The Effectiveness Of Socio-Technical System Approach And Lean Production In Manufacturing And Service Industries

Introduction

The essay will be exploring how appropriate and useful is the use of Socio-technical system approach and Lean production as tools to effect changes in McDonald’s and NTUC Supermarkets - manufacturing and service industries respectively.

Tools

Lean production is minimizing waste and maximising customer value, achieving excellence through creation of more value with fewer resources. Waste is defined as anything that does not add value to the product. Eliminating waste along the entire work process, companies will be able to generate processes which requires less human effort, space, capital and time to increase the quality and decrease cost of products compared to traditional business systems.

Socio-technical system approach are systems that considers human, social and organisational factors, and technical factors in the design or organisational systems. The outcome of these methods is better understanding of how organisational, social and human factors affect the way work is done and technical systems are used. The key pieces to a social-technical system is the organisational structure, People, Technology and Tasks. It is how technology and people co-exist in the organisation to help complete tasks and overcome problem and challenges.

Company

McDonald’s is a popular fast food chain in the world. They are the pioneers for walk up hamburger stands and started the concept of ‘fast-food’. Like any fast food restaurants, it serves food at an affordable price and with little waiting time. NTUC Supermarkets is an established supermarket brand in Singapore that has over 200 outlets in Singapore. They also have an online platform that reaches out to 400000 subscribers. They also own a fresh food distribution centre and a centralised warehousing and distribution company.

Similarities

The process between staff producing burgers at fast food chain and consumers shopping at a modern supermarket are similar in many ways. To produce burgers quickly yet on demand, demands a very good process or work flow. To allow consumers to find what they want in a large supermarket and checkout as quickly as possible, the design and flow of the supermarket needs to be well thought of. In both industries, in a general context, you would want to reduce waste of space and inventory, waste of waiting and waste of resources and increase efficiency.

Lean production in McDonald’s

Lean production has been one of its core competitive advantages since opening in 1948. They created the ‘fast-food’ concept and is probably the first to implement lean service in the food sector. Their first restaurant had no interior dining area and thus there was no waiting staff. Their kitchen area was designed into an ‘assembly line-style’ layout that maximised efficiency and output. They had a simplified menu and using assembly line principles, they were able to sell hamburgers for half the price compared to a sit-down restaurant. In this example we saw how Lean production reduces the waste of motion, inventory and waiting.

In 1998 McDonald’s overhauled their kitchen and introduced a new production system, applying the Just-In-Time theory. Ivan (2017) explains that new production system allows orders to be delivered “hot and fresh”, eliminating the need for warming bins. The new systems target 90 seconds from delivery to order. This is an example of how McDonald’s used Lean production techniques to reduce waste of over production and increasing the quality of their food served.

The disadvantage is that it will be difficult to maintain a growing menu. Lean production focus on cutting down wastes, having a bigger menu will mean more time taken to prepare and a larger possibility of waste for less popular items.

Another way McDonald’s can apply Lean production to improve their operations flow is to come up with a process that enable consumers to clear their own trays. Create a centralised tray return station where consumers will be rewarded for clearing their trays. This helps to reduce waste of talent as they would not need to have staff patrolling the restaurant to help clear trays and clean tables, enabling them to focus on other tasks.

Lean production has helped McDonald’s create the revolutionary concept of ‘fast food’. Eliminating waste by waste, it has further transformed McDonald’s to the fast food chain giants they are today and making dining more convenient and fuss free than ever for consumers today.

Lean production in NTUC supermarkets

Lean production theories can be seen in the design of NTUC supermarkets. One example is where commonly paired items are categorised or placed close to each other. Popular Items are normally organised to the front of the store. You will realise items are stored at similar locations under similar, regardless which NTUC Supermarket you visit.

Another example is how Lean production helps to keep 38000 items in stock in a single supermarket. Every item has a place. When it is removed and scanned, electronic records are updated, inventory levels are monitored and items are reordered and restocked accordingly based on the maximum amount of space available.

The Disadvantage of Lean production in NTUC Supermarket is that it is a stressful system which is relentlessly focused on results, therefore staff needs to be integrated into the lean culture of the company and proper training needs to be provided. Secondly, Lean production looks to eliminate waste of inventory, waste of space and waste of transport. Sometimes keeping just enough, isn’t enough. What if there is a drought and vegetables supplies are cut? What if there is a traffic jam and the fresh goods can’t reach the store on time? It can be a challenge to balance between overstocking and understocking.

Lean production can further help NTUC supermarkets be less wasteful by having flow racks in the fridge. Where the frozen store is at the back. This way, the staff can top up the stock by sliding it down from the back of the flow rack. This is implementing the first in first out (FIFO) rule of lean thinking. This will benefit goods that have a short expiry date such as milk and reduce wastage of goods due to expiration.

Lean production has helped the NTUC to design supermarkets which eases the process of consumers making milk-runs to the supermarket by eliminating the waste of time where the consumer realises what they want is not available and the waste of motion, where consumers need to go around finding what they need.

