership said, “We want to ‘democratize the skies’ and give rank-and-file Americans the freedom to fly.” They perfected a new way to be an airline by virtue of what they wanted to achieve as an airline. They did what made sense to them, even if their strategies made no sense to the legacy carriers.

Tony Hsieh and his colleagues at Zappos never said, “We want to introduce innovations to e-commerce and do a better job of selling shoes over the Internet.” They said, “We wanted to build the greatest customer-service brand in the world, a company whose mission is not simply to deliver products but to deliver happiness.” Thus Zappos created a special culture, a unique way of doing business, and an almost mythic status among its customers, who have given the company permission to sell all sorts of products above and beyond shoes.

Cirque du Soleil did not set out to make a few tweaks to the traditional three-ring circus, or market-test a few new acts as a way to offer innovations vis-a-vis Ringling Brothers. Rather, an immensely talented group of street performers set out to define a whole new category of live entertainment, a creative leap that made perfect sense to the artists who dreamed it up, but made no sense to circus veterans or to audiences who had never seen such shows before.

The common theme Bill points out is having a purpose.  In all three cases, having a strong purpose that was communicated and believed in led to the innovative thinking.  It was delivering to the customer that mattered.  Not being “innovative”.

Have a purpose you believe in.  Understand the customer.  Deliver to the need.  Innovation will come.

The Customer Feedback Loop

The focus of lean is first and foremost on the customer.  What is of value to the customer is the first question that should be asked?  A lot of organizations do a good job of asking for feedback from their customers.  What usually is missing is the feedback loop back to the customer.

While visiting an offsite location of the company I work for I saw this book in the cafeteria.

(Click on Image to Enlarge)

This is left by the company that services the cafeteria.  Not only does the company ask the customers fore feedback and suggestions, the fourth column is a feedback loop to the customer.  It is a reply letting the customer know what if the suggestion is possible or what work they are doing on the suggestion.  The company is completing the loop.

Too many times companies ask for the feedback do not complete the loop back to  the customer.  This is good example of giving feedback to the customer so they know they are being listened to.

If you want feedback from customers, then make sure you they know you are using it.