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Disclaimer--This paper partially fulfills a writing requirement for first year (freshman) engineering students at the University
of Pittsburgh Swanson School of Engineering. This paper is a student, not a professional, paper. This paper is based on
publicly available information and may not provide a complete analyses of all relevant data. If this paper is used for any
purpose other than the authors’ partial fulfillment of a writing requirement for first year (freshman) engineering students the
University of Pittsburgh’s Swanson School of Engineering, the user does so at his or her own risk.
COFFEE AND LEAN SIX SIGMA: REIMAGINING THE POTENTIAL OF
INDUSTRIAL ENGINEERING
Eileen Collie ([email protected])
LEAN SIX SIGMA: REVOLUTIONIZING
RETAIL OPERATIONS FOR AMERICA’S
MOST BELOVED COFFEE SHOP
Retail Operations is one of the least noticed, yet most
appreciated aspects of Industrial Engineering. Can you
remember the last time you walked into a coffee shop, and
left feeling like you had just been treated to an exclusive
experience? The supermarket where everything you needed
was accessible, including the staff? That little shop
downtown you just can’t pass by because the window
displays are so tempting? Whether you realized it or not, each
of these experiences was specifically tailored to make you
feel just that. These everyday experiences may seem simple;
however, they are much more complex than many believe.
They involve supply chain management, cost analysis, layout
design, and flow management--everything from how much
the company spends on a certain product, to how they market
it, to how many people they have selling it. Teams of
designers, businessmen, and engineers may spend months,
even years perfecting and crafting them, and they have
developed it down to a science: the science of people and
engineering. For the continuation of this paper, I will explore
one of the most notable methods for optimizing retail
operations: Lean Six Sigma--the methodology behind this
science. While criticized by some for its lack of creativity,
Lean Six Sigma has been successful for many familiar
businesses across the United States, including Starbucks as I
will discuss later, because of its ability to provide managers
and staff with meaningful data and practical solutions to
make their work easier to do, and more efficient for
customers.
RETAIL OPERATIONS: THE ART AND
SCIENCE OF PERSUASION
Some call it consumerism. I call it admiration. Since I
was a child, I have been fascinated by how people make
economic choices, and how brands can kindly coerce people
to change their decisions, or to keep making the decision, or
tell others why they are so happy they made that decision. I
take note of marketing and ways businesses tailor to customer
University of Pittsburgh Swanson School of Engineering 1
11.01.2016
experience. I was converted to Apple from Android by a
mere admiration of their ability to convince people that
owning their product made them a better person. I am willing
to pay $5.50 for a latte because I am so impressed that
Starbucks has convinced millions they need to do the same.
When it comes down to it, every business in America has
the primary function of making a profit, and the primary
function of our society is to have as much time as possible to
do what we love. Our capitalist economy functions on the
idea that if you can make something people want to buy, and
successfully persuade them of this, you will make a profit and
be “successful.” However, you must do it efficiently, because
the clock is ticking, and time is a valuable commodity to
everyone. In modern culture, specifically in the past decade,
the world of commerce and retail has shifted from mere
practicality to an “experience.” This experience must be
consistent yet personalized, efficient yet relaxed. This is the
paradox of Millennial consumerism. As one blogger and
retail operations specialist wrote, “Customers no longer want
their expectations met in retail - they want them
EXCEEDED!” [1] And countless studies over the past year
have shown that customers want a business who is honest
with their customers and seeks to connect with them, who can
operate without wasting time or resources (both of the
producer and consumer), and who can give back to society in
meaningful ways [2], [3], [4].
Not Only for Marking Majors: the Significance of Retail
Operations to Engineering
This then is the significance of retail operations. It is
significant because our consumer driven society obsessed
with time and “the experience” says it is. It is not significant
to every society. The majority of most countries worldwide
do not operate this way. So, if this topic is only significant to
Baby Boomers and Millennials in Upper Middle Class
America, why should engineers care? Why should anyone
care? Engineers are trained to make the world a better place.
They spend years earning degrees in practicality, efficiency,
and problem solving. This is the basis of every engineering
program and profession: to make the world a better place for
people. As this new branch of industrial engineering (IE) in
particular emerges, the engineering community should be
Eileen Collie
excited about the new opportunities to affect mankind at the
most basic level: economically, at the decision making level.
Many colleges are now even introducing retail operations as a
new concentration for IE majors, giving legitimacy to the
idea that engineers do have a place in the retail market [5].
