MBA6900 Capella University Caesars Casinos Lean Operations Case Discussion

MBA6900 Capella University Caesars Casinos Lean Operations Case Discussion

Question Description
Focus on
What are the most important elements of the process-improvement approach pursued at Tunica? What benefits were derived from this approach?
What would be the advantages and disadvantages of adopting an expert-driven approach to process improvement at the Metropolis faciltiy, in contrast to the employee-centered approach used at Tunica? Which approach would you recommend for Metropolis, and why?
Assume Hirsch has decided to follow a high-involvement approach similar to the one he led at Tunica. What challenges and risks do you anticipate Hirsh will face in moving forward at Metropolis, and how should he be prepared to respond?
Assume service scores for the area you manage, Harrah’s Metropolis hotel housekeeping, have declined over the past year. As part of the LEAN rollout at Metropolis, you and some of your front-fine employees will participate in a kaizen event focused on improving guest-room housekeeping operations. What KPIs (key performance indicators) would you propose to track to determine whether the changes implemented through the kaizen effort actually improve performance?
Hirsch has been given 20 minutes at an upcoming meeting to pitch his idea for a process-improvement program to the rest of the Metropolis leadership team. What should he do before he gives the pitch? How should Hirsch organize this pitch and what information should he include?
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Caesars Entertainment capitalized the word “LEAN” to emphasize its role as a systematic program and distance it from
any connotations associated with a more narrow view that might suggest downsizing.
For the exclusive use of W. Du, 2019.
This document is authorized for use only by Wenyue Du in Operations Management-1 taught by DAVID LENDRY, Southern New Hampshire University from Jul 2019 to Nov 2019.
2 TB0389
spending. On a quarterly basis, weekly service-score data were averaged and used as a factor in determining staff
bonuses. The higher the percentage shift of B scores to A scores, when compared to the same quarter the prior
year, the higher the bonus for team members. At the end of 2008, the Caesars Tunica leadership team sought to
deliver more conversions from B to A scores, both to increase customer loyalty in a hypercompetitive landscape,
and to maximize team-member bonuses and enhance employee satisfaction.
Members of the Tunica executive team recognized that to reverse the declines in revenue and challenges
to profitability, and improve service scores and market share, would require engaging the entire organization.
However, one challenge was the absence of a consistent and systematic problem-solving approach through all
layers of the 24-hour, 7-day a week business. As one associate observed, “If your supervisor is passionate about
casino cleanliness, casino cleanliness becomes your top priority. But your next supervisor, or the supervisor of
the next shift, might focus on a completely different aspect of the customer experience.” Hirsch recognized that
LEAN, with its easy-to-understand tools and concepts, could create a consistent and focused approach to process
improvement for all layers of the business.
Kaizen Events as the Organizing Framework for Implementing LEAN at Caesars Tunica,
Mississippi, Casinos
In December 2008, Hirsch was appointed Regional Director of LEAN for the three Caesars casinos in Tunica.
He and the executive team saw the urgency for change, and knew they had to make the right improvements and
sustain them. Hirsch created a Regional LEAN Team by recruiting two experienced, high-potential leaders from
the casino operations in Tunica, each with a passion for process improvement. The team agreed to orchestrate the
LEAN rollout around a series of kaizen events. These were intensive five-day workshops involving employees from
multiple functions and levels working together to identify and improve target processes.2
For example, an early
kaizen event focused on improving hotel operations—from check-in to check-out. The kaizen team included a
department manager, bellhop, housekeeper, front desk clerk, supervisor, information-technology associate, and
a gaming-floor employee. The department manager’s participation ensured that she understood the work undertaken during the kaizen week and would be prepared to lead the follow-up activities that grew out of the event.
An initial challenge was that, to some casino employees, the word lean implied cutting jobs. To address
this challenge, members of the executive team consistently communicated that the goals of eliminating waste
via LEAN efforts were to improve the customer experience, increase process effectiveness, teach problem-solving
tools, and improve employees’ work environments—not to cut personnel. Sharing this message was important,
but Hirsch and his team knew they simply had to start conducting kaizen events so individuals would SEE that
jobs were not being eliminated. As Hirsch explained, “We thought our behavior would speak louder than our
words, and it did.”
The five-day kaizen workshops—each of which followed a similar structure (see below)—yielded immediate,
tangible improvements and laid the foundation for post-event efforts to establish a LEAN culture throughout
the organization. During calendar year 2009, Hirsch and his team staged 63 five-day kaizen events. These events
resulted in improved customer-service scores and $3 million in documented savings. Each five-day workshop included a set of activities intended to build knowledge, engage participants, solve problems, and develop solutions.
