Lean Hospitality

Lean Hospitality

By Venanzio Figliolino

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Lean Hospitality

1. Introduction

The effects of the recent economic and financial crisis now has also reached the hospitality and tourism industry. The branch that until a few years ago was used to report continuous growth today has to deal with new challenges. For the great majority of the companies from these industries (especially hotels) nowadays turnover decreases and at the same time, costs increase. As a result, the profits are getting less or as the case may be posting losses becomes inevitable. There are several reasons underlying this phenomenon. First of all, the cost of labor, food and energy are still increasing with no end in sight. Secondly, also the tax burdens has a significant impact on a company’s financial situation. Lastly, also the effect that is widely known as “loss of the center (or middle)” plays an important role in the current development since many companies of the branch lose their core-client-group. In order to counteract these developments, working in an efficient and effective way and to focus on the complete fulfilment of the customer needs becomes even more important. In other

markets, especially in the industry, these challenges has been successfully faced with Lean Management. Unfortunately, Lean approaches are not very popular in the hospitality sector. In the existing literature there are only few and not well documented examples for the implementation of Lean Management up to now. The objective of this work is to investigate the application of traditional Lean Management methods in the hospitality area and to make a statement about their suitability and the possible potential for optimization.

2. State of research and application of Lean Management in different sectors

In the context of Lean Management, “Lean” essentially means flexible, agile or light. Lean is a bundle of principles, methods and actions for the effective and efficient configuration and examination of the whole supply chain. Goal of Lean Management is to create value without producing waste (“muda”). Value is any action or process that a customer would be willing to pay for. Lean tools therefore help to identify and to eliminate waste. As waste is eliminated, quality improves while production time and costs are reduced.

3. Examples of Lean Management in the hospitality and tourism sector

In the past, Lean Management has shown its applicability to the service or tertiary sector that includes also the hospitality and tourism area. Nonetheless, in todays literature there are only a few examples of companies that have implemented Lean Management in their organisational processes up to now. This may be caused by various factors. Surely, one of them is that Lean methods are used only partially in the single departments of an organization and therefore the overall approach is missing. Consequently, these applications are not attributed to Lean Management. Particularly worth mentioning is that when Lean Management is applied in the hospitality area this occurs mostly in combination with the management system Six Sigma.

Yukai Resort – Japan

The Yukai Resort in the famous Gero Onsen Hot spring area of Japan is part of a traditional Japanese hotel chain that performs Lean hotel operations in order to offer great value to their customers, to reduce costs and to remain competitive in the fierce hospitality industry. Thanks to Lean Management methods for the resort it is possible to offer to its guests the same standards and services as other hotels do, but for only half of the price regardless of high or low season. In the Yukai resort all resort duties are shared by all personnel. This has allowed the resort to operate with minimal staff and reduce overall costs while maintaining high quality. Dinner and breakfast are buffet style, which reduces staffing requirements. Staff are also active in Lean Management or Lean Kaizen efforts. The manager leads Kaizen circles weekly and monthly. The receptionists, in their free time will go to areas needing assistance, perhaps the kitchen or laundry [12].

Apex Hotels – UK

The laundry at Apex hotels is one of the hotels largest spends each month. The Lean team mapped out the end to end cycle involving the laundry process demonstrating how each morning the laundry service deliver clean linen to the hotel and take away the dirty linen to be laundered. Further analysis highlighted the non-value-adding activities of the process. By eliminating these tasks and restructuring processes, organisational structures and workforce planning, the Lean team was able to save about 5.728 man hours per annum. Applying Lean Methods not only lots of money can be saved, also the service for the guests and the working conditions for the hotel staff have improved significantly [13].

Towne Place Suites by Marriot Hotels – UK

One of the main goals of Lean Management is to maximize the customer benefit and at the same time to minimize the use of resources. This is what happened at the Town Place Suites by Marriot Hotels. After 5-days of workshop about the application and the effect of Lean principles, the customer and staff satisfaction has increased significantly. The key for this was:

  •  Nobody is negligible for the achievement of the goal

  •  The hotel’s staff is the first costumer

  •  More responsibility was assigned to employees.

    In addition, Marriot’s Hotel elaborated 12 principles to

    improve the customer service [14, 15].

    Starwood Hotels

    Starwood Hotels implemented Lean Six Sigma in 2001. As a result, the company realized some quick financial wins. Incremental revenue increased by 19% and overall spending’s by customers, while staying at the properties, increased by nearly 12% in the few months after implementation. By centralizing the spa reservations group by utilizing tools of Six Sigma, Starwood claimed a revenue increase from 91 to 141 million pounds. Food production, due to its similarities to the manufacturing industry has had success on case-by-case basis in using Lean and Six Sigma principles [16].

