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Lean Six Sigma – a breakthrough methodology for business transformation in Hospitality

Introduction:

Lean Six Sigma is a hybrid methodology combining Lean and Six Sigma to enable a customer focused and data driven

approach towards process improvement by reducing waste. The improvement methodology enables to reduce product

or service failure rates to a negligible level (roughly 3.4 failures per million opportunities). Lean Six Sigma encompasses

all aspects of a business, including management, service delivery, design, production and customer satisfaction. Lean

Six Sigma companies typically spend less than 5 percent of their revenues addressing and repairing quality problems.

The 3 commandments of this philosophy are: -

The Customer is the King

In God we trust, all others bring data

Variation is the enemy of all processes

Manufacturing, automobile, aviation, medical transcription, software, ITES, banks and even other financial institutions

are following this methodology.

The question then is why not Hotels?

If the first commandment of Six Sigma talks about the customer how can we leave out an industry which is the

epitome of customer service and thrives purely on achieving customer delight consistently.

The need of the hour is to welcome Six Sigma in this industry and utilize the skill to enhance employee

efficiency and customer satisfaction

Increasing competition from multiple players in this field and intensive work reaffirms the above

hypothesis.

In an industry where customer interactions occur on an hourly basis, each customer touch point is

critical for building personalized service credibility and developing customer affinity.

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Application of Lean Six Sigma in Hospitality: -

Hotel-wide

Enhance Customer Loyalty

Reduce Employee attrition

Productivity/Efficiency Improvement

Improve Work-life balance

Reduce Billing errors/losses

Developing better performance measures/ metrics

Increase Revenue

Reduce Cost

Capture 'Voice of Customer' data

Front Office Operations/ Sales & Marketing

Reduce wait time during peak check-in time

Reduce wait time during peak check-out time

Eliminate billing errors and improve accuracy

Reduce No shows

Increase Occupancy

Optimal utilization of the current product mix (rooms) to increase revenue

Increase customer delight at the Executive Club

Reduce/eliminate loss calls (Operators area)

Accuracy of information

Food and Beverage Service / Production

To maintain optimal inventory

Minimize wastage/pilferage

Standardized output of Food and Beverage

Reduce the time from order to service

Optimal utilization of current product mix (F&B/Outlets) to increase revenue

Accommodation Operation (Housekeeping)

Reduce the turnaround time of making/turning down a room

Standardization of cleanliness across areas

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Purchase/Stores

Reduce Inventory surplus

Cost Benefit Analysis between cost of inventory and cost of storage of products where prices

vary seasonally

Standardize the operating procedure of issuance to various departments

Reduce the turnaround time of issuance to various departments

Human Resources/ Personnel

Accuracy of payroll

Documentation management

Reduce the turnaround time of recruitment

Reduce the turnaround time of relieving

Increase the employee satisfaction rate

Reduce employee attrition

Throughout the hotel industry, the gospel of excellence is the key ingredient to success. In search of

performance management excellence, Hilton Hotels corporation has implemented a Balanced Scorecard that

incorporates revenue maximization, operational effectiveness and brand management. The culture at Marriott

International, Inc prides itself on its reputation for superior customer service - 'people serving people'. Starwood hotels

and resorts worldwide Inc is the first hospitality company in the world to embrace Six Sigma since 2001 and extends

this best practice to all properties worldwide, including the Sheraton Hong Kong Hotel & Tower.

A case in hospitality

Barry S. Sternlicht, chairman and CEO, Starwood Hotels and Resorts had stated, "The launch of Six Sigma is

one of the most important strategic initiatives since the formation of our company," he continued. "It is our goal for

every Westin, Sheraton, W, Four Points by Sheraton, Starwood Vacation Ownership and St. Regis /Luxury Collection

guests to have a flawless experience during each and every visit. Six Sigma will help us reach that goal."

The Sheraton Miramar resort had the highest overall performance in 2004 in each of the five key metric

measurements including the Guest Satisfaction index. They were recognized as the Hotel of the Year in EAME (East

Africa and Middle East) region.

Starwood has run over 3000 projects worldwide to date in areas such as productivity, menu re-

design, resort concierge, email marketing and launching a worldwide sales initiative. Another of its chain

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of hotels, The Westin Turnberry resort in Scotland won the IQPC's 5th Annual European Six-Sigma summit in London

in April 2004. It won the European award in the category 'Design for Six Sigma' for a reservation project. Sheraton

Lagos Hotel & Tower having adopted Lean Six Sigma as the driving force for its business in 2003. Within this period it

had experienced improvement in every facet of the business from the product delivery to service delivery to guest and

employee satisfaction all of which impacted the bottom line positively.

Proof of the pudding...

Covidien, Dow Corning, and Hilton Worldwide Are 2015 AFP Pinnacle Award Finalists

Covidien, Dow Corning, and Hilton Worldwide are finalists for the Association for Financial Professionals (AFP)

2015 Pinnacle Award. Of the finalists, Dow Corning is up for “utilizing Lean Six Sigma techniques, value-stream

mapping and a return on human assets focus.” Dow Corning overhauled its manual, process-heavy currency trading

program and as a result of the overhaul, the organization cut nearly $5 million a year in costs. Dow Corning was

also able to re-allocate nearly 600 hours of labor to more value-adding activities!

