Lsg Sky Chefs

Case Assignment: LSG Sky Chefs

Situation: Post the September 2011 terrorist attacks, the world’s biggest in-flight services provider – LSG Sky Chef, lost 30% in business. Airlines reduced the number of flights and meals served due to the public’s reluctance in flying. By September end, LSG granted a leave of absence to 30% of its US-based workforce. They had to quickly devise ways to survive the tough market and replenish revenues. Gary Berndt was hired as COO to implement a “fundamental change” through lean principles at 96 flight kitchens across 79 airports in the Americas. The company had to learn and apply lean principles in a non-traditional work space.

Key Issues:  

• LSG had to survive in an increasingly difficult industry due to a crisis. They aimed to change the process operations by teaching and implementing lean practices rapidly in a non-traditional environment.
• The catering industry differed from the traditional manufacturing industry in key areas: it was faster, had less engineering and designing needs upfront, and faced daily peaks and valleys in demand as opposed to spikes.
• They also wanted to improve quality by developing new items for the menu and redesigning the procurement process keeping in mind the new industry landscape. Given that their customers were airline companies, there was the problem of different customers having different specifications for the same product such as lettuce.

Actions: What steps were taken to improve the situation or achieve the desired results?

• Building the Culture: LSG recruited Lean experts to bring about the much-needed changes. In November 2001, Senior VP Craig Cain was hired, who in turn brought in lean thinkers such as Fran Duffy to coach employees on the techniques. “Hear, See, Do” was their training approach. In the “Hear” phase, the COO visited the Gemba (CSCs), walked through the value streams with GMs, indicated wastes, and showed how lean could help. In the “See” phase, GMs and managers from all facilities visited the pilot CSCs in Los Angeles and Chicago to see lean principles in practice. In the “Do” phase, GMs started their new lean set ups and ran them independently.
• Standardization: This was the first step in the pilot started in January 2002 that focused on establishing standard processes and effective workplace organization with visual controls. This allowed transparency about production status and eliminated excess equipment.
• Redesign Workstation: The layout of the physical space where employees prepared meal “components” and “assembled” them were improved. This comprised the second step in the process.
• FIFO Inventory Management Process: The third step entailed the creation of a sturdy FIFO system ensures that employees don’t waste time looking for items.
• Establish a Pull System: They used bins and racks for the associates to signal what was needed. This ensured a reliable and repeatable route delivery system to help associates work without stock-outs or interruptions.

Results: How did the process performance change? What were the business benefits?

• The pilot was very successful with quality and efficiency improving in six weeks. The pilots garnered 10% overall productivity through concentrating on only 20% of operations in each facility.
• The company’s costs went down as overtime, required floor space, and quality complaint from customers reduced. Moreover, the initiative took minimal capital investment.
• The process also created capacity for growth once the industry recovered.
• Beyond the pilot, the process helped reduce the time to locate and load carts at the Boston Logan airport by relieving dock congestion.

Learning: What was something you learned because of studying this case?

• Lean can be successfully practiced across all industries if the principles are understood and correctly applied.
•  Often a business can increase overall productivity by concentrating on a single area.
• Industry growth is beyond control but it is possible to survive even in a downward facing industry with the correct approach.