• Kaizen Day 1
Every kaizen event began with education about LEAN concepts. A major component of this education was
teaching employees to recognize waste (or, in Japanese, muda). Hirsch and his team used a memorable acronym for teaching waste recognition that seemed to resonate through the entire organizational hierarchy—
DOWNTIME (defects, overproduction, waiting, not engaging people, transportation, inventory, motion,
and extra processing). At each kaizen event, the facilitator explained DOWNTIME using examples from the
casino environment.
2
C. Marchwinski and J. Shook (Editors), Lean Lexicon: A Glossary for Lean Thinkers, Fourth Edition (Cambridge: The Lean
Enterprise Institute, Inc., 2008, p. 41.)
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This document is authorized for use only by Wenyue Du in Operations Management-1 taught by DAVID LENDRY, Southern New Hampshire University from Jul 2019 to Nov 2019.
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– Defects: Defects are mistakes that result in items being scrapped or reworked. Delivering a drink to
a customer with ice when the customer has requested no ice is a defect. Checking a guest into a hotel
room with the incorrect bed type (i.e., two queen-size beds instead of a king-size bed) is a defect. In both
situations, wasteful rework is required and the customer is left with a poor impression.
– Overproduction: This is production in excess of what the customer requires. Customers in one restaurant
were sometimes served water with three lemon slices. Most customers were satisfied with a single lemon
slice. As Hirsch explained, “Customers write us all the time to tell us what they love about our casinos in
Tunica, but occasionally getting additional lemons in their ice water is not a cause for customer delight.”
Producing three times as many lemon slices as necessary was waste because it consumed money and time
without creating additional value for the customer.
– Waiting: Waiting-time waste occurs when employees are idle or when customers must wait for service.
Time spent waiting adds no value to the product or service. If a gaming table runs out of a particular
dollar-value betting chip, the table-games supervisor signals for a chip replenishment. Chip replenishment
is a time-consuming process that, because of regulatory standards and asset protection protocols, requires
supervisor verification, travel to and from the cashier cage where money and chips are held, and engaging
a security guard to oversee the transport. During portions of the process, patrons and employees sometimes
must wait to resume gaming activity, which affects profitability of gaming operations. Similarly, if a hotelroom attendant cannot finish cleaning a room because sheets or towels from the laundry aren’t delivered
on time, the attendant may be forced to wait. This yields non-value-creating payroll expense and a delay
in room readiness for customers.
– Not Engaging People: Organizations incur waste when they don’t routinely ask employees, “What
would you change that would make your job easier to do and allow you to better serve customers?” Prior
to the introduction of LEAN methods, the majority of tactical process changes occurred as a result of a
top-down approach. Although some of these top-down solutions produced improvement, they did not
always achieve their highest potential. Without immediate feedback from the employees actually doing
the work, managers could not fully appreciate delivery-system challenges. For example, employees in one
area struggled to transport food carts across deep-pile carpeting in corridors, resulting in relatively long
transport times and employee fatigue. During a kaizen event, the employees who had experienced this
performance obstacle greatly appreciated having their voices heard.
– Transportation: This is the waste of resources, time, and effort involved in moving items and tracking
their locations. Damage and non-value-added payroll expense are always a risk when items are transported,
and transportation adds to process throughput time. Moving food, for example, does not add to its value.
One kaizen team tracked the life of a beer and discovered that a beer could be put into storage in up to
five different locations before being acquired by the beverage server for delivery to customers. Limiting
transportation frees employees for higher-value work, and, in the hospitality industry, can also help protect
product quality.
– Inventory: Inventory waste is incurred when material on hand exceeds current demand. Excess inventory
costs money, takes up space, can create a safety hazard, and becomes obsolete when customer requirements
change. Inventory is, in essence, dead money—money has been spent on something that is doing nothing
to create customer value. An examination of one of the Tunica warehouses revealed multiple pallets of
boxes of paper used to print vouchers for customers cashing out from slot machines. Each month, a team
ordered approximately $10,000 worth of slot paper, regardless of current inventory levels. This order level
had historically enabled the property to have the right quantity of slot paper on site. However, as business
levels declined for casinos in the Tunica region and slot volumes became more variable, a six-month supply
of slot paper accumulated in the Caesars Tunica warehouse.