4. Identification of suitable Lean methods for the hospitality sector

Today exist a lot of different methods and tools in the field of Lean Management. Due to the fact that Lean was born in the ambit of production, also the majority of its tools come from this area. Through adaptation over time, today they are applicable also in other fields and are no longer subjected to single industries. Nonetheless, not every method would be equally suitable for every section and process. Therefore, an adequate evaluation procedure has to occur to get a ranking with the most suitable Lean methods for the hospitality area.

4.1. Criteria definition

In order to get indications of which Lean methods are the most suitable for the hospitality field, the definition and weighting of appropriate assessment criteria is unavoidable. In this validation model, four criteria were defined and differently weighted.

Criteria 1 – Effort and costs for implementation: In practice, the cost of investment and the use of resources should be as low as possible to ensure a very short amortisation period. Also in this validation model, this criteria plays an important role.

Criteria 2 – Time to visibility: Criterion two focalises the short term visibility of positive effects regarding the practical application of the methods. Project failure is often caused by missing results in short terms. Therefore, also this factor should be taken into account.

Criteria 3 – Impact on KPIs: KPIs have a big influence on decisions taken by a company’s management and help to decide on the continuation, extension, limitation or abortion of a project, investment or other strategic activities.

Criteria 4 – Sustainability of outcome and application: In comparison to criteria two, the focus is lead on the sustainable outcome and use of the method. One main goal of Lean- Thinking is the long-term benefit for the enterprise. Changes in the mindset of people cannot occur in few days, but it takes its time. Therefore, also this criteria should be affiliated in the validation model.

4.2. Evaluation of suitable Lean methods for the hospitality sector

As already mentioned the validation of the methods depend on their performance regarding the four defined assessment criteria. To ensure the adaptability of the validation model to the needs of various enterprises in the tourism industry, the single criteria can be weighted differently. In this research case the above-mentioned criteria where weighted together with the management of the case study hotel. To criterion three (Impact on KPIs) was given the biggest weight in order to recognize the fact that often KPIs are the main argument in taking strategic decisions.

 

Fig. 1. Analysis of the suitability of traditional Lean Management methods

As we can see from Fig. 1. not all of the listed tools and methods are equally suitable for their application in hospitality. We can observe, as expected, that methods from certain groups, for example Organisation and Staff, Material flow and Layout seem to be more suitable than others are.

Machinery and Equipment: Methods from this cluster show in comparison to others a low suitability, especially regarding criterion one and two. This may be caused by the high cost and the excessive planning impact for implementation.

Material flow and Layout: The methods from this class present a mixed picture. Some of them are performing very well others again are legging fare behind. The strengths of methods from this cluster lay in their effects on KPIs and sustainability.

Organisation and Staff: In this cluster, there are not big differences between the performances of the single methods. Throughout they are suitable very well for hospitality.

Production Planning and Control: These methods are particularly expensive in their implementation and suffer from the effort and time needed to get the desired result, although they are very sustainable in use and application.

Quality: Comparable with Material flow and Layout. Some of the methods are time-consuming and very complex in their implementation. In addition, their benefit is not always recognizable at first sight.

The results from this analysis and validation model show that the single cluster with their methods perform very different regarding the single criteria. On average, the performance of the methods satisfies the expectations. To verify these results in the next chapter the application of some of the methods was carried out in a real case study in a North-Italian hotel.

5. Case Study – Application of Lean methods in a premium family hotel

The enterprise from the case study represents one of the biggest and noblest family spa hotels worldwide. The hotel is open all year round, has a maximum capacity of 110 beds and employs about 120 persons.

5.1. Introduction of CIP-Workshops

CIP-Workshops (Continuous Improvement Process) are a very flexible Lean Management method and applicable in lots of different company areas. CIP-Workshops were implemented in different departments of the hotel. CIP-meetings were and are hold for example in the reception with front and back office, in the kitchen and in the service, as well as in the hotel spa and at the housekeeping.

Regularly hold workshops form the fundament for the CIP- method. The participants should arrive well prepared to the workshops. This could occur by on-site-visits, by analyzing process specific data or reports. Employees that are involved directly in the process usually have the most extensive knowledge and should explain the process to the rest of the participants at the beginning of the workshop. In addition, also a CIP-leader has to be named. For example, at the kitchen department, this was the junior chef. In sense of the Lean principles, it was important to assign him more responsibility, secondly it was a good opportunity to let him and his social capabilities grow and thirdly the group-dynamic is much more flexible if no one is afraid to speak one’s mind. The junior chef was also responsible to take care that the agreed tasks were realized until the next CIP-meeting.

