Download - Kaizen Lean Assessment Audit

1KAIZEN and GEMBAKAIZEN

are the trademarks of KAIZEN Institute

Welcome to

Audit

KAIZEN®/ Lean Assessment

June 24-27, 2013, Abuja



Agenda

1. Management Priorities2. Highlights3. Some Metrics4. Way Forward5. Potential Benefits6. Q & A



Top Management Direction: OE Imperatives for BE

1. Improve Customer Satisfaction: Room supplies; Food

variety, quality & service

2. Upgrade facility and guest amenities for improved guest

perception of VFM

3. Reduce procurement lead time & delivered item cost

4. Reduce % Operating Cost (Food, Energy, R&M)

5. Improve employee morale and engagement in

continuous improvement



Management Priorities & Challenges

Customer value• Improved customer experience, satisfaction• Reduced Room turnaround time /Smooth Guest check-in• Improved Room Service delivery -quality performance• Timely availability of Room supplies• Timely approval, procurement & product availability• Service delivery for short-notice events

Shareholder/ Management value• Reduced % Food cost• Reduced Repairs & maintenance bill• Lower overall operating cost• Reduced energy bills• Replacement of aged equipment & infrastructure

Employee engagement (issues)• Improved safety & security• Ownership, flexibility, openness to new learning• Availability of buses• Team deployment and efficiency• “One voice” in THTSL

Other issues• Management of traffic flow and parking• Training & support for IT• Reduction in “left behinds”• Real time guest feedback



Highlights: Some overall observations

Strengths:1. Clarity of Top Management OE vision and direction2. Strong customer orientation and focus3. Open, progressive management team4. Excellent property, great potential

Challenges & opportunities:• Lack of “modern” guest amenities (wi-fi, TV, phone ..)• Need for room/ hotel infrastructure upgrade• Employee morale needs urgent address



Some Gemba Observations



Stores

Disorderly storage; difficult to retrieve material



Kitchen and Laundry

Cluttered Workspace; difficult to maintain FIFO (First-in First-out) in cold-store



Operating Cost Break Up

Operating Cost Break-Up

Operating Cost Break-Up as a % of revenue

27%

24%19%

11%

10%

8%

2%

PAYROLL COSTOTHER EXPENSESINSURANCE, MGMT FEE AND OTHERSFOOD COSTREPAIR AND MAINTENANCE COSTENERGY COSTBEVERAGE COST

16%

14%11%

6%

6%

5%

1%

OTHER EXPENSESINSURANCE, MGMT FEE AND OTHERSFOOD COSTREPAIR AND MAINTENANCE COSTENERGY COSTBEVERAGE COST



Cost Break Up - Utilities

Energy Cost Break-Up

32%

63%

6%

FUELELECTRICITYWATER



F&B Revenue Break Up

Food Revenue Break-Up.

35% - Food cost as a % of revenue

15%

27%58%

1% 0% 3%

BREAKFAST FOOD REVENUELUNCH FOOD REVENUEDINNER FOOD REVENUESUPPER REVENUECOFFEE BREAKS REVENUEOTHER FOOD REVENUE

Beverage Revenue Break-Up.

19.5% - Beverage cost as a % of revenue

14%

11%

26%

50%

BEER REVENUEWINE REVENUELIQUOR REVENUEOTHER BEVERAGE REVENUE



Food and Beverage – Daily Covers

0

500

1000

1500

2000

2500

3000

3500

4000

4500

5000

Total

Dinner

Lunch

High day-to-day variation in Lunch-Dinner covers (42 data points)

Note: This trend needs to be viewed with Actual Lead Time for “short notice” banquets/ events (data recording needs to be initiated)



Customer Complaints

BQT/Events Business Center Laundry Housekeeping Engineering Concierge Room Service0.00%

5.00%

10.00%

15.00%

20.00%

25.00%

30.00%

35.00%

40.00%

45.00%

38.19%

28.95%

11.01%7.28% 6.57%

4.80% 3.20%

Internet X Luggage Down Safe Witness Internet Cable Chair Delivery Chair Removal 0.00%

5.00%

10.00%

15.00%

20.00%

25.00%

30.00%

35.00%

40.00%

45.00%

50.00%45.12%

21.40%18.60%

11.16%

1.86% 1.86%

Source of customer complaints

BTQ/Events customer complaints



Customer Complaints

Internet Down/Slow Internet Cable0.00%

10.00%

20.00%

30.00%

40.00%

50.00%

60.00%

70.00%

80.00%71.17%

28.83%

0.00%5.00%

10.00%15.00%20.00%25.00%30.00%35.00%40.00% 35.48% 33.87%

16.13%

9.68%4.84%

Business centre complaints

Laundry complaints

Amenities Room Make Up 0%

10%

20%

30%

40%

50%

60%

70%

80%

Housekeeping complaints



Guest Waiting/ Room Turnaround Time (Room TAT)