– Motion: Any movement that does not add value to the product or service represents waste of motion. In a
food-service area, bottles of water were stored in a large tub-like container of ice (rather than a refrigerator)
to keep them cold. Servers incurred waste of motion every time they reached into the container, withdrew
a cold bottle of water, grabbed napkins from a nearby dispenser, and dried off the bottle before placing it
on a tray to deliver it to a customer.
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– Extra Processing: Extra processing occurs when unnecessary, non-value-adding work is performed. For
years, as part of the property’s security protocol, a security guard used a metal-detecting wand to scan bags
of trash coming out of the casino’s cash-counting room to ensure that coins were not being smuggled out.
This practice continued after the casino eliminated all metal coins from operations. No one questioned the
protocol to wand the trash because it was always done this way and was assumed to be a regulatory necessity.
D-O-W-N-T-I-M-E proved an effective analytical tool to help front-line personnel see the various types
of waste in work processes. In addition, Day 1 training also introduced several LEAN tools. Participants learned
about value stream mapping, spaghetti diagrams, 5S, Five Whys, one-piece flow processing, the pull discipline,
and the basic problem-solving approach (i.e., define the problem, seek out root causes, identify potential solutions, test them, keep what works, repeat). With an understanding of these LEAN principles and tools, the teams
were ready to improve their own processes. At the end of Day 1, each team agreed on the processes that would
be the focus of the week’s kaizen improvement efforts. The selected processes presented the greatest opportunities
to improve customer service and reduce waste.
• Kaizen Day 2
During the second morning, participants
mapped the work processes targeted for improvement. Team members engaged in what
was called a gemba3
walk, in which they went
to where the work was done, made notes on
what they individually saw, and gathered data
about each process step. Then they jointly
created a large, wall-display value stream map
of the process using sticky notes and simple
symbols (see Exhibit 1 for an example).
The afternoon of Day 2 was devoted to a
waste walk. Armed with a sheet that listed the
types of waste and using the DOWNTIME
rubric, each participant observed a segment
of the process and recorded every waste he or
she identified. In some cases, team members
counted how often a particular waste (e.g.,
walking to retrieve a forgotten item) occurred
and timed the duration. This information
helped teams to understand the effects of
the waste on the business. After completing
their observations, team members met to
share their waste discoveries, recording each
waste on a separate sticky note. A typical kaizen team identified between 60 and 80 points of waste in the
target process.
As part of the waste walk, a team member equipped with a copy of the area layout would follow a specific
person or product, drawing a line from start to finish every time the person or product moved to a new location. The result, called a spaghetti diagram, often provided compelling evidence of the motion and transportation waste inherent in the current way work was done. Exhibit 2 shows the spaghetti diagram of sandwich
production developed as part of a kaizen event focusing on kitchen operations.
In the afternoon of Day 2, team members categorized wastes by moving each pink sticky note into the appropriate quadrant on a wall-mounted matrix (see Exhibit 3). Specifically, the team determined whether a waste
would be easy or hard to remove and whether removing the waste would have a large or small effect on (1)
3 Gemba (also translated as genba) is the Japanese term for “actual place” and is often used to refer to the location where
work occurs.
Exhibit 1. Value Stream Map of Hotel Operations
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TB0389 5
safety, (2) quality, (3) delivery, (4) inventory,
or (5) productivity and cost. These were the
five key dimensions on which all areas were
evaluated.
Wastes that appeared in the top left (easy to
remove, large impact) quadrant (circled) were
the first targets of opportunity for the remaining days of the kaizen event.
At the close of Day 2, the kaizen team presented the work it had done so far to the
property’s executives. The team shared its
value stream map, waste-prioritization matrix,
and other analyses. This meeting had three
goals. First, the exchange of information at
the meeting helped ensure that senior leaders recognized the goal of the kaizen event,
understood the analyses the team had performed, and supported the direction the team
was headed. Second, the checkpoint meeting
provided an opportunity to seek senior executives’ assistance in removing barriers the team
anticipated (e.g., the need to purchase equipment, or a request for help in rearranging a
workspace). Third, the department manager’s
involvement in the kaizen team’s presentation
helped ensure his or her commitment to the
changes the team was developing.
• Kaizen Day 3
On Day 3, the team identified the root cause
of each waste in the easy-to-remove, large
impact quadrant of the matrix generated in
Day 2. In seeking out root causes, kaizen
teams relied heavily on the Five Whys lean
tool. This technique involves asking why five
(or more) times whenever a problem or waste
is encountered. For example, a team observed
that buffet attendants routinely polished clean
silverware. When queried, the area’s supervisor noted that over a typical 24-hour period,
about four hours of employee time was spent
polishing clean silverware. Applying the Five
Whys to this waste of motion, the team asked
and answered the following series of questions:
• Why are attendants spending four hours
a day polishing clean silverware?
