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Business optimization (applied lean manufacturing) ETREE coffe shop
- 2. Background Information & Problem Definition
- 3. The Coffee Shop • Located at Shenzhen Polytechnic campus • Created in 2014 • Typical team of 3 workers : manager + 2 waiters
- 4. The Menu • 9 classic coffees (M or L) • 11 special coffees (M) • 6 ice-Teas (M or L) • 4 hot teas (M) • 6 Fresh fruit juices (M) • Deserts (cakes) • Wide range of products ; • Quality products ; • Studied Marketing/Design
- 5. The Service • Shop : 32 feedbacks • Online : 85 comments analysed. • The speed and the service are the main negative feedbacks. 0 20 40 60 80 Drinks quality Food quality Service Price Speed Customer's satisfaction (/100) speed 44% service 26% Food quality 15% Drinks 8% Price 7% Online survey
- 6. Limitations • Important flow of customers during rush hours : efficiency drop • Delay orders delivery (inventory is increasing faster than the processing time) • Can’t serve everybody in time : lose customers (limit profits) • Bad customers feedback/satisfaction : impact on image • Organization issues (labour and workspace) • Video
- 7. Analysis of Current Situation
- 8. Current Operations – Layout
- 9. Current Operations – Layout Juice
- 10. Current Operations – Layout Iced Coffee
- 11. Analysis – Seven Wastes DefectsOverproduction Transportation Waiting Inventory MotionProcessing
- 12. Analysis - Six Performance Objectives 0 1 2 3 4 5 6 7 8 9 Quality Speed Dependability Flexibility Innovation Cost
- 13. Company’s Pain Points • The options in the menu are too much varied • Employees spend too much walking around the kitchen • Clients during rush hour can spend up to 20 minutes waiting • The products’ location is undefined and spread across the kitchen • There is only one blender for both juices and tea • There is only one big fridge that contains all cold inventory • Employees doing different tasks cross the same path
- 16. Seiri Focus on best selling products Ice Coffee Fruit Juice “choosing and separating”
- 17. Seiton “tyding up the area” Redesign the shop’s layout
- 18. Seiso • Enhanced productivity creates unused capacity during non-rush hours • Use the idle time to perform maintenance and cleaning tasks • Schedule maintenance and cleaning task in advance “clean up and maintain”
- 19. Seiketsu Worker 1 Worker 2 ManagerCustomer Redefine employees' roles Manager: • Stands by the cashier • Takes order from customers • Assigns orders to the workers • Sets priorities Workers: • Prepare the drinks “standardize”
- 21. ETREE’s New Performance Objectives 0 1 2 3 4 5 6 7 8 9 Quality Speed Dependability Flexibility Innovation Cost
- 22. Investment No revenue is lost during the two days the craftsman is making the changes to the shop layout as this can be done during the six weeks of term holiday in February when the shop is closed anyway. 2 x refrigerators ¥ 1,000 1 x blender ¥ 440 1 x craftsman (16h) ¥ 672 Total ¥ 2,112
- 23. Benefits
- 24. Arrivals, Service and Waiting-Line Characteristics • Reneging customers • Unlimited waiting time • Queue discipline: first-in-first-out • Multiple-server queueing system • Single-phase system • Service time randomly distributed Server 1 Server 2 Arrivals Queue Depature after service
- 25. Effect of Our Solutions Normal Hour Rush Hour Old System New System Old System New System Arrivals/Hour 20 20 41 41 Average Service Time 2.725 1.68 2.725 1.68 Average Service Rate 22 35 22 35
- 26. Multiple-server Queuing Model (Model B: M/M/S) Normal Hour Rush Hour Old System New System Old System New System L - Average customers in the System 1.1458 0.6222 14.149 1.7832 Lq – Average customers in Queue 0.2367 0.0508 12.2854 0.6117 W – Average Time Spent in System (Total Waiting Time) 3.4375 1.8667 20.7059 2.6095 Wq – Average time Waiting in Line 0.7102 0.1524 17.9786 0.8952
- 27. Effect on Capacity and Revenue 22 drinks/hour 35 drinks/hour ¥15.5 x 13 = ¥201.50 more revenue per rush-hour 3 rush- hours/day ¥ 604.5 more revenue per day
- 28. Conclusion Benefits • 13 additional customers served in every rush-hour • ¥604.5 revenue more a day • Less customers leave the line without receiving service • Higher customer satisfaction because of reduced waiting time Cost • ¥ 2,112 Investment
- 29. References
- 30. References Chiarini, A. (2013). Lean Organization: From the Tools of the Toyota Production System to Lean Office. Milano: Springer. Heizer, J.H. & Render, B. (2014). Operations Management: Sustainability and Supply Chain Management (11th ed.). Boston: Pearson. Paton, S., Clegg, B., Hsuan, J., & Pilkington, A. (2011). Operations Management. Berkshire: McGraw-Hill Higher Education.
