Applying Lean Principles to Small Businesses

by Dan Stoelb

Special points of interest:

  • This experience reaffirmed that any process, no matter what it is or how small, can realize significant benefits from implementing lean.

  • Most people do not think that there is opportunity for significant improvement in a pizza operation- it is small and nothing complicated seems to take place. WRONG!!!

No, this isn't a story on how to make a pizza that has fewer calories or is fat-free. Rather, it is a story of how even a small "ma and pa" shop can effectively analyze its marketing; competitors; suppliers and process layout and by applying lean manufacturing concepts and tools, see a significant improvement in their bottom-line results.

This story reaffirms that lean manufacturing, as a strategy, philosophy; and as a tool, can take any process and with little or minimal cost, see dramatic improvements in its ability to perform and increase its competitiveness.

The story begins one day as I was sitting inside a corner service station, eating pizza from a pizza and chicken business located inside the service station. From my position, I could observe the actions inside both the pizza and chicken businesses (owned by the same person but operated as two separate businesses).

The pizza operation was located in an area approximately 15 feet by 20 feet. The equipment inside the pizza operation consisted of 3 ovens stacked vertically on top of each other and occupied an area about 3 feet by 5 feet, physically located in the middle of the room. To the left of the ovens was a cooler tray/table where all the ingredients that were for immediate use in making pizzas and sandwiches were kept cool. This cooler was slightly elevated about 6" above the work surface and was also slightly slanted to make it easier to take ingredients out of the separate tubs. The worktable where the pizzas were made on was about 30 inches wide by 6 feet long. To the left of this cooler table was a single cooler standing about 7 feet high, where sodas and containers of more commonly used ingredients that required refrigeration were kept.

There was a small 30 inch by 3 foot work table located to the right of the take-off side of the ovens where the cooked pizzas were taken manually from the oven, put into a pre-folded box and cut into slices. When the complete order was ready, the person working on the table or the person taking orders would let the deliverers know that an order was ready for delivery. The person next in line for delivering an order would take the food and place it in a special insulated delivery "bag to keep the food hot. A small inventory of pre-folded boxes (14 and 16 inch pizza boxes which were most common size pizza sold) were kept and stored on some simple metal shelving above the cooler table and the other worktable.

At the time I was observing, it was about 12:30 p.m., one of their high customer traffic times. I sat and ate my pizza, intrigued by the flurry of hectic activity that was going on in that small space. There were 6 people working:

  • 1 person was making the pizza's;

  • 2 delivery drivers were standing by waiting for deliveries to be ready.

  • 1 clerk took care of the cash register and sales, and

  • 1 person answering calls and faxed and writing tickets for food that was ordered.

  • 1 person was answering the phone, filling out the order forms, figuring prices and taxes, and when not busy, being a general helper.

I was amazed that anything was getting done in that small space.

The layout of the equipment with the ovens in the middle of the room clearly limited the movement of people and restricted where supplies that were needed to be kept on hand could to be located. People bumped into each other constantly. The person taking the orders and writing out the tickets would often put one hand over one of her ears so that she could hear better. The people working in the area spoke in a loud voice, often joking and laughing at a level that was clearing distracting to the order writer and heaven knows what the customer on the line was thinking.

The person making the pizzas did not measure anything and I wondered how he could insure consistency in weight, amount of ingredients used, etc.

When ingredients needed replenishing, it required someone to be told by the person making the pizzas that he needed "so and so". This person then walked approximately 50 feet, that took him on a course through the chicken place (which we will discuss a little later on) to a storage freezer area where extra boxes, frozen foods and ingredients were kept. This person would sometimes walk back and forth 3-4 times to get materials while the person needing the materials would often wait. Most of the pizza ingredients were kept in medium size boxes or 1-gallon cans. These required the person to return with the ingredient, open the box or can, and then put the ingredient in the proper cooler tray position.

I observed this operation for about 45 minutes. When the traffic died down and I went up to the counter and asked if the manager/owner was there. He was and I introduced myself. I asked him if he had a few minutes to sit and talk and we went and sat at one of the area dining tables.

I told him about my observations and what I do for a living. I asked him if he was happy with the way the pizza business was operating and had he ever thought about how the business could be improved.

He stated that that overall his business was doing well. He had owned the business now for about a year, and had worked for the previous owner for 2 1/2 years before purchasing the business. He had some occasional delivery problems; training problems; turnover; and of course, the pizza business competition was tough. But overall he was satisfied with business operations.

I asked him if there was one thing that he could improve with his current operations, what would that one thing be? He thought for a few minutes and responded, " I would like to see it more organized and people helping out before they are asked to. I would also like to see all of my drivers more "energetic" and do deliveries more quickly".

I told him that there was great opportunity to improve those aspects of his business and others things as well. I told him that I was willing to help him and would be willing to spend a few days working in the pizza area to get a better understanding of everything. I also requested to be a deliverer so that I could get first-hand experience with delivery.