– Because the silverware has spots that create an unacceptable presentation on the dining table.
• Why does the silverware have spots on it?
– Because the silverware comes out of the dishwasher with spots on it.
• Why does the dishwasher leave spots on the silverware?
– The dishwasher doesn’t hold a consistent temperature during one of the phases of the cleaning cycle.
Exhibit 2. Spaghetti Diagram of Sandwich Production
Exhibit 3. Waste Prioritization Matrix
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This document is authorized for use only by Wenyue Du in Operations Management-1 taught by DAVID LENDRY, Southern New Hampshire University from Jul 2019 to Nov 2019.
6 TB0389
• Why is one phase of the cleaning cycle not holding a consistent temperature?
– One portion of the current preventive maintenance protocol is not consistent with what the manufacturer
suggests in the dishwasher’s operating manual.
• How can we remedy the situation?
– Revise the preventive maintenance protocol to make it consistent with the manufacturer’s guidelines.
Based on this analysis, team members revised and adopted new preventive maintenance practices, and continued to evolve them over time.
• Kaizen Day 4
Day 4 was devoted to try-storming—proposing and testing possible remedies to root causes of problems
identified the prior day. For example, the team investigating the waste of motion in polishing clean silverware agreed to commit to better pre-wash procedures, and to institute routine preventive maintenance to
clear obstructions in the dishwasher tubing before they could affect the rinse water temperature. Preventive
maintenance design and scheduling were among the lean solutions frequently called upon to remove waste
from processes during kaizen events.
In another example, the team examining
kitchen processes try-stormed options for
arranging kitchen equipment and supplies
to reduce the time and motion involved in
preparing sandwiches. Exhibit 4 shows the
spaghetti diagram of sandwich production
in the revised kitchen layout (as contrasted
with Exhibit 2). Locating together the items
needed for sandwich production (an example
of work-cell creation) vastly streamlined the
time and motion required.
Another LEAN tool used by almost every
team in the try-storming phase was 5S, a term
referring to principles for creating a visual
work environment that is easy to understand,
execute, and maintain. The concept was
originally drawn from five Japanese words:
seiri, seiton, seiso, seiketsu, and shitsuke. These
have been translated into numerous S-words
in languages around the world. In English, the 5S are typically expressed as sort, set in order, shine, standardize, and sustain.
1. Sort: “If in doubt, throw it out” is the phrase that best describes this first S. Sift through everything that
has accumulated in the workplace and identify what is needed. Eliminate unnecessary or out-of-date
items.
2. Set in Order: “A place for everything and everything in its place” describes the set-in-order concept. Assign essential items to specific locations and clearly mark these locations. The objective is for anyone to
be able to find anything at any time quickly, and for it to be obvious when things are not in their proper
place.
3. Shine: Clean and inspect the workplace. After sorting and setting in order, houseclean thoroughly to
ensure that everything is clean, neat, and functioning properly.
4. Standardize: Standardize means to create and enforce policies and procedures that make 5S a daily practice,
not a one-time activity. This typically entails assigning responsibilities and putting in place policies such
as a daily five-minute shine—a brief period each day devoted to cleaning and ordering the workplace.
5. Sustain: Sustain means to institutionalize the above 4S’s throughout the entire organization so that 5S
develops deep roots.4
Training, communication, ongoing measurement, and promotion of 5S are essential
building blocks of sustain.
4
P. Dennis, Lean Production Simplified (New York: Productivity Press, 2007, p. 35).
Exhibit 4. Spaghetti Diagram of Sandwich Production
after Try-Storming
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This document is authorized for use only by Wenyue Du in Operations Management-1 taught by DAVID LENDRY, Southern New Hampshire University from Jul 2019 to Nov 2019.
TB0389 7
In applying 5S at Tunica, teams began by removing everything from the area under study and placing each
item into one of three piles: (1) items that were definitely needed and used, (2) items about which the team
was not sure of the need, and (3) items that were definitely not needed. Items in the not-needed pile were
discarded or repurposed. Items in the definitely needed pile were set in order—placed in a designated area.
Next, the team turned to the not-sure-of-the-need pile. Having just set in order the definitely needed items,
teams were able to take a fresh look at items in the not-sure-of-the-need pile. Teams often concluded that
much of the not-sure pile could be discarded or repurposed.
