Application Of Lean Concepts For Copper Kettle Catering

Evaluation of Copper Kettle catering operation in compliance with lean concepts

The purpose of the report is to discuss if the lean practices are applicable to Copper Kettle Catering or not. This is a catering company in Manchester, England having business ranging from preparation of lunch for picnic, meeting to large wedding, dinner or office parties. Lean practice is the practice of waste reduction and continuous improvement of the production process. Lean management is the process of improving efficiency and quality of product or services. This report discusses the lean systems that are applicable for the case study company. Copper Kettle Catering may face some problem in implementing the lean system due to its business structure. Therefore, the report would suggest some strategic approach to overcome the barrier.

In the view of Bashir et al. (2015), lean management is the management that observe, encourage, challenge and learns from the system. Copper Kettle Catering can learn from existing catering business and can take initiative for further improvement in the business. As stated by Ulvenblad et al. (2014), lean practice is the scientific method of experimentation and finding improvement. Shaked (2013) cited, ‘Lean system is defined by the set of tools that identify and eliminates waste generated by the business’. As waste is eliminated, Quality of the production process improves with the increase in its value. The owner emphasizes the lean concepts such as flexibility, reduction in lead-time and reducing costs. As opined by (2013) that lean is more important in service sector in comparison to the manufacturing sector. The catering business of Copper kettle catering handles demand at large scale in Manchester, England with only 10 full time employees, 2 cooks and 8 staffs for food preparation. Lean process can be applicable to this company at the integrated logistics and supplying catered food to the large parties.

As pointed out by Shaked (2013), lean practice may help the company to achieve customer satisfaction through enhancement of range of food product, improving quality of food, meeting the need of special food item keeping in the mind the concerns of income and health. There is scope for lean practices in this company. CKC has shortage of resources such as shortage of sufficient space, refrigerator, which indirectly affect the profitability of the company. Capacity constraints limit the production and reduce competitiveness.

The company needs to create separate department with the expansion of business such as human resource management, quality assurance department, production department and finance department in order to manage the operation effectively. It is not possible for two owners to control human resources on daily basis. Additional full time workers are required to manage individual department with the objective of expanding business. As every department has distinctive role, a person individually cannot manage whole operational tasks alone. However, CKC needs to be strong before hiring full time workers. Infrastructure is also needed to manage multiple departments in an organization. CKC suffers from lack of standardization and inefficient production process. Therefore, the company needs lean practices for improvement service quality.

CKC suffers from service quality and capacity constraint. CKC has space problem in their building and hence faces inventory management problem. 1stly CKC has storage problem and hence, it has to order dessert from outside. Moreover, due to limited space, the quantity of food preparation is less per day. Therefore, lean supply model can be applied to the company in order to improve the problem. Lean supply model focuses on the competitive position of the company and its value stream. Company is highly dependent on the partnership, openness and profit sharing between two owners. Secondly, sourcing decision is important for this lean practice as this may be tool for gaining competitive advantage in business. Meristö and Laitinen (2015) mentioned that sourcing facilitates the supplier to supply products at fficient and timely manner by reducing cost. Sourcing of resource and output can be dual or single. Sourcing decision is taken as long term basis. Buying criteria is selected based on benefits from alternative networks. An important factor of this model is that the supplier needs to take a proactive approach to improve competitiveness. CKC needs to invest in capacity expansion if it intends to increase production and range of food product. As mentioned by Pan et al. (2016), innovation in products and increasing range of product increases.

Lean systems applicable to Copper Kettle catering

The next important aspect of this model is management of data interchange and interaction. Company such as CKC needs to have transparency in the data management, cost and capacity management. A strong supply chain that can connect customers, raw material and intermediary product suppliers, financial partners, needs to be built up. As suggested by Meristö and Laitinen (2015), group based development tool is effective in this purpose. Effective and frequent interaction with the stakeholders at the operational level is required. Interaction with the employees and customers regarding the business decision or any change in prevailing decision needs to be communicated effectively. Any miscommunication regarding information can create demand supply gap in business. For example, if the company fails to meet demand of customer any day, problems need to be communicated with the customers properly. Otherwise, they may shift towards other firms with dissatisfaction. Lastly, the supplier needs to have flexibility in operation. Demand for food varies with seasonal fluctuation. Hence, CKC needs to bring variability in food products overtime. All these process can help to share operational risks among the stakeholders.