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 1821:36

0:00

2:24

4:48

7:12

9:36

12:00

14:24

Chart Title

18 data points from front office Average 05:12Median 05:02

Min 00:41

Max 11:47Large variation observed

Room TAT for Last guest check-out time Next guest check-in time for a specific room



Inventory and Consumption Analysis - Food

NGNTOTAL CONSUMPTION (2012) 800,539,217AVE DAILY CONSUMPTION 2,193,258INVENTORY ON HAND (AS ON MAY 31ST 2013) 41,036,811INVENTORY COVER (DAYS) AT 2012 CONSUMPTION RATE 19 Days

No.of ItemsInventory Value

(NGN)

NON-MOVING ITEMS

Items with no consumption in Jan-Dec 2012 55 1024958 2%

SLOW MOVING ITEMS

Items with stock of >365 Days 25 4038938 10%

Items with stock between 100 to 365 Days 41 2358256 6%


MOVING STOCK




Items with no inventory in stock 123 0 0%

Total Items 437 41,134,821

57%



Inventory and Consumption Analysis – General Store

TOTAL CONSUMPTION (MAY 2013) NGN 28,705,807

AVE DAILY DONSUMPTION (MAY 2013) NGN 925,993

INVENTORY ON HAND (AS ON MAY 31st 2013) NGN 130,757,095INVENTORY COVER (DAYS) AT MAY 2013 CONSUMPTION RATE

141 Days

No. of Items

Inventory Value (NGN)

% of Total Inv Value

SLOW-MOVING ITEMS

Items in stock, but no demand in May 2013 232 44,642,826 34%

Items with stock > 365 Days 43 33,628,698 26%

Items with stock between 100 to 365 Days 82 27,878,186 21%


MOVING ITEMS


Items with stock between 2 to 7 Days 8 134,696 0%

No Inventory 31 182 0%

Total 500 130,757,095



Technical Services



“Ageing Infrastructure”

SURVEY OF AREAS & TECHNICAL INSTALLATIONS: ‘A’ ITEMS ARE THOSE THAT HAVE EXCEEDED THEIR EXPECTED LIFE BY HILTON / INDUSTRY STANDARDS

AREA ‘A’ PRIORITY ITEMS 1. SAFETY EQUIPMENT & SYSTEM 92. SECURITY: CCTV – TV, MUSIC SYSTEM 203. ELECTRICAL SYSTEM & EQUIPMENT4. ROOF TOP 135. EXECUTIVE FLOOR 76. GUEST ROOMS / CORRODOR 97. FRONT OF HOUSE (Health Centre) 18. PUBLIC AREAS 89. F&B OUTLETS 1210. BACK OF HOUSE 511. LANDSCAPE & FAÇADE 9

Source: Study conducted by Chief Engineer



Hotel: Critical Equipment (“Show Stoppers”)

1. GENERATORS2. CHILLERS3. STEAM BOILER / WATER CALORIFIER4. MAIN WATER SUPPLY PUMP5. FIRE PUMPS6. WATER TREATMENT UNIT7. FUEL SUPPLY PUMPS8. BUSES

9. FUEL / GAS STORAGE TANKS10.RELATED PIPING (etc) INSTALLATIONS



LAUNDRY

1. DRY CLEANING EQUIPMENT2. WASHING MACHINES3. FLAT BED DRYER

Laundry, Kitchen: Critical Equipment

KITCHEN(Data being listed by team)



Buses: Maintenance Expense Jan-May 2013 and Forward Estimate

Note: Excludes 5 new buses

No. BUS NUMBER Exp: Jan-May 2013(NGN)

% of Total Jan-May Exp

STATUS Est Repair Cost(NGN)

1 329 (MBO1721) 3,353,854 19.0

2 458 (MBO 1418) 2,564,260 14.5 . UNDER REPAIR

3 310 (MBO1721) 2,480,284 14.1 . UNDER REPAIR

4

911 (MBO1721) 2,162,660 12.3 . Needs New Engine. Body work

4,800,000

5 922 (MBO1721) 1,883,920 10.7

6 351 (MBO1721) 1,779,715 10.1

7 685 (MBO 1418) 1,075,894 6.1

8 424 (MBO1721) 975,955 5.5

9 459 (MBO 1418) 867,686 4.9 . Needs New Engine 4,200,000

10 352 (MBO1721) 257,250 1.5 . Needs New Engine 4,200,000

11 456 (MBO 1418) 232,455 1.3 . ON SCRAP LIST

12 687 (MBO 1418) Out of Operation . Needs New Engine 4,200,000

TOTAL 17,633,931 17,400,000



Key Initiatives – Phase 1

• Implement 5S in Stores, Kitchen, Laundry, Utilities and Parking

• Streamline flow of Purchasing & Procurement process

• Reduce Room Turn-around Time

• Improve Delivery-Quality of Short-notice Events

• Initiate TPM through Autonomous Maintenance of critical equipment in Technical Service, Kitchen, Laundry

• Reduce Energy Consumption

• Reduce F&B Costs as a percentage of F&B Revenue

• Reduce inventory of slow moving items



Roadmap & Benefits



TENTATIVE ROADMAP – PHASE 1 (1/3)