We worked out an arrangement for my "pizza experience" and agreed that he would owe me nothing if he wasn't satisfied with my recommendations and he didn't realize at least a 10% improvement in productivity, measured by efficiency; reduced time from customer order to delivery; and reduction of waste. He agreed.

If you are like me and most other people, the process of pizza making seems pretty straightforward and simple. I was told by the employees that one of the "nice things" about making pizza was it was virtually impossible to "screw up". Pizza making consists of putting on a mixture of ingredients on a pie crust. If you messed up, no one usually noticed.

But as is the case in most situations, even the simplest of tasks are often more complex than it seems at first. The following are the "waste" that I observed during my first few days as a "professional pizza employee":

  • Layout of the equipment, storage areas and flow was very inefficient. To much back-tracking, double-backing, and having to do extra walking and movement to get products, ingredients and other items that were not stored close to the work station where it was used. No 5S.

  • There was no exact science of measuring ingredients. Each person who made pizzas (the owner normally made the pizzas and sandwiches but when he wasn't there, people "filled in" on a rotating basis.) This resulted in great variance in the amount of ingredients that were put on each pizza or sandwich. At times there would be less cheese and meat, at others times, excess cheese, meat and other ingredients. The decision making process was up to the individual's discretion, based upon a brief training session by the owner.

  • The area and floor were not kept clean. Especially during the busy periods of the day, it wasn't uncommon to have the floor look like a food fight had taken place, especially by the pizza making station. No one seemed to think about keeping the floor clean.

  • The trash at times would overflow and wouldn't be taken out unless the owner asked or even then, not till the end of the day.

  • Storage space was located too far away - especially the frozen or refrigerated items. Traveling back and forth 50-60 feet one way was a transportation waste. But because the working space was limited, this waste was accepted.

  • The order taking work station was in a constant state of disorder and made it difficult for the person taking the order to have room to write, use the calculator and keep things organized.

  • There was little effective training given to a new person starting. Instructions were given quickly and it appeared that you were shown one time and expected to know how to do the task properly.

  • There were no standardized work methods or specific policies or procedures. This lent toward people doing things "their way" which often was not the most effective or was very wasteful.

  • Deliverers were not always kept productively busy when waiting for an order to be completed. Some would take it upon themselves to help out where needed. Others just stood around or went out to the booth area and smoked until an order came up.

  • Little proper planning and coordination was done. Instead of getting boxes, etc ready before the pizza came out, people would wait until the pizza was done, then look at the ticket, find the order, and then box it. Very inefficient. No Set Reduction techniques were used.

  • When on deliveries, by the end of my first day, the owner commented to me that he was impressed with my "speed" in delivery. He said it was a long time since he had someone who had "a sense of urgency" and delivered and got back.

I observed the other deliverers for the next few days. It finally occurred to me why some of the other deliverers were "slow". If they went on a delivery and got a "good tip' they would take their time getting back because they were content with the money they made that hour. The usual means of payment for a pizza deliverer was $6.00 an hour base, $1.00 for each trip, and then the tips. It wasn't uncommon for the average deliverer to make $11.00 - $15.00 an hour. Their incentive was not customer service, but whether they were content with how much they made that hour. No performance measurements.

  • Deliverers did not always have the most reliable or well kept vehicles. One deliverer often had to add oil once or twice during his shift because it leaked so badly. One customer even called and complained about the oil spots that he left on their concrete driveway when he delivered.

  • Orders were supposed to be kept in order by ticket number. That way, the earliest order would be completed before a later placed order. When an order was taken, the ticket was separated. The green color top copy was placed on an "order board" and the white carbon copy was given to the pizza maker as the "kanban' to make the order, per customer specifications.

What I observed was that the deliverers would often switch the order of the tickets. They would do this if they didn't want to deliver an order out of town, or was too far away, or they knew the customer didn't give any tip or a very small tip. The owner and the person boxing the pizzas and completing an order did not pay very close attention to this aspect. Even when they did, they often didn't say anything.

Sometimes customers would request pizza, sandwiches and chicken. Even though the chicken and pizza places were right next to each other, you would have thought at times that they were located miles apart. Orders would be delayed because no one had taken the ticket to signal those in the chicken place that a customer order was taken.

From the above situations, it is easy to see that there existed several opportunities for improvement. But as it is customary in many organizations, people saw these things as "the way things were", and didn't give any thought to making improvements. The impact that these various forms of waste had on the overall operations was missed.

After a few days of working, I compiled a series of suggestions that I knew would help improve the efficiency and cleanliness. But I suggested to the owner that he and I hold a meeting with the employees and review what was observed and get their feedback and suggestions first.

A meeting was held, and as often the case, the employees were at first hesitant to say anything. With a little coaxing, they began to open up and started to offer many suggestions (we brainstormed during this part of the presentation). The end result was not only a comprehensive list of small, low or no cost improvements that was developed. The agreed upon schedule was a short- "mini-KAIZEN" event to reorganize, relocate equipment and then determine what was needed to be done after the event.