Waste reduction is crucial aspect of the lean system management. Waste can be controlled through reducing over production, defects in service delivery, cutting unnecessary inventory or stock, improving workplace condition and the cooking area (Natarajan, Sarda and Srivastava 2015). Proper use of resources reduces both physical and financial resources. Company needs to use process activity mapping in order to find waste and inefficiency. Process activity mapping is a list of daily schedule mentioning time, resource and responsible person to perform the task. Due to low capacity, CKC sometimes run out of resources and fails to meet customer expectation. Therefore, capacity building is the foremost concern for the company.

Main problem of CKC is the capacity constrains and inventory management. Therefore, operational policy is disrupted. One major problem that CKC may face in implementing lean practice is prediction of demand. CKC has two products category such as deliver only and deliver and serve. Deliver and serve category product is scheduled on Monday and delivery-only category foods is scheduled during week. There is limited selection of food items. Moreover, the same day delivery is possible by the company if order comes before 10 am. The problem arises due to limited resources. As the company suffers from limited capacity and excessive inventory, the CKC faces problem in demand management. Excess inventory is reflected in the annual report when firm fails to release stock in a timely manner. Excess inventory does not generate any cash flow.

Main problems faced by CKC are presented below:

• Demand management problem in short term
• Limited sources
• Excess inventory
• Limited space
• Limited human resource
• Problem in dessert transportation

CKC has to manage inventory first in order to increase cash inflows, which can be reinvested in the company. In order to meet demand in the short run, CKC has to improve both physical and financial resources. Improvement in physical infrastructure is not possible for in short term as there is low cash flow. Employment of more full time labour also needs time. Therefore, time constraint comes as a major barrier to the company. Another barrier is human resource shortage. Therefore, one option to the company is to use labour for extra time in the production process until new full time employees are recruited (Vlachos and Bogdanovic 2013). New employees need to be accompanied by essential capital required for cooking and delivery of the product. Fulfilment of all these requirements is not feasible within a very short period for CKC.

Major barriers to implement lean system

As suggested by Psychogios and Tsironis (2012), growth of the catering business depends on the quality of the food served to different groups of customers. As order has to place to CKC before 10 am, it indicates that there is lack of flexibility in production. One way to improve business, the company needs to be ready to supply food at a fair price. Food serving needs to be done in a professional manner to reduce waiting time for guest. The following strategy can be taken to overcome the barrier to implement lean practice:

• Education regarding lean practice to employees
• Increasing customer awareness regarding lean practice,
• Workers involvement and empowerment
• Involvement of top management
• Robust planning
• Gradual implementation of the policies

As discussed by Elnadi (2015), the company needs to engage the staffs in acquire necessary skills and knowledge to achieve smooth implementation of lean principles in business. The owners can arrange a training session for the employees with lean consultant regarding new tools and techniques. As two owners of CKC are the manager of the company, they need to take the responsibilities. A training session can be arranged for cooks. Training regarding changing culture may help in overcoming difficulties, mitigating misconception about lean. As tasks can be interchanged among other eight employees, company needs to build up the team having great collaboration among them. In the view of ?iarnien? and Vienažindien? (2015), customers need to be aware about the lean practices and changes as proper performance of the organisation depends on the ability and efficiency of employees. Lean practice is implemented by employees. Therefore, proper management of resources, reduction in waste is possible only if employees understand their needs and implementation process effectively.