START UP ACTIVITIES

INITIATIVES AREA MEANS OUTCOME Month 1

Month 2

Month 3

Month 4

Month 5

Month 6

Month 7

Month 8

Month 9

Month 10

Month 11

Month 12

Month 13

Month 14

Month 15

Month 16

Month 17

Month 18

1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4

START UP

TOP & SENIOR MANAGEMENT CONCLAVE

THTSL, Abuja Top/ Sr Mgmt Conclave

Alignment and role clarity of key stakeholders in continual improvement journey

1

ESTABLISH OE INFRASTRUCTURE THTSL, Abuja

. Kaizen Coordinator

. Kaizen Promotion Office

ESTABLISH HOTEL STEERING COMMITTEE THTSL, Abuja

Senior Management

+KPO

Top/Sr Mgr Sponsoship established for direction, support & review of improvement activities

KAIZEN BASICS TRAINING THTSL, Abuja

Class Room + On the job

taining

All participants those who will be part of execution team

18 Month engagement, consisting of:1. Start-up Activities2. Transformation Actions (Implementation in Gemba)3. Actions to Sustain improvements




TRANSFORMATION ACTIONS


Month 2

Month 3

Month 4

Month 5

Month 6

Month 7

Month 8

Month 9

Month 10

Month 11

Month 12

Month 13

Month 14

Month 15

Month 16

Month 17

Month 18

1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4

TRANSFORM (Theme)

REDUCE PROCUREMENT LEAD TIME

GENERAL STORES:- Approval process- Order to Delivery process

TFM Tool Box . Current State Map . Future State Map. Specific projects

IMPROVE STORE ITEMS AVAILABILITY

. Food store

. Gen store

. Room supplies

Inventory Management

(PFEP). Reduced stock outs. Controlled nventory

IMPROVE WORKPLACE

. Stores: Gen, Food, Wine. Kitchen, Laundry. Utilities, Car Parking

5S. Reduced Search time. Space freed up. Improved productivity

IMPROVE MACHINE UTILISATION

. Kitchen

. Laundry

. (Utilities)

Autonomous Maintenance (Steps 1 & 2)

. Reduced downtime

. Reduce Maintenance cost

REDUCE ENERGY CONSUMPTION . Hotel LOSS TREE

ANALYSIS . Reduced Energy Cost

REDUCE ROOM TURNAROUND TIME . Housekeeping TFM Toolbox . Reduced Customer Wait

time

REDUCE FOOD COST AS % OF FOOD REV . Food LOSS TREE

ANALYSIS . Reduced Food Wastage




ACTIONS TO SUSTAIN CONTINUOUS IMPROVEMENT


Month 2

Month 3

Month 4

Month 5

Month 6

Month 7

Month 8

Month 9

Month 10

Month 11

Month 12

Month 13

Month 14

Month 15

Month 16

Month 17

Month 18

1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4

SUSTAIN

INITIATE DAILY MANAGEMENT

ALL OPERATING AREAS NGK

. Consistancy of results

. Quick Response to Problems. Daily Accountability

Certified Kaizen Practitioner ALL FUNCTIONS CKP Training . 25 Kaizen Trained Internal

Resources

PHASE I PROGRESS REVIEW KI + Co Kaizen Audit . Phase II Roadmap

KAIZEN PROMOTION KI + Co. Setup KPO. Setup Obeya Room

. Communication

. R&R



Potential Benefits (First estimates)

No. Particulars Current State Future State/Benefits Annualised Savings (Est)

1 5S - Workplace Organisation Cluttered . Reduced Search Time. Improved Productivity. Space Freed Up

2 Purchase & Procurement process flow improvement

(TBD) . Reduced Lead Time. Improved item availability. Lower Inventory

3 Food & General Stores Inventory Management

31-May-13 Stock ~ NGN 170,000,000

. 35% Reduction in Wrkg Cap

. Freshness: First-in, First-out

. Space released

. Improved productivity

$55,000

4 Autonomous Maintenanace (Steps 1&2)

High Breakdowns, Low Utilisation

. Improved Equipment Availability. 10% cost reduction

$472,000

5 Spares Inventory Management Non-Availability Of Critical Spares

. Quicker Mean Time to Repair (MTTR)

6 Improve Service Response Time Low Customer Sat . Repeat Customers

7 Reduce Energy Costs (% of overall Rev)

5% of Revenue . 5% lower cost $195,000

8 Reduce F&B Costs (% of F&B Rev) Food:35.5% of Food RevBeverage:19.5% of Bev Rev

F:33.3% & B:18.9% $350,000

9 Steering Committee and KPO Sponsorship, Direction and Support10 Obeya Room KPI Management and Control

11 Certified Kaizen Practitioner Internal Expertise for KaizenSavings: ~ US$1,072,000

PROCESS & SYSTEM IMPROVEMENTS

SUSTENANCE & INTERNAL CAPABILITY BUILDING

Download - Kaizen Lean Assessment Audit

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