As a future engineer and citizen of the United States, I am
excited that we as a country have reached the point where we
are no longer only consumed with providing for the basic
needs of the people. Engineers are no longer needed for the
sole purpose of survival. We have reached a point in
humanity where yes, there are still major world problems to
solve, but some of the problems we are allowed to solve are
for the pure purpose of making people’s lives more
enjoyable. This is the purpose of the retail operations
engineer: to make retail more enjoyable for consumers and
more profitable for businesses.
Negatives of Lean Six Sigma Methodology
Official Six Sigma training can be very costly, making it
hard for small businesses to afford, and without this proper
training, applying Six Sigma can lead to poor results as
neglecting even one factor of production and retail can skew
the end results drastically. Some small businesses, desiring to
utilize the Lean Six Sigma methodology but not able to afford
official training, will try to employ these technical and
complicated methods unofficially. Without this training,
mistakes are easy: wrong data entry, neglect of even a minor
factor of retail. These minor mistakes can skew the entire
analysis of the situation. While this is the primary complaint
many small businesses have with Lean Six Sigma
methodology, even some large businesses have complaints
with the system. Some companies have found that Lean Six
Sigma creates structures for management and production that
are too constricting to personality and creativity. Some also
argue that focusing too heavily on customer satisfaction can
cause businesses to spend more money than necessary and to
decrease profits because one far less expensive solution may
be shown by Six Sigma to create less customer satisfaction,
but in reality, any decrease in customer satisfaction it may
cause would be negligible compared to the monetary savings
[8]. For a theoretical example, the later illustration I will use,
Starbucks, might have found in their research that one, very
costly espresso machine might have been favored by 51% of
consumers, so Lean Six Sigma, through data analysis, would
show this to be the best option for increasing customer
satisfaction. However, because the percentage of customers
who enjoyed it more, compared to the cost is so small, it
would ultimately hurt the company more than help it.
LEAN SIX SIGMA: THE SCIENCE BEHIND
THE ART
What is Lean Six Sigma?
Lean Six Sigma is a subset or an approach of the Six
Sigma methodology, and one of the most technical ways that
companies can approach retail operations improvement.
While there is no one piece of technology specific to Lean
Management or Six Sigma, businesses over the years have
worked to refine the processes down to a fine science, with
the steps of each philosophy mirroring the scientific method
closely. There are also many softwares which apply the
principles of Lean Six Sigma and allow businesses to analyze
and track data according to this methodology including
6Sigma, Analyse-it, and Apogee.
Six Sigma, as one training program states, is
designed, “to eliminate defects and waste, thereby improving
quality and efficiency, by streamlining and improving all
business processes,” whereas, “the main emphasis of Lean is
on cutting out unnecessary and wasteful steps in the creation
of a product so that only steps that directly add value to the
product are taken” [6]. First introduced by Toyota, Lean
Management focuses on five steps to eliminate waste
including defining the problem, analyzing current data,
finding solutions, responding to customer feedback, and
continually working for improvement. Six Sigma on the other
hand, pioneered by General Electric, focuses on the pursuit of
perfection led by management. While for some time there
was debate about whether Six Sigma or Lean was the better
system, many business are now combining the two into Lean
Six Sigma, applying principles of Lean to the Six Sigma
technology to create a much more effective and complete
process.. Together, Lean Management and Six Sigma provide
businesses with, “Continuous, efficient feedback on its
processes and put[s] a system in place that ensures
organizational excellence based on the feedback” [7].
Positives of Lean Six Sigma Methodology
On the other hand, Lean Six Sigma encourages companies
to continually seek to find the root of the problem rather than
wasting time on surface level issues. The method as a whole
demands that the well-trained user clearly define every aspect
of the problem and then clearly analyse its effect on every
part of the whole. This time using Starbucks as an actual
example: when approaching the efficiency issues Starbucks
wanted to address, they began by running lab tests, modeling
the situations, speaking to customers, employees, and
management, and collecting data from every step of the
process. After applying Lean Six Sigma analysis to this data,
they once again ran tests both in labs and in store, and
continually looked for feedback and improvement. Like in
this example, Lean Six Sigma creates attainable goals and
provides management and employees alike with practical
steps to reach these goals. The data collected by using Lean
Six Sigma Methodology has real-world significance both
quantitatively and qualitatively, providing businesses with an
accurate and precise representation of the effectiveness of
their policies. Ultimately Lean Six Sigma has been proven to
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Eileen Collie
increase revenue by increasing customer satisfaction and
decreasing waste time after time [8].
matter. Coffee shops have become a place for reunions, first
dates, study sessions, and philosophical conversations.