A kaizen event in the buffet kitchen applied 5S to the dry-goods storage area, where inventory was not systematically organized (see Exhibit 5, left side). Retrieving a specific item might require a lengthy search, and
items, once located, could potentially have passed their expiration dates. Further, duplicate items might be
ordered if the on-hand item could not be located quickly.
The kaizen team studying the dry-goods storage area discarded $8,000 worth of unused inventory, established
dedicated storage locations for the items that remained, marked the maximum inventory levels with tape on
the wall, and used eye-level labels with pictures to show what went where (see Exhibit 5, right side). The effort
simplified ordering and increased the speed with which items could be retrieved for use in serving customers.
To address the inventory challenge of slot paper described earlier, the kaizen team dedicated a lined-off space
in the warehouse for the boxes of slot paper and created a visual two-bin system. Two stacks of slot paper, each
of which represented a two-week supply, were located side-by-side. Team members placed a strip of tape on the
wall indicating the maximum height of the stacked boxes of paper. They added clear signage that reminded
warehouse personnel to withdraw boxes from only one stack at a time until it was depleted. Depletion of the
first stack triggered an order timed to arrive
before the second stack ran out (see Exhibit 6).
This system eliminated unnecessary orders and
reduced the annual inventory investment by
$60,000. And, because warehouse workers had
been part of the kaizen team that developed
this solution, they readily embraced the new
work procedures.
Through the application of simple tools, such
as 5S, a kaizen event typically eliminated
anywhere between 25%-90% of the waste
observations. This was a powerfully motivating
and rewarding exercise for employees who were
able to see that they could immediately remove
obstacles and improve frustrating aspects of
their work through the kaizen process.
Exhibit 5. Before and After 5S in Main Kitchen Dry-Goods Storage
Exhibit 6. 5S Two-Bin System
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8 TB0389
• Kaizen Day 5
On the morning of the last day of a kaizen week, the team presented its work to the property executive team
and managers. Team members shared their value stream maps, waste analysis and try-stormed solutions, and
described the follow-on improvements they planned to make, but could not complete, in the five-day kaizen
event window. These action items identified, but not yet implemented, were captured in the area’s Kaizen
Newspaper, which was posted in the work area and became part of the daily-management metrics board (see
Exhibit 9). The presentation on the last day was informative for senior leaders, and it also allowed them to
recognize kaizen team members for their hard work and reinforce the cultural shift taking place.
Post-Kaizen Pillars
The week-long kaizen events provided the foundation for creating a
LEAN culture. Solidifying the gains
and maintaining momentum to truly
transform the organization required
more than these week-long events,
however. Caesars Tunica’s House of
LEAN (see Exhibit 7) relied on three
post-kaizen pillars: standard work, key
performance indicators, and a focus
on daily problem solving reinforced
through gemba walks.
• Standard Work
Every kaizen event resulted in
new ways of performing routine
work activities, and each new work
process was documented with easyto-follow instructions that included
pictures and listed the tools required (see Exhibit 8). This standard work became the prescribed and repeatable
way of performing the task.
• Key Performance Indicators: The Daily-Management Metrics Board
Measurement played an essential role in keeping areas accountable for maintaining and extending the
improvements made during the kaizen event. “You get what you measure,” as the management adage holds.
After each kaizen event, employees in the work area developed a set of key performance indicators (KPIs)
that were consistent with the company’s overall operating objectives of safety, workplace organization (5S),
quality, delivery, inventory, and productivity-cost. These indicators (one or two per objective) were tracked
on a KPI Board posted in each area and updated on a daily basis. Performance was coded as red (below
expected performance) or green (at or exceeding expected performance). In addition to the key metrics,
the visual board also displayed the name of the individual responsible for maintaining the board, the list of
ongoing improvement efforts generated during the most recent kaizen week, and the area’s standard work
SOPs (standard operating procedures). The board documented barriers to service the team had identified and
described countermeasures the team had developed for removing or overcoming these barriers. For example,
a barrier to service quality for one team was insufficient training on the new standard work, which had been
developed during the kaizen event. To address this, the team planned additional training. Exhibit 9 shows the
standard board format adopted throughout the organization.
• Daily Problem Solving, Gemba Walks, and Executive Engagement
The KPI Board became the focus of daily problem solving. At a designated time each day, area team members
gathered around the board to discuss performance, report barriers, share improvement ideas, and decide on
next steps.