In short, the following things took place during the mini-KAIZEN event:

  • The ovens were relocated from the center of the work area, to be against the outside wall. This opened up a larger area for people and product flow, and gave more options to organization and storage of materials. (5S).

  • A small team of employees, with the owner, looked at and laid out a revised material storage area, based upon the concepts of reduced traveling; reduced movements, ease of location at point of use. The end result was materials were stored in a more organized and easily retrieved manner, and getting materials was made more productive. The issue of the freezer storage area was not addressed as part of this project, since it would involve a large investment to move the freezer to a new and closer location. But it is on a "to-do project list:" for the future.

  • Some additional shelving was added above the work areas that allowed for more storage area. This resulted in fewer trips having to be made during a day to get replacement ingredients etc.

  • A visual system was created when ingredients, boxes etc were needed. By using a simple tack board, the items were listed on the board. Each container was marked and when the level of ingredients got to that level, the pizza maker would hang a red color tag under the needed item. Employees were trained to always look at the board when they went by. Whoever saw it first would replenish the material. This simple method reduced the times the process of making pizzas had to stop while ingredients were being obtained from the freezer area.

  • The storage of the delivery bags was moved from under the counter to near where the pizzas were taken from the oven, cut, and boxed. This reduces the traffic and back and forth movement in getting orders ready without creating a traffic congestion.

  • A minimum, throughout-the-shift cleaning schedule was created. Employees were also trained so that anyone who was "free" and the area needed to be swept before the next scheduled time, would clean up the area. The focus here was on perception by customers and vendors and how the work place looked.

  • A new ticket control system was developed to insure that orders were processed and delivered in the order taken. If any exceptions were required (combining orders that were located within a specified distance of each other) the owner or shift leader would be responsible for authorizing the change.

  • A training format and classes were developed and used to re-train everyone on procedures and policies. A master copy was kept on the shelf by the order taker workstation and abbreviated copies of the more important tasks were placed on the wall for reminders.

  • A time clock was put in place (the deliverer's idea) and when a person left to go on a delivery, the green copy of the order form would be 'stamped" with the time. When they returned, they once again "stamped" the same ticket. This information was then analyzed and charted and average delivery times were posted for each person and for total of all deliverers. While a strict "time schedule' does not always lend itself to this situation, (since some orders are only blocks away and others are 15-20 miles round trip), an "average time" category based upon distance was developed and guidelines were established with input from the drivers. The average time per delivery has decreased by 25% in the short time that this system has been in place.

    By improving the average delivery time per driver, the number of drivers needed per shift has been reduced. On the busier shifts, one less driver is now needed to make more deliveries.

  • The order taker workstation was improved by adding shelves and keeping the worktable organized and free of "extraneous materials" (used to be everyone left their own personal items on the table or threw things on it). A new telephone was purchased that allowed for improved loudness settings that helped to hear the customers without having to cover your ears. The employees also were trained in the need to hold conversations down to a level that did not interfere with hearing the customer on the phone or that the customers would hear.

  • Measuring the ingredients more consistently was accomplished by having different size cups that were marked for each size pizza made. This simple technique significantly improved the consistency of the amount of ingredients that were put on each pizza, no matter who was making it. We use only one cup per ingredient, as each cup is marked at a different level for each size pizza, so if you make a 12" pizza you fill the ingredient to the 12" level line. If you make a 16" you fill the cup to the 16" level. Simple, but very effective in reducing overall ingredient usage by an estimated 15% thus far.

  • It is estimated that the improved work organization and layout has reduced congestion, improved flow and reduced redundancy in movement by at minimum of 20%.

  • Set-up of boxes, accessories and other things have been improved so that the time from when a pizza is taken from the oven to the time it is boxed and ready for delivery has been reduced 5-10%. Simple things like having the box ready before the pizza comes out was done. This planning is now done through a process where the white copy of the ticket is given to the person making the pizza. The tickets are kept on a small board off of the work station, in the order they are received. When a pizza is completed, it is immediately handed to the person boxing the pizzas who then gets "prepared" for the next order, reducing the work necessary once the pizza comes out.

    During the busy shifts, one less "general person" is needed to complete the same amount of work.

From the above examples, improved organization, workplace cleanliness, improved productivity were all accomplished by using lean manufacturing principles and tools. The changes that have been attained from a few short days of analyzing, planning and working with the employees and owner has helped this small business owner, in a highly competitive environment, reduce costs, while improving customer service.

So the next time you go and order a pizza, observe the layout and operation. You might be able to give a few ideas on how the business can be made "lean" and more productive, by the use and implementation of lean manufacturing concepts.

Dan Stoelb is President of the Lean Manufacturing Consortium, a professional networking organization that provides it members with information; resources and advice on how to implement Lean Manufacturing. For additional information contact Dan by e-mail: daniel_stoelb@yahoo.com .

Many more articles in Performance Improvement in The CEO Refresher Archives


Copyright 2006 by Dan Stoelb. All rights reserved.

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