Case Studies on Productivity Improvement

Starbucks
“This is a game of seconds …” says Silva Peterson, whom Starbucks
has put in charge of saving seconds. Her team of 10 analysts is constantly
asking themselves: “How can we shave time off this?”

Peterson’s analysis suggested that there were some obvious

opportunities. First, stop requiring signatures on credit-card purchases
under US$ 25. This sliced 8 seconds off the transaction time at the cash
register.

Then, analysts noticed that Starbucks’ largest cold beverage, the Venti
size, required two bending and digging motions to scoop up enough ice. The
scoop was too small. Re-design of the scoop provided the proper amount in
only one motion, which cut 14 seconds off the average time of one minute.

Third were new espresso machines: with the push of a button, the
machines grind coffee beans and brew. This allowed the server, called a
“barista” at Starbucks, to do other things. This can save 12 seconds per
espresso shot.

As a result, operations improvements at Starbucks outlets have

increased the average yearly volume by ~US$ 200,000, to ~US$ 940,000 in 6
years. This is a 27% improvement in productivity, which is ~4.5% per year.

(modified from “Operations Management” by J. Heizer and B. Render, 2008)

1
Ritz-Carlton Hotels
The Ritz-Carlton company is the only two-time recipient of the
Malcolm Baldrige National Quality Award in the service category, having won
in 1992 and 1999. An independently operated division of Marriott
International, Inc., it manage luxury hotels around the world. All have
received 4- or 5-star ratings from the Mobil Travel Guide and diamond
ratings from the American Automobile Association.

The goal for customer satisfaction is a defect-free experience for guests

and 100% customer loyalty. The hotel employs a measurement system to
chart progress toward elimination of customer problems, no matter how
minor. To meet its goal of the total elimination of problems, the Ritz-Carlton
has identified over 1,000 potential instances for a problem to arise during
interactions with guests. To cultivate customer loyalty, the hotel has
instituted an approach of “Customer Customisation”, which relies on
extensive data gathering. Information gathered during various types of
customer contacts, such as responses to service requested by overnight
guests o post-event reviews with meeting planners, are systematically
entered into the database, which holds almost a million files. The database
enables hotel staff worldwide to anticipate the needs of returning guests. The
“Greenbook” is the Ritz-Carlton handbook of quality processes and tools, a
nearly constant reference that is distributed to all employees. Any employee
can spend several thousand dollars to immediately correct the guest’s
problem or handle any complaints.

Nore than 85% of the company’s 28,000 employees—known as “The

Ladies and Gentlemen of the Ritz-Carlton”—are front line hotel workers. The
hotel’s “pride and joy” programme gives employees a larger role in the design
of their jobs. First-year managers and employees receive over 300 hours of
training. As a result, the hotel’s employee turnover rate has declined over a
long period, and the levels of employee satisfaction are very high.

In an independent customer survey, more than 80% of guests said

they were extremely satisfied and 99% said they were satisfied with their
overall Ritz-Carlton experience, compared with under 70% for the nearest
luxury hotel competitors.

(modified from “Operations Management along the Supply Chain” by B.W.

Taylor III and R.S. Russell, 2009)