Once a week, representatives from Tunica’s executive team conducted gemba walks to observe processes and
hear from process teams about their ongoing improvement efforts. In each process area, the team and executives
Exhibit 7. Tunica’s House of LEAN
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TB0389 9
gathered around the area’s KPI Board to discuss red metrics and the status of countermeasures. The team also
shared the progress it was making in addressing the to-do items identified during the most recent kaizen event
and requested support, where needed, from managers and executives.
This ongoing engagement of top-level leaders was essential to sustaining momentum. The company
CEO, who had encouraged Tunica to develop a LEAN culture, followed the efforts of the program
closely, participated in gemba walks while on site, and personally called employees to thank them for
their improvement efforts.
Exhibit 8. Standard Work
Exhibit 9. KPI-Indicator Board Standard Format
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10 TB0389
LEAN Results in Tunica
In a little over a year, Hirsch and his team had conducted over 60 kaizen events, and more than 400 employees
had invested over 14,000 hours5
in the effort. Further, all 34 company vice-presidents and directors had participated in kaizen events. Service scores had improved in areas across the businesses, and many areas reached
the required three percent shift from B to A scores needed to maximize employee service bonuses. Moreover,
waste elimination had generated documented annual cost savings of $3 million. After witnessing these positive
results and seeing evidence of support from the top, departments began asking for kaizen events and employees
requested opportunities to participate on kaizen teams.
Managers and employees alike viewed the effort as an effective way of instilling a continuous improvement mindset in the organization. An IT manager observed, “Having done a few kaizen events, I continue to
see that this is a true employee engagement tool.” An accounting clerk who participated in a kaizen event noted,
“It was great to be considered an equal participant and to have input on big decisions that affect our work and
department.” One of the team’s cooks commented, “LEAN ought to be a way of life here.” And a table games
supervisor said, “I wish these kaizens had been implemented a long time ago. It would have made our jobs easier.”
A janitorial team member offered this perspective:
The LEAN program is a fantastic idea. It made my job a whole lot easier and less stressful. The
LEAN two-bin system eliminated the time I had to spend unnecessarily counting inventory each day.
I also feel more valuable to the property because I now play a role in ensuring my co-workers get
what they need to keep our property clean. I still can’t believe our CEO took the time to call me on
my cell phone to ask me about LEAN and congratulate me on our success.
Reflections on the Tunica Experience
Reflecting on the successful effort at Tunica, Hirsch was cognizant of several important lessons. One was the
vital role of senior leaders. Without their support, Hirsch knew the effort would have faltered. Their engagement—from participating in kaizen events, to routinely leading gemba walks—was key in demonstrating to the
organization that LEAN was real and here to stay. Still, he observed, there were some leaders, primarily at the
middle-management level, who were at times slower to adopt new operating practices or embrace the LEAN
cultural shift. In many cases, these managers were fearful of departing from long-standing operational practices
they personally designed, and thus were more inclined to defend. Furthermore, some managers could tend to
feel that a decision to abandon an existing process was a sign that senior leaders lacked confidence in their technical expertise. Hirsch and the other members of the Regional LEAN Team recognized, early on, the challenge
resistance to change could present and how it must be addressed to move the organization forward.
Another challenge within the organization was obtaining the financial support to make physical changes
(e.g., moving equipment) to implement kaizen recommendations. Physical changes sometimes required the
kaizen event leader to seek higher-level approval for the release of funds above a department’s current repair and
maintenance budget. Initially, obtaining additional financial support was a challenge because the senior leadership team sought to maintain expense discipline throughout the business. However, once the kaizens began to
yield tangible benefits, much of the hesitation to fund infrastructure changes diminished.
The Tunica experience also convinced Hirsch that the shock-and-awe implementation philosophy Caesars
casinos embraced had been effective. The team designed the kaizen events to be lightning fast and generate immediate results that would convince the rest of the organization that the initiative had merit. Hirsch observed:
“Our regional leadership team wanted to make it so big that our team members could feel the earth tremble
with operational improvements. This occurred as a direct result of how the Tunica team began to embrace the
intense kaizen spirit and the support we received in areas from the senior leadership team to Facilities to IT and
everyone in between. Everyone played a part.”
5
Based on the assumption that 400 employees engaged in at least one five-day kaizen event in which they invested about
36 hours (4.5 eight-hour days—events concluded at noon on Friday): 400 employees * 4.5 days * 8 hours/day = 14,400
employee hours.