Starwood Hotels & Resorts Worldwide

Instead of hiring consultants or ethnographers, a common first step for a new initiative, the hotel chain relied

on a seemingly stodgy process: Six Sigma. Last year, according to Starwood management, programs developed under

the famed management technique delivered more than $100 million in profit to its bottom line. As a result, the

White Plains (N.Y.) company is one of the world’s most profitable hotel operators: Its net margin is nearly 15%,

higher than those of rivals Hilton Hotels (HLT) and Marriott International (MAR), as well as the

industry average of 9%. “We have been driving our margin growth faster than our competitors,” says Ballotti. “When

people ask why, I point to Six Sigma.”

What’s in it for Hospitality ?

Reduce cost of operations by 30% (YoY) while scaling up to be world –class

Improve sales revenue by 25% (YoY) with less investment

Powerful re-branding supported by robust backend processes using Lean Six Sigma

Become one of the pioneers in hotel industry to achieve Process Excellence

Ability to guarantee service – first of its kind in the industry and gain a significant competitive advantage

STRETCH 30 – “Strategic Re-engineering To Reach

Competitive Horizon”

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Minimum 30% improvement, irrespective of current level of process maturity

• Metrics driven organisation

• Roadmap assessment

• Cost of Quality modeling

• Kaizen for Quick hits and rapid changes to standardization

• Analytics for opportunity assessment

• Lean operations

• Six Sigma tools for enhanced effectiveness

• BPR strategic tools / IT – assisted re-engineering for transformation

• Significant reduction in Cost per FTE and Cost per transaction

• Reduced customer complaints and improved NPS

• Six sigma level of defects / errors in Operations

• Improved Turn Around Times

• Enhanced productivity

• Transformational gains on all key metrics

• World – class organisation

Our Senior Coach

A practicing professional with over two decades of experience in the field of Project management and Operations Management with a specialization in Quality across Manufacturing, Information Technology and Services. He has rich experience training & consulting various world class companies such as Alstom, Bosch, TVS group, Gamesa, Michelin, Apollo Tyres, Hyundai, Nokia, Hewlett Packard, Standard Chartered, Mashreq Bank, Dubai Bank, Dubai Islamic Bank and thousands of students and professionals through many public programs. Earlier, he was leading the strategic agenda of Innovation and Digitization as Head of Business Excellence and Group Change Delivery across fifty plus countries for Standard Chartered Scope International. In his earlier assignments as Quality Leader in various multi-national corporations, he has deployed strategic change management programs such as Lean, Six Sigma and Innovation for business transformation with a focus on analytics and customer-centricity. He is a certified Project Management Professional (PMP) from Project Management Institute, US, certified Six Sigma Master Black Belt (CSSMBB) from Indian Statistical Institute, Lean Master / Reengineering Customer Care

Name: K. Kalyanasundaram Education: BE, PGDM, CSSMBB, CQP, MCQI, FCSIA, PMP Experience: 20 years plus Skills: Lean, Six Sigma, TQM, JIT, Statistics, Analytics, Customer

Service, ISO and Project / Program Management

Strengths: Focus, Includer, Strategic, Learner and Analytical –

Top 5 strengths from the Strengths Finder of Gallup

Organization

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Engineer from Renault Institute of Quality Management and Cegos, UK, certified Chartered Quality Professional (CQP) and a Member of the Chartered Quality Institute (MCQI), UK. Fellow (FCSIA) Member of the Customer Service Institute of America and a certified Assessor of Business Excellence from the Confederation of Indian Industry–Institute of Quality. Speaker at the various international forums including the American Society for Quality, 5th Annual Middle-east Business Excellence Summit in Dubai, 2nd Gulf Quality conference in Doha, Qatar and the Madras Chapter of Indian Institution of Industrial Engineering. Reviewer of papers for National Project Management Conference, India. Member of the panel judges for various conferences / competitions such as International Quality Conference by National Institution for Quality and Reliability and QIMPRO convention. He is also a PhD Research scholar from Amrita School of Business with four international publications in the field of Quality Management and Experimental Psychology. Key expertise

Lean Six Sigma

Customer Service

Analytics

Program & Project Management

Cost Optimization / Productivity Improvements

Innovation & Digitization

Benchmarking

Problem Solving EPS/ 8 D

BPMS – Business Process Management Systems

Business Intelligence

Performance Management / Metrics & Measurement

Risk Management

Major achievements:

Mentored more than 100 hi-impact projects with over 25 million USD hard saves and significant improvement in

Total Customer Experience / Net Promoter Score across world class companies in UK, UAE & India.

Trained more than 1500 Professionals with over 5000 hours of training in Project management, Lean and Six Sigma

across world class companies in India, UAE and UK.

Pioneered the introduction of Work Measurement (Industrial engineering practices like MOST – Maynard Operation

Sequence Technique) and Hyper-specialization in the IT / ITES industry for Productivity / cost optimization

Led the strategic agenda of Innovation and Digitization for Standard Chartered Scope International across fifty plus

countries

Lean six Sigma efficiency improvement projects including maximization of Straight-through processing through

Innovation & Digitization leading to cost save of more than USD 25 million

Lean Six Sigma projects on customer to customer TAT reduction of more than 50% on key products such as cards,

personal loans and savings account leading to an increase in Net Promoter Score from 30 to 45

Seat Utilization improvement from 110% to 150% across locations through implementation of agile work place

solutions

Use of latest trends in technology including Artificial Intelligence (virtual assistants) to eliminate manual

intervention in operations

Winner of the Icons CEO award of the Global Shared Services Centre consecutively for 2 years (2012 and 2013)

Introduction of an innovative concept of “Customer Consultant Award” for complaining customers

Service Excellence enabled through implementation of CRM solution across the bank

Uplifting Customer service champion and writing back specialist from Up your service college, Singapore