Lean operations
Instructions:
This assignment consists of 3 parts. Part 1 describes a retail grocery chain that has implemented lean operations. Part 2 describes a dental office that has implemented lean operations. Part 3? You’ll just have to read it.
Common goals, among others, of lean operations are:
- Flexibility
- Reduced inventory
- Time efficiency
- Reduction in direct costs
For Parts 1 and 2, describe how each SPECIFICALLY achieves each of the above four goals. Some of your responses may contribute to more than one goal. Be specific and be thorough. Do not generalize. (Bullets and numbered lists would be great.) Use the terminology in your text. For example, in the dental office case: Instead of saying “they used green and red tags to indicate that additional manpower was needed to stay on track” you should say a ‘kanban system was used to signal addition needed manpower at that station.
Part 1
Byco opened its first retail store in Denmark in 1938. 75 years later, the company is a reputable retailer with more than 8,000 stores in Europe, Scandinavia and the U.S. During the past 20 years, Byco’s strategy has been to provide products that are anywhere from 10% to 25% cheaper than its competitors with no compromise in quality.
Employees at Byco undergo extensive employee training on a continuing basis which enables most employees to be very knowledgeable about all departments and all aspects of store operations. Wages are significantly higher and turnover is significantly less than the industry standard.
Byco has established win-win relationships with its suppliers. The company continuously improves its product offering by hiring highly paid and experienced buyers. Byco carries a limited number of varieties of its products, relative to its competitors; however, their products are high quality and exceed standards set by consumer legislation. Byco’s suppliers deliver products in display-ready packages. Each store has a large loading platform where forklifts transport incoming products directly to the sales floor.
All stores are open from 9am to 7pm, Monday – Saturday and 11am to 5pm on Sunday. Grocery carts are located at the entrance to the store. Customers pay a deposit for use of a cart by dropping 50¢ into an automated till. The 50¢ is returned to the customer when the customer returns the cart to a locked position in the queue of grocery carts. At any point in time, a store manager can determine the approximate number of shoppers in the store by getting a read-out of the number of in-use carts.
Customers queue up in a single line to be checked out by the next available cashier. Products display multiple bar codes. After all items are scanned, they are returned to the shopper’s cart. The shopper then proceeds to a bagging station where the shopper bags his/her products. The shopper can either provide his/her own bags or purchase large recyclable bags at the bagging station for $1 each.
Byco’s major competitors have profit margins of about 1.7%. Byco has managed to achieve about a 2% profit margin while passing on a 10%-25% cost savings to its customers.
Part 2
Read Dentist Drills Down to the Root Causes of Office Waste (Links to an external site.).
Part 3
We’ve all been in a situation where we’ve had to deal with inefficiency or waste that is costly, maddening or both. It may have been at work or dealing with a company as a customer. Describe the situation, point out how it fails at least one “lean operations” characteristic and what you’d do to remedy the situation. No more than 1⁄2 page please.
Example:At a recent visit to a facility that was to perform a stress test, the check-in queue was very long, leading to an excessive wait for those of us wanting to check in. I noticed another person behind the desk and asked if she could open up the other station to check in patients. She responded “I check patients out.” Not a single person was waiting to be checked out. Cross training of workers (flexibility) could have greatly eliminated the non-value added activity of customer wait time.
Solution.
Lean Management
Lean production is a method of production that was invented to help reduce wastes and maximize efficiency. Today, the method has been applied in many different businesses and companies, in different industries. Some of the major aims of lean production include flexibility, reduction in inventory, time efficiency and reduction in direct costs. This essay discuses some of the ways different organizations achieve these goals, and how some fail to achieve them.
Part 1
At Byco retail shop, flexibility was obtained by extensively training all employees on a continuous basis. The employees were trained on all aspects of store operations and to be knowledgeable of all departments. By doing this, all the employees could help in any department and could handle any store operation when the need arises. This meant that the store could not be inconvenienced by the absence of one employee since any employee could take his or her place.
Inventory is defined as stocking more than what is required by a pull system that is controlled precisely (Marchwinsky, 2007). To reduce inventory, Byco only stocks a limited number of varieties of its products, which are of excellent quality. This enables them to have just enough inventory to satisfy their customer’s needs.
Time efficiency was achieved by Byco by:
- Establishing win-win relationships with their suppliers such that the suppliers deliver products in display-ready packages. This helps in eliminating the time needed to repackage the products.