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At the beginning of the LEAN initiative, Hirsch and his leadership team thought planning and executing the
kaizen events would be the most difficult aspect of implementation. In reality, this had been fairly straightforward
and extremely energizing for Hirsch’s team and workshop participants. What proved especially challenging was
sustaining the gains after a kaizen event. “We were constantly fighting the headwind to go back to the way things
had been done before.” It seemed to be human nature to drift backward to pre-LEAN behaviors. The post-event
emphasis on development of standard work, the use of KPI boards to monitor performance, and the daily problem
solving and gemba walks had helped to maintain momentum. Follow-up training also played an important role.
According to Hirsch: “Our Human Resources training team did a great job designing and executing training for
all team members affected by process changes stemming from kaizen events. In a 24/7 business, this proved to
be a very good countermeasure to help with team member buy-in and continuing support.” However, Hirsch
acknowledged that all of these efforts required significant commitment and time.
Hirsch believed the organization had created innovation around, and embraced, the grand objective of
creating a culture where problem solving, waste removal, and customer service improvement were ongoing parts
of everyone’s job.
Onward to Metropolis
The Metropolis, Illinois, casino was opened in 1993 and initially located on the Ohio River along the border
between Illinois and Kentucky.6
Caesars acquired the facility in 2000 and had operated it since then under the
Harrah’s nameplate. In addition to the riverboat that originally housed the casino, the site also included a convention center, several restaurants, and a 258-room hotel. In a typical year, Harrah’s Metropolis hosted more
than 600,000 visitors.
In November 2014, Harrah’s Metropolis Casino was relocated from the riverboat to the former convention
center space adjacent to the original land-based hotel. The new facility was a significant strategic capital project
aimed at improving the casino’s competitive position with a state-of-the art gaming floor, increased entertainment
offerings, expanded food and beverage amenities, and improved accessibility and comfort for customers. The
new single-level gaming floor featured more than 800 slot machines, 23 table games, a World Series of Poker
room, new restaurant, entertainment lounge, and three new bars.
Increasing competition was an important factor in Caesars’ decision to invest almost $9 million to relocate and renovate the Metropolis casino. The previous two years had seen the growth of competing gaming
options in both Illinois and Kentucky. In Illinois, recently passed legislation permitted certain enterprises (bars,
restaurants, truck stops, and fraternal organizations such as the Knights of Columbus or Elks Club) to operate
video-gambling machines. By one estimate, there were more than 15,000 such machines in enterprises across
the state by the end of March 2014. 7
In Kentucky, so-called Instant Racing8
allowed bettors to place wagers on
previously run horse races using a slot machine-like device.Despite issues around its legality,9
instant racing was
gaining in popularity.The Caesars management team recognized that the Harrah’s Metropolis property needed
to be seen by patrons and potential patrons as offering an entertainment experience that went well beyond the
video-gambling options readily available in other venues.
The Harrah’s Metropolis executive team also knew that non-gaming hospitality was becoming increasingly
important in the casino industry. Casinos in Las Vegas were experiencing well-documented increases in customer
non-gaming spending, and Harrah’s Metropolis patrons indicated a strong desire to enjoy additional non-gaming
experiences during their trips. Taking steps to ensure that the organization efficiently delivered hospitality service
that customers scored as A-level promised to have a positive effect on the bottom line. But what was the best
way to make this happen?
6
Metropolis (population 6,500), located in southern Illinois, was considered part of the Paducah, Kentucky, Metropolitan
Statistical Area (population 100,000).
7
Kurt Erickson, “Video Gaining: Illinoisans Get a Piece of the Action,” Illinois Issues, June 2014. http://illinoisissues.uis.
edu/archives/2014/06/videogaming.html (accessed October 25, 2014).
8
A race was randomly selected from a library of more than 50,000 races without identifying information such as location,
racetrack, horses running, or jockey. Based on limited racing-sheet information, the player placed a bet. The video ran and
the outcome was revealed.
9
http://www.kentucky.com/2014/02/20/3099342_kentucky-supreme-court-sends-instant.html?rh=1.
For the exclusive use of W. Du, 2019.
This document is authorized for use only by Wenyue Du in Operations Management-1 taught by DAVID LENDRY, Southern New Hampshire University from Jul 2019 to Nov 2019.
12 TB0389
Hirsch believed that an organization-wide process-improvement effort could contribute to the financial
success of Harrah’s Metropolis. As he walked the new casino floor, he saw opportunities to eliminate waste—from
excited patrons waiting for big jackpot payouts, to execution of inventory management for the new restaurant.