- 31. Appendix
- 33. Juice Activities’ Time Activities Time in secounds Takes paper out of the counter and reads the order 10 Goes to fridge to pick up fruit 30 Chops pears and pineapple 35 Uses the juice maker 30 Prepares the passion fruit 25 Clean blender 30 Places the fruit and juice in the blender and blend everything 45 Grabs a cup 10 Places it in the counter 10 TOTAL Activities Time in seconds Takes paper out of the counter and reads the order 10 Goes to fridge to pick up fruit 10 Uses the juice maker 30 Prepares the fruit 15 Clean blender 15 Places the fruit and juice in the blender and blend everything 45 Grabs a cup 5 Places it in the counter 10 TOTAL
- 34. Iced Coffee Activities Time Activities Time in secounds Takes paper out of the counter and reads the order 10 Makes espresso in the coffee machine 30 Grab a cup and put some ice inside 20 Drops the coffee in the ice 5 Go to the fridge and grabs the milk 20 Bring the milk to the table and add to the cup 10 Stir and places it on the counter 7 Activities Time in secounds Takes paper out of the counter and reads the order 10 Grab a cup and put some ice inside 30 While expresso is doing Drops the coffee in the ice 5 Go to the fridge and put the milk 7 Stir and places it on the counter 10
Editor's Notes
- To test if the layout and flow of employees is efficient we decided to analyse two different process: a juice order and an iced coffee order. When ordering a Juice, let’s say a Pineapple and Passion Fruit, the employee has to collect and cut the different fruits, put some of them in the juice maker then puts all together in the blender. Most of the times the employee has to clean the blender in the middle of the process of preparing an order due to the fact that there in only one blender available, which is not only used to make the juice. It can be seen in image x (process) the process of making the juice and in image y the path that the employee has to make inside.
- In addition to the objectives, we decided to apply the seven wastes by Taiichi Ohno in this analysis. Overproduction happens when it’s reduced an amount of products that exceeds the demand too soon or too late, which is exactly what happens. Consumers get their orders not in the time they want, but later than that and sometimes is jus In ETREE’s case employees waste time cleaning the blender, every time they want to use it making unnecessary tasks just because there is only one blender available both for juices, teas and other drinks. In addition, is can be verified that employees perform some maintenance in between orders that are completely unnecessary for the moment, so there is also an overprocessing waste. In this company case, their inventory is raw and semi-finished material will be incorporated in their’s beverages during orders. They keep most of the products in one big fridge that is nor organized in any manner, which takes them some time to look for the material needed in order to prepare the drink. Looking at the layout and the employees’ movements is noticeable the time they spend moving around to pick up the materials and products they need. There is a big amount of space behind the counter and a lack of order and cleanliness, making two employees when doing different tasks cross the same path. This information shows that clearly there is a motion waste in the drink’s preparation, While Waiting waste occurs when ETREE employees have to wait for the blender, juice maker and the coffee machine to finish, transportation waste occurs while moving the fruit from the fridge in one site of the balcony to the other end of it. Contrary of the previous types of waste, defectiveness is something that doesn’t occur with regularity in the coffee shop. They are known for doing the products with quality and with no defects since the beginning of the beverage’s preparation.
- With the information gathered, it is necessary to apply the six performance objectives (Paton, Hsuan &; Pilkington, 2011) to ETREE current situation in order to evaluate the coffee’s operations and identify their major problems. Quality is something perceived by the customers. In this case, we can analyze two different cases of quality: the product quality and service quality. With a few interviews to regular clients, it is clear to the majority that their products are tasteful and fresh. On the other hand, when asked about the service quality, there are a few problems. Regular clients spend too much time, usually 25 minutes during rush hour, waiting for their beverage. This makes them unhappy about the quality, making them sometimes not ordering anything due to the extended waiting time. EXPLAIN WAITING TIME This goes along with the next objective: speed. Since it takes too much time for making a drink, between 2-7 minutes, ETREE employees are not fast enough to handle all the request during a rush hour. Some activities and the time wasted in motion steals precious time that can be used to prepare another order and reduce waiting time for clients. Furthermore, it can be verified that the product is up to the clients’ expectations but not the waiting time. Although the product has a high quality it’s not ready when the customer wants and needs making the dependability objective not achieved. The company has some special beverages that are more customized and involve an extra effort. Having these drinks shows flexibility to their clients, it shows that they can prepare more elaborate beverages in order to satisfy their customers. Another aspect in flexibility is the ustomization of some added favlous or extra components in the drinks. However, these drinks are the least ordered, mainly because regular customers already know the average time that they have to wait Cost is referred as how customers perceived ETREE prices. The majority of customers find the prices accessible and price- quality of the products ratio excellent. In terms of cost for the Cafe, we are aware that such diversity of products, ones with special ingredients, make the company invest in some products and in training, that is not giving much return since only % of the orders are for that special category of drinks. The last objective that can be used to identify some problems is innovation. With this objective, we can recall the different types of drinks as some kind of innovation, however, apart from the register and the tickets with the orders, there isn't any kind of innovate process or technique used by the ETREE.