- Equipping each store with forklifts that transport the products that are being brought in directly to the sales floor. This also reduces the time between the reception of the products and the sale to customers.
- Having customers line up and wait for the next available cashier and having many cashiers at the same time was a good way of ensuring that the customer waiting times are reduced.
Direct costs were reduced by Byco through different ways like:
- Having the suppliers deliver the products in display-ready packages helped in eliminate the direct cost of repackaging.
- Having an automated till to help manage the carts instead of employing someone to help in handling the movement of the carts helped in eliminating the cost in terms of the salaries that could have been issued out.
- Having the shoppers provide their own bags or buy a recyclable bag helped in minimize direct costs both for the company and the customer.
Part Two
Dr. Sami Bahri performed very excellently in achieving all the goals of lean management. To achieve flexibility, he trained all his dentists, dentist assistants, hygienists, front office employees and flow managers on the dental hospital operations. This helped him eliminate the issues like having to treat patients for free because his sole receptionist was absent. In his new system, he ensured that even the assistant dentist could receive in-bound phone calls and even the flow managers could clean the cubicles.
To achieve time efficiency, Bahri ensured that all the operations could be done in one room. Cleaning, filling and all the other treatment activities could be done on one desk, eliminating the time taken to move from one department to another. Moving the inventories from the store room to the supermarkets next to the cubicles helped minimize the time spent moving from the store to the cubicles and back with the supplies. This also helped in minimizing the time spent waiting for the supplies by the dentists. Employing a part-time employee to do the replenishing of the supplies helped in reducing the movement times for the dentists, hygienists and the dentist assistants (Marchwinsky, 2007).
Another way in which time efficiency was reduced was by moving the operations such as the explanation of insurance policies and collection of payments into the cubicles. Purchasing computers and digital scanners also helped reduce the time needed for such activities. Having printers and computers in every cubicle helped in ensuring that there was no need to backlog to the reception desk for patient information, insurance details and payment methods, which is a significant reduction in time. This also ensured that the patients can leave without needing to stop at the front desk. The use of the kanban system also helped in ensuring that each dentist was on schedule and was available to serve the next patient.
Reducing inventory was at first a challenge for Bahri, but after analysing the equipments they often used, he realized that 90% of the times, they only needed certain types of tools for all the operations. They then set up the cassettes with the basic tools and put the other tools and equipments that were only used 10% of the times close by for when they were needed. The supermarkets helped in ensuring that only the needed supplies were ordered for, which helped in minimizing the probability of supplies expiring. Completing all treatments in one go helped in minimizing unnecessary follow ups and rescheduling (Marchwinsky, 2007).
Direct costs were most effectively reduced by training all employees on the operations of the dental centre and minimizing the takt time. This helped in minimizing the need to hire extra dentists and hygienists to help in completing the patient requests. The purchase of a computerized dental milling machine was a great move to eliminating the direct cost of sending dental impressions to external labs. The dental centre could make their own crowns for filling operations within 30 minutes (Marchwinsky, 2007).
Part Three
When my credit card was stolen, I visited a bank with the intention of checking my balance. I knew I could get the information from the receptionist, so I joined a long line leading to the receptionist. After about one hour, I finally got to her and asked if she could help me know my bank balance if I didn’t have my credit card. She told me that she didn’t deal with balance enquiries and advised me to go to the Enquiries department.
Once again, I had to line up and wait for my turn to place my enquiry. After another half an hour, I reached the officer in charge and asked him to assist me check my balance. He asked for my credit card and I explained that it had been stolen. The officer again referred me to the Accounts Opening department where, after lining up a third time, only my signature was verified and I was sent to the Bank Manager, who also verified my signature before telling me my bank balance.
It took me about
four hours to just know my bank balance, something I could have done within a
half an hour. To reduce the unnecessary movements and time wastage, it could
have been better if all bank employees were given training and clearance to
perform the basic bank operations including balance checking to help minimize
the unnecessary waiting times and movements (Miina, 2012).
References
Miina, A. (2012). Lean Problem: Why Conpanies Fail with Lean Implementation?. Management, 2(5), 232-250. http://dx.doi.org/10.5923/j.mm.20120205.12
Marchwinsky, C. (2007). Dentist Drills Down to the Root Cause of Office Waste. Lean Enterprise Institute. Available at http://www.lean.org/common/display/?o=807