Although any one improvement might seem trivial, ignoring these small wastes could lay the organization open
to death by a thousand small cuts. The Harrah’s Metropolis executive team had delivered a successful construction project and opening, and the move to the new location seemed an ideal time to make a renewed push for
continuous operational improvement.
One thing that puzzled Hirsch, however, was the best approach to take. The initiative he led in Tunica had
demanded significant time commitments from all levels of the organization. An alternative for Metropolis was
to deploy a small group of highly skilled process-excellence experts who were experienced in the application of
LEAN principles and tools. These individuals would be charged with improving internal processes and procedures,
although all employees would be expected to contribute improvement ideas through various means (employee
focus groups, suggestion systems, and other avenues). This approach could offer a more efficient route to ongoing
improvement because it would not take employees away from their work responsibilities for extended periods
of time. With expertise-based process improvement, Hirsch’s team would not have to train line employees to
analyze and improve processes. He believed the cost and time involved would be significantly less than at Tunica.
The resource challenges associated with leading a single property also argued for a more top-down approach
at Metropolis. At Tunica, Hirsch had access to regional resources from three properties, enabling him to borrow
employees from other facilities to cover the work responsibilities of those participating in kaizen events. That
would not be as easy at Metropolis, with only 600 employees and a single facility—high-involvement kaizen
event activities could result in insufficient coverage of key service areas. A dedicated team of LEAN experts would
take the load off of employees and keep services running. On the other hand, he remembered how energizing it
was for employees to be involved in making their own work better.
As Hirsch scanned the gaming floor, he wondered what his next steps should be.
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This document is authorized for use only by Wenyue Du in Operations Management-1 taught by DAVID LENDRY, Southern New Hampshire University from Jul 2019 to Nov 2019.
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Appendix A: Background on LEAN Concepts
LEAN management, adapted in the West from the Toyota Production System, is a philosophy of continuous improvement that seeks to increase the competence with which an organization’s processes can deliver value to customers. Its
core aim is to eliminate waste that occurs in the form of waiting, rework, excess production, and so forth. Womack and
Jones in their seminal book, Lean Thinking, describe the essence of lean in five key principles.1
These principles, which
originated in manufacturing contexts, had been successfully translated to the service sector.
1. Determine what the customer wants. Begin by understanding what the customer values in the product or service.
2. Eliminate waste from the value stream. Determine how value is currently delivered to customers by studying the value
stream and identifying and eliminating wasteful steps and activities.
3. Wherever possible, use continuous flow. After eliminating wasteful activities, with the steps that remain, keep the work
flowing, without delay, from step to step. This involves locating successive operations in close proximity (a concept
associated with work cells) to produce items or serve customers one at a time, with each item or customer passed
immediately to the next step without interruption or delay. In manufacturing contexts, this is known as one-piece
flow. Continuous flow eliminates the delays and inventory associated with producing in large batches, where the entire
batch is completed at one step before any of the items in the batch move to the next step. The concepts apply just
as easily to services: customers flow seamlessly from one step to the next without delay, and do not find themselves
inventoried in long queues or waiting areas.
4. Use pull (not push) to govern how material flows between steps. Where continuous flow is not possible, let customer
demand govern how much and when to produce. Individual supplier steps should produce only what is required
to replenish what has been used by the consuming step. In some service settings, pull is a given because customers (e.g., patients, legal clients, restaurant patrons, casino guests,) can’t be processed in advance of their arrival or
expressed desire for the service. But, in more production-oriented activities such as restaurant services, pull implies
accumulating food supplies at levels that meet demand, avoiding the waste of spoilage or the risk of serving unfresh
food to customers.
5. Manage toward perfection: Continuously improve every process.
In LEAN parlance, a value stream is all the steps required to complete a product or service from beginning to end.
Although LEAN has traditionally been applied to the transformation of physical goods, value streams exist in any productive effort. A customer’s journey inside a casino—from arrival to departure—involved many different value streams,
each of which delivered a product or service experience: valet parking, hotel check-in, food and beverage services, gaming,
housekeeping operations, retail activities, spa services, and so on. Each of these value streams was a potential target of opportunity where waste could be identified and eliminated with the objectives of improving the customer experience—and
the organization’s profitability—by delivering a product or service better, faster, and at lower cost.
1
J. Womack and D. Jones, Lean Thinking: Banish Waste and Create Wealth in Your Corporation (New York: Free Press, 2003).
For the exclusive use of W. Du, 2019.
This document is authorized for use only by Wenyue Du in Operations Management-1 taught by DAVID LENDRY, Southern New Hampshire University from Jul 2019 to Nov 2019.