kaizen lean assessment audit

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Slide 1

Welcome to

AuditKAIZEN/ Lean AssessmentJune 24-27, 2013, Abuja

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KAIZEN and GEMBAKAIZEN are the trademarks of KAIZEN Institute

Agenda Management Priorities Highlights Some Metrics Way Forward Potential Benefits Q & A

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KAIZEN and GEMBAKAIZEN are the trademarks of KAIZEN Institute

Top Management Direction: OE Imperatives for BEImprove Customer Satisfaction: Room supplies; Food variety, quality & serviceUpgrade facility and guest amenities for improved guest perception of VFMReduce procurement lead time & delivered item costReduce % Operating Cost (Food, Energy, R&M)Improve employee morale and engagement in continuous improvement

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KAIZEN and GEMBAKAIZEN are the trademarks of KAIZEN Institute

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Management Priorities & ChallengesCustomer valueImproved customer experience, satisfactionReduced Room turnaround time /Smooth Guest check-inImproved Room Service delivery -quality performanceTimely availability of Room suppliesTimely approval, procurement & product availabilityService delivery for short-notice eventsShareholder/ Management valueReduced % Food costReduced Repairs & maintenance billLower overall operating costReduced energy billsReplacement of aged equipment & infrastructureEmployee engagement (issues)Improved safety & securityOwnership, flexibility, openness to new learningAvailability of busesTeam deployment and efficiencyOne voice in THTSLOther issuesManagement of traffic flow and parkingTraining & support for ITReduction in left behindsReal time guest feedback

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Employee Issues

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Employee Conversation #1: Kitchen, Supervisor, 9 years (7 years permanent)Problems in serving guestsToo many casuals: Unhappy that they are not permanent employees despite 7 years workShortage of pots: Most are aged, some shapes are not compatible with flat-plate induction-cookers. Often, the same pot has to be rewashed by the cookFrequent Equipment breakdowns: Induction cookersOften 6-7 items requested by guests are not available (ex: meat items, sausages up to 1 week; plantains )Food wastageWaste of expensive, imported food items is as high as 15% (chiefly due expiry date)Raw food wastage (local) is about 5%Personal/ Staff issuesReduced Medical care: This has been cut down by 50% for permanent staff, very de-motivating for most staffUnreliable Transport: Staff are often late, buses break down frequently. People are bundled into one bus and are fatigued (standing) by the time they arriveNo Career growth: No promotion, should have been a manager by now; there is favouritism in managementTraining: No opportunity for external training (highly valued); only people with senior contacts get the chance Increasing Workload: Team members who have left are not replacedAbout being a member of the Hilton Team

The experience gained here is really good, especially in the aspect of guests relations

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Employee Conversation #2: Kitchen, 3rd Commiss, 12 years (11 years permanent)Problems in serving guestsQuite often items that guest require are exhausted (vegetables)Food wastageThere is food wasted due many casuals and lack of skills in right first time cookingAlso, casuals - because they are not happy - do not care and waste food during cookingPersonal/ Staff issues4 years ago motivation was high, equipment was replaced, new uniforms and boots were providedNo opportunity for promotionMedical care is cut down to halfDental care is not included in medicalTransport if often late: reaches at my pick-up point at the time I am supposed to start workCasuals are generally unhappy at still being casuals (some for 18 years)

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Employee Conversation #3: F & B, Supervisor, 18 years (9 years permanent)Problems in serving guestsOften (appx 5% of the time) food that the customers order is not available.Not enough training is provided to the staff, and as a result the skill level varies from individual to individual. Personal/ Staff issuesReduced Medical care: 100% medical cover to was promised but not deliveredUnreliable Transport: Staff are often late, buses break down frequently. People are bundled into one bus and are fatigued (standing) by the time they arriveEmployees do not have a sense of belonging as their efforts sometimes go unrecognised. Increasing Workload: Team members who have left are not replacedPoor condition of mens changing room highlighted. About being a member of the Hilton Team

Experience has taught a lot about guest relations and making people happy.