The owners need to involve in continuous improvement of the lean practices and require providing all the facilities require supporting staffs. Employees need to be proactive to meet customer satisfaction at the peak session. Atkinson (2013) opined that catering business needs to emphasis on the marketing part as there is huge competition in this business. Parthanadee and Buddhakulsomsiri (2014) suggested that innovation is the important aspect that brings competitive advantage for the company. Innovation in food variety, increasing product category, and increasing number of food in menu offers greater option to the customer. These strategies play effective role for determination of customer preference.

As CKC has lack of sufficient funds, it can start with small capital. Innovation can bring in serving food. It has been stated in the case study that the CKC sometimes run out of ingredients due to space problem and inadequate production. If supply is shortage in the face of high demand, customers shift towards rival firm. Consequently, cash flows are reduced in this company due to not meeting demand. CKC may acquire a collection of fancy serving dishes, neat and clean service to the customer. The concept of ecological footprint can be applied in the business model. The company needs to use this concept during the marketing of the product. In the view of Psychogios and Tsironis (2012), customer service in catering business not only needs to provide different types of food, but also creating an ambience and keeping costs within budget of the customers. A skilled caterer may make provision for dinner and lunch special needs to improve customer service. The company can arrange to develop infrastructure. Readymade commercial kitchen can be hired to run the business until the existing one cannot be expanded.

In order to take advantage of lean practices, the company can apply following processes in business.

Management of inventory

 In the view of Agus and Iteng (2013), too much inventory is not beneficial for the company. Therefore, CKC can take some strategy to manage inventory in order to bring efficiency in working capital. One way to manage inventory is to monitor inventory level at a time interval. As mentioned by Atkinson (2013), high level of inventory increases expenses and overhead costs.  Inventory in the catering business are food ingredients, kitchen utensils. As argued by Parthanadee and Buddhakulsomsiri (2014), a small scale company needs to learn effective utilisation of assets and needs to focus on items that matter most to the company in the very short time.  

Removing non-value added activities

CKC is recommended to implement lean manufacturing approach to mitigate waste of resources and waste of time. This process helps the company to stream value added activities eliminating non-value added activities. As stated by Shaked (2013), any activity that does not add value to the market is waste for the company and needs to be eliminated. The company can analyse this issue through conducting customer survey. Restructuring kitchen with innovative design may save space and reduce wastage.

Managing human resource

CKC has eight employees who are engaged with the delivery system and production system. In the view of Meristö and Laitinen (2015), catering staff can work as a group or may work as a team. When employees work as a group, tasks are divided among the them in order to increase productivity. On the other hand, a well-organised team know their duty and wok to meet a common goal. They work in the similar way as expected in the catering business. As per case study, employees of CKC work as a group. As teamwork is more effective compared to group work, the first one is recommended to have separate team for different product segment such as for delivery section and delivery and serve section.

Using the concept of ecological footprint

Ecological footprint reduction is an important aspect for business operation and its corporate social responsibility. Reduction in ecological footprint increases the value of catering business. Use of eco friendly product in business, reduction in wastage, bringing sustainability can provide competitive advantage to CKC in the competitive catering industry. CKC can be suggested to use locally grown vegetables and other agro products as fresh agro products are desirable to the health conscious customer. Moreover, the concept of reuse, recycling can be applied by CKC. Reusable dinnerware has lowest environmental impact.

As reusable dinnerwares are not always available, the company can use compostable and recyclable dinnerware. Therefore, CKC can use marketing campaign highlighting the ecological footprint aspect to attract the attention of new customers towards the company. This policy can be helpful in attracting customer and increasing revenue. As revenue increases, cash inflows and profitability increase. Two owners of CKC can retain the extra profit from business for further investment to expand capacity. Retained earning is the best possible option for CKC as there is no need for external fund collection and creating financial burden. Cash flow problem, investment problem can be managed in this way. This is a part of quality management in the lean practice system.