In order to collect as much improvement suggestions as possible and to motivate the hotel staff to care about the CIP- method a reward system was developed (Ideas Management). A CIP-board was placed for everyone visible in the hotel (see Fig. 2). For the hotel staff it is possible to write their improvement ideas on prefabricated idea cards. This ideas are then rated by the CIP-jury and either endorsed or rejected. Another CIP-board shows the status and the results of the endorsed suggestions. At the end of the year, a lottery with the cards of all endorsed suggestions is hold out. The employee with the most suggestions therefore has the best chance to win a price (for example a holiday travel to New York).

Fig. 2. Realized CIP-Board for Idea Management

5.2. Application of Lean methods in warehouse management

The hotel in the case study has different warehouses and storages at different places and floors distributed over the whole building. This circumstance should in effects be positive for running the hotel because this makes it easier to place the different goods near the destination where they are needed. Due to the fact, that no one was responsible for the organization of the warehouse, this happened more or less randomly. Therefore, goods that were needed at the ground floor were placed often two or even three floors off. To avoid such inefficient situations in the future, the different warehouses and their contents were analyzed. The articles were clustered into different product families regarding their intended use and place of consumption.

To reduce time and distance for moving goods in and out of the warehouse and to improve the clarity, an ABC-analysis was done. The focus was primarily hold on A-products that were needed very often. These products were then placed as near as possible to the entrance of the warehouse (for example pasta). Applying this actions, not only the time to access has been reduced, but also a so called quarantine zone found its place in the storage.

To facilitate the warehousing even further and to reduce the time for purchasing goods a barcode-system was implemented. The barcodes were stuck to magnetic cards and placed in front of the relative article. Now purchasing and reordering the goods is much more easy than before. Provided with a scanner, it is possible to scan the codes placed in front of the articles and to insert then directly the desired quantity. Another positive fact is that now it is no longer necessary to fill out order sheets manually. By using the scanner, orders will be sent automatically to the purchase department.

5.3. Reduction of movement in Housekeeping

Housekeeping is one of the most important activities in a hotel. Firstly, because the majority of the guests attach high value to order and cleanliness, especially in the price segment of the case study hotel. Secondly, it is a major cost factor in a

company’s budget. To analyze the process and to identify non- value-adding activities, a video recording was done and the path traveled by the staff was set down with the help of a typical spaghetti diagram known from Lean material flow analysis (see Fig. 3). The advantage of the spaghetti diagram is that two types of waste, transportation and motion, can be visualized in a very easy way. At every floor were placed two trolleys. One for the clean laundry and one for the dirty one. The housekeeping staff was divided into single teams. One team consists of two or three people, responsible for different tasks. Task one is to free the rooms from dirty laundry and garbage and put them on the assigned trolley. Task two consists in taking the clean laundry from the second transport carrier and change the covers. Task three is about replacing the dirty towels with new ones and cleaning the room.

Fig. 3. Spaghetti diagram

The identified weakness in the process was that the two transport carriers were positioned at a fixed point in the corridor instead of moving them to the single cleaning locations because it was nearly impossible to move them. They were completely overloaded and therefore very unstable. To improve the process the two old transport carriers were substituted by new and ergonomically designed trolleys. Now every team had three transport carriers: one for the clean laundry, one for the material needed to clean the rooms and one for the auxiliary staff. Overloading the trolley now is prevented by charging only the amount of clean laundry and materials that are needed during one day. A packing list for every trolley was made and fixed on the carriers. Now the personnel can move the trolleys to the single rooms. In addition, also the accessibility to the different materials on the trolley has improved significantly. Due to the optimization of the routes and an improvement of the work management, savings in time and distance of about 30% were obtained. Therefore, not only the working conditions for the housekeeping staff, but also service to the customer has improved significantly.

 

© 2015 The Authors. Published by Elsevier B..V..This is an open access article under the CC BY-NC-ND license
(Phetetpr-:r//ecvrieawtivuencdoemr mreospnos.nosrigb/illiicteynosfesth/beyS-nccie-ndti/f4ic.0C/)o. mmittee of 48th CIRP Conference on MANUFACTURING SYSTEMS - CIRP CMS P20ee1r5-r.eview under responsibility of the scientific committee of 48th CIRP Conference on MANUFACTURING SYSTEMS - CIRP CMS 2015

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Lean Six Sigma Hospitality

Lean Six Sigma Hospitality


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