Socio-technical approach in McDonald’s

Over the years, we have seen McDonald’s beginning to take a Socio-technical approach in their organisation. One of the approaches is front counter automation where McDonald’s has developed kiosks to take orders from their consumers. What they have done is applying a manufacturing style of thinking to a staff intensive situation. The kiosk produces a standardised and satisfying output while minimizing the operation discretion of the staff. It also helps consumers order in a less stressful manner where they can be rushed or pressured facing a staff.

Another form of their Socio-technical approach comes from having a system that displays orders in the kitchen. When an order is received through the kiosk or counter, the order will be shown on a display in the kitchen and multiple orders can be shown at once. Once the order is done, the staff will cancel it off the display. This allows multiple staff to work on the order and predict the amount of ingredients that they need to prepare ahead which is a lot tougher to accomplish simply referring to the receipt.

The disadvantage is that staff needs to be trained to use the technologies and also adapt to new roles. A staff that is replaced by the automated kiosk now needs to learn how to help consumers use the kiosk and do table service. The maintenance cost of these technical systems can also be high.

There are multiple tasks that are happening at once in the restaurant during operational hours and especially in bigger McDonald’s restaurants, it can be quite chaotic for the staff. One of the possible recommendations is for McDonald’s to develop a central managing system for the store manager. Where the manager will know if there are tables to be cleared, consumers having difficulties with the kiosk machines, inventory that is running low or even when there is large amount of orders and you need more hands on deck. This system will allow the store manager better delegate tasks during peak operation timings and understand the trend to come up with better task assignments.

Socio-Technical approach has been an important tool to help McDonald’s develop new strategies to tackle manpower challenges and operational challenges. Using technical systems, consumers now has enhanced experience in the restaurant and employees are able to focus and deliver quality performances.

Socio-technical approach in NTUC supermarkets

In recent years, NTUC Supermarkets have taken a very strong Socio-technical approach in the continual change and development of their organisation. Amit (2014) explains how NTUC has tackled the challenge of facing a tight labour situation in a labour-intensive industry using a socio-technical approach. NTUC supermarkets now utilises self-checkout machines where 1 employee can serve between 4 to 6 customers where a typical check out counter is 1 employee at 1 check out counter. Other than solving manpower issues, this initiative has also helped to speed up the process of consumers paying for their goods, making it more efficient.

NTUC Supermarkets has also began using electronic price labels, where there is no need to physically replace paper labels where there is a price change, making this task more productive for the staff.

NTUC Supermarket has also launched their e-commerce platform, ‘FairPrice on’. This initiative allows consumers to shop online from anywhere and have it delivered to their doorstep. This platform has helped them to score an important competitive advantage as it reaches out to parents with very young kids, housewives and working executives. Eunice (2014) explains that this allows pregnant ladies or people with children to still get what they need without the need to carry bulky items such as bags of rice, milk powder and drinks or to make trips down to the supermarket. This is a good example of how socio-technical approach uses technology (e- commerce platform) to help people (consumers) with their given challenges (time constraints, unable to carry heavy things, etc.) to accomplish their task (grocery shopping) .The disadvantage of taking a socio-technological approach is the cost of developing and maintaining the technologies are high. Re-training of staff and change of their task is also needed. For self-checkout, the cashier is now a moderator where the staff helps the consumers facing problems with the machines. For the e-platform, the staff who does re-stocking have an additional task of packing grocery items that were ordered online and prepare it for delivery. With technology, there is also a high chance that it will fail if not maintained properly.

My recommendation for NTUC supermarkets is having a fully automated experience for walk in consumers. With large majorities having smartphones and Singapore pushing to go cashless, it is possible for consumers to just walk out of supermarkets without the hassle of going through checkout counters. A mobile app can be developed for consumers to scan as they shop. Before they leave the supermarket, they just need to pack their groceries and pay through their phones. Grocery shopping would be a fuss free experience. The app would be able to give them information they would need on the products they are looking at and also help them keep track of personal shopping lists and expenses, NTUC supermarkets on the other hand would be able to collect more data and help them build a more interactive and personal supermarket experience.

NTUC supermarkets has effectively utilised Socio-Technical approach in recent years to effect change and develop their organisation and have gained a competitive advantage. Using Socio-Technical approach, they have reduced the need for manpower and made the process of checking out easier. Productivity of employees has been increased. NTUC have also changed the concept of grocery shopping by bringing the supermarket to their doorstep literally.

Conclusion

In conclusion Lean production is important as a core tool for organisational change. Both McDonald’s and NTUC Supermarkets have applied Lean production theories to their work flow and has been successful in cultivating a lean culture. Socio-technical approach is the important top up onto Lean production, we have seen in the essay how socio-technical systems help to make task easier and in lean terms, reduce waste, in many areas of the organisation. Lean production builds a strong foundation for the organisation and Socio technology helps bring the organisation to another level so both tools are appropriate to effect changes in both industries.