The Gantt chart shows the seven steps for implementing lean practice in CKC.  The Gantt chart has marked possible days required for the task. The process starts with planning stage and followed by steps such as mapping value stream, arrangement of training and education, customer awareness, management of inventory, removing non value added product and implementation of lean practice. Gantt chart shows the time schedule against each task planned to manage lean practice.

Total days required for lean implementation in CKC as per planning is = 15 + 7 + 90 = 112 days or 3 months 22 days. The path marked by red colour in above diagram is the critical path showing completion of each task.

Recommendations have been made for successful implementation of lean system in CKC. However, proper implementation depends on the capability of the company. First recommendation has been made on inventory management. It has been suggested to keep track of inventory. Inventory management helps to smooth cash flow in the company. As per the structure of the business, management of the inventory is possible only manually. As argued  by Natarajan, Sarda and Srivastava (2015), computerised process of inventory management and keeping track of the data can be costly to the company having problem with the cash flow. Use of information technology is effective for data management, however, not feasible for the CKC due to its limited economies of scale. Vlachos and Bogdanovic (2013) highlighted that demand planning is important for the inventory management. CKC has observed that demand for variety food items are growing with the intervention of new firm such as Lunches-R-Us. Therefore, CKC needs to focus on demand planning along with the inventory management. Cost minimisation is another crucial aspect of the demand planning for this catering company.

The second recommendation was human resource management. In order to meet customer demand at a large scale, staffs that are more permanent are required. Extra full time staff can reduce customer-waiting time. However, it may not be feasible for the company to recruit multiple staffs in the short run, as it will create financial burden on CKC. Another problem pointed out by Ulvenblad et al. (2014) is that a catering business with only 10 full time employees may not compete in the competitive industry. There is another issue of workplace condition for the employees. Recruitment of more delivery person, food specialist is required for the company. Marketing specialist personnel is required for the company. However, recruitment and retention are challenging for the company. Moreover, as recommended in the earlier section that training is required to enhance soft skill of employees engaged with marketing and delivery. Customer satisfaction depends on reliability and responsiveness of employees.

It has been suggested to work as a team rather than group. The main benefit of teamwork is objective of each employees are same for a specific task. The entire team member may have different tasks; however, they have good collaboration. Bringing collaboration within a team is a crucial task. The company needs a strong leader, who can motivate the employees. The owners of the company thus need to have the leadership quality, who can train, motivate and encourage employees regarding the changes and can aware them effectively about the lean practices.

The last recommendation is to incorporate ecological footprint concept within business. Reliability and loyalty of the stakeholders may increase through this policy. However, robust planning is required for recycling and reuse of the used materials (Bashir et al. 2015). This process needs to technologically improved infrastructure to recycle the materials. This may cost extra burden to the company. Effectiveness of the process would be envisaged after proper utilisation and investment of funds. This policy is likely to be ineffective in short run. However, in the long run, application of this policy is feasible.

I have learned from above discussion that CKC is a catering business, which has problem of inadequate capacity to grow the business. I have learned from the analysis that both physical and financial resources are important for smooth running of business. In order expand catering business, capacity of kitchen, storage system play an important role. Constraint of resources increases delayed order and inability to meet market demand. CKC has problem in inventory management. Therefore, it suffers from cash flows in a systematic manner. Due to having capacity constraint, the company cannot prepare and deliver food items immediately. It can only deliver food to the customers, who have ordered before 10 am. Therefore, customers face constraints in placing demand. Naturally, they may move to other firms in the same industry. Customer dissatisfaction increases from lack of responsiveness, reliability and empathy. Product category is limited in this company. Therefore, the items of lunch box and dinner box are limited on daily basis. Customer gets limited option in the absence of any flexibility. Hence, implementation of lean system in the company is fruitful for increasing revenue. I have learnt that in lean practice, the company needs to build up infrastructure. Improvement of skill of the employee, improvement of technology, bringing innovation in food preparation, human resource management, inventory management and waste management are required for best lean practice. Quality improvement is another aspect of lean practice along with inventory management and waste reduction.  

References

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