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Highlights: Some overall observationsStrengths:Clarity of Top Management OE vision and directionStrong customer orientation and focusOpen, progressive management teamExcellent property, great potential

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

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KAIZEN and GEMBAKAIZEN are the trademarks of KAIZEN Institute

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Some Gemba Observations

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StoresDisorderly storage; difficult to retrieve material

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Kitchen and Laundry

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

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Operating Cost Break UpOperating Cost Break-Up Operating Cost Break-Up as a % of revenue

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Cost Break Up - UtilitiesEnergy Cost Break-Up

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F&B Revenue Break Up Food Revenue Break-Up. 35% - Food cost as a % of revenueBeverage Revenue Break-Up. 19.5% - Beverage cost as a % of revenue

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Food and Beverage Daily CoversHigh 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)

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Customer ComplaintsSource of customer complaintsBTQ/Events customer complaints

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Customer ComplaintsBusiness centre complaintsLaundry complaintsHousekeeping complaints

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Guest Waiting/ Room Turnaround Time (Room TAT)

18 data points from front officeAverage05:12Median05:02Min00:41Max11:47

Large variation observedRoom TAT for Last guest check-out time Next guest check-in time for a specific room

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KAIZEN and GEMBAKAIZEN are the trademarks of KAIZEN Institute

Inventory and Consumption Analysis - FoodNGNTOTAL CONSUMPTION (2012)800,539,217AVE DAILY CONSUMPTION2,193,258INVENTORY ON HAND (AS ON MAY 31ST 2013)41,036,811INVENTORY COVER (DAYS) AT 2012 CONSUMPTION RATE19 Days

No.of ItemsInventory Value (NGN)NON-MOVING ITEMSItems with no consumption in Jan-Dec 20125510249582%SLOW MOVING ITEMSItems with stock of >365 Days25403893810%Items with stock between 100 to 365 Days4123582566%Items with stock between 30 to 100 Days821681876441%MOVING STOCKItems with stock between 7 to 30 Days771454884435%Items with stock between 2 to 7 Days1821478285%Items with stock between 1 to 2 Days161972330%Items with no inventory in stock12300%Total Items43741,134,821

57%

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KAIZEN and GEMBAKAIZEN are the trademarks of KAIZEN Institute

Inventory and Consumption Analysis General StoreTOTAL CONSUMPTION (MAY 2013) NGN 28,705,807AVE DAILY DONSUMPTION (MAY 2013) NGN925,993INVENTORY ON HAND (AS ON MAY 31st 2013) NGN 130,757,095INVENTORY COVER (DAYS) AT MAY 2013 CONSUMPTION RATE141 Days

No. of ItemsInventory Value (NGN)% of Total Inv ValueSLOW-MOVING ITEMSItems in stock, but no demand in May 201323244,642,82634%Items with stock > 365 Days4333,628,69826%Items with stock between 100 to 365 Days8227,878,18621%Items with stock between 30 to 100 Days7120,408,98916%MOVING ITEMSItems with stock between 7 to 30 Days334,063,5183%Items with stock between 2 to 7 Days8134,6960%No Inventory311820%Total500130,757,095

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Technical Services

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Ageing InfrastructureSURVEY OF AREAS & TECHNICAL INSTALLATIONS: A ITEMS ARE THOSE THAT HAVE EXCEEDED THEIR EXPECTED LIFE BY HILTON / INDUSTRY STANDARDSAREAA PRIORITY ITEMS SAFETY EQUIPMENT & SYSTEM 9SECURITY: CCTV TV, MUSIC SYSTEM20ELECTRICAL SYSTEM & EQUIPMENTROOF TOP13EXECUTIVE FLOOR 7GUEST ROOMS / CORRODOR 9FRONT OF HOUSE (Health Centre) 1PUBLIC AREAS 8F&B OUTLETS12BACK OF HOUSE 5LANDSCAPE & FAADE