Starbucks, the largest coffee chain in the world, has been
using Lean Six Sigma methodology for over a decade. While
they were severely criticized initially, ultimately it led only to
their massive success. Starbucks first introduced their new
experiment in the early 2000s. While there were many behind
the scenes factors involved, the primary way the everyday
experience of the customer changed was in the way their
coffee was made. Prior to this, all the espresso was
handroasted and baristas were allowed to make the beverages
in whatever way they felt best suited them. When Lean Six
Sigma was introduced, the entire bar was rearranged, and a
new machine which both roasted the espresso and steamed
the milk replaced hand roasting [9], [10].
Lean Six Sigma Methodology: Saving Time and
Personalizing Retail Through an Engineer’s Mind
Lean Six Sigma provides the most technical approach to
operations management. Often this technical approach
requires someone very highly technically trained both in data
analysis and efficiency. Who better for the job than an
Industrial Engineer? Lean Six Sigma boasts many “firsts.” It
was the first methodology which brought science to the field
of retail, not only manufacturing. It was also the first method
to invite engineers into the world of retail, which actually
required that engineers be involved. While Lean Six Sigma
certainly has significant potential in other areas of more
significance worldwide such as efficiency in emergency
rooms or new infrastructure and processes for technology and
manufacturing in undeveloped areas, this chance Lean Six
Sigma provides engineers to add simple enjoyment to the the
lives of people in a meaningful way should also be highly
exciting specifically to hopeful industrial engineers like me,
who feel torn between the world of retail and business and
the world of math and science.
In my opinion, the most fascinating result of the Lean Six
Sigma methodology to engineering and society, however, is
the paradox it creates within engineering and its influence on
American society. For decades, engineers have been famous
for creating machines and technology which in many ways,
take the place of man, replacing manual labor with
mechanisms. Still today, many engineers are criticized for
being analytical, unemotional, and out of touch with
humanity, even though they are the ones providing oftentimes
for our most basic needs. However, Lean Six Sigma turns that
notion on its head. Now, engineers are the driving force for
an entire system based on interpreting customer demand and
the ability and resources of its workers to create practical,
efficient solutions for the retail industry. While Six Sigma
may still be criticized for its rigidity and technicality, there is
no doubt it has revolutionized the way many businesses serve
their customers, employees, and communities.
Starbucks and Lean Six Sigma Cannot Please Everyone
At the time it was introduced, it had many critics. Baristas
and customers alike criticized the method for being too rigid
and impersonal. Customers could no longer see their drinks
being made, and the espresso was no longer handcrafted. For
a few years, their sales dropped and the company struggled
(for Starbuck’s standards). CEO Howard Shultz himself even
sent out an apology letter of sorts explaining his internal
struggle regarding the change. [11] One blogger wrote,
“That’s exactly what they are now—a bunch of coffeemaking machines . . . lean has transformed what used to be a
pleasant experience into an expeditious, efficient, but in the
end, unsatisfactory customer experience” [12].
But They Can Please Many
So, one might ask, were there any positives? How does
Starbucks still exist today if so many customer were so
unsatisfied with the change? Some customers and baristas
loved it. Many customers found that their drinks were faster
and more consistent and the quality of the service they
received in reality was the same, if not improved. Baristas
reported they were often able to provide better service
because they were less hectic, more organized, and were able
to be more consistent. Because of this, they had more free
time to interact with the customer without fear their work
would suffer [13].
John Shook, “Former director of the University of
Michigan, Japan Technological Management Program, and
faculty of the university’s Department of Industrial and
Operations Engineering,” and the Lean Six Sigma consultant
for Starbucks himself wrote after much criticism, “Instead of
barista's having to stop to search for things that are in the
wrong place, or aren't there at all, the goal is to make as many
things as possible routine so that the barista can spend just a
few more seconds talking with the customer. That's the goal.
No workarounds due to the line backing up, no short-cuts to
get caught up – handling each unique order as it should be
STARBUCKS AND LEAN SIX SIGMA:
COFFEE AND EFFICIENCY
How Starbucks uses Lean Six Sigma to Maximize
Efficiency and Minimize Error
While large, somewhat impersonal companies such as GE
and Toyota may have been the first to revolutionize Lean and
Six Sigma methodology, they are not the only ones. In fact,
one of the most personal retail industries in the market today
is also well known for finding success with this method. For
many people coffee is a very personal and even religious
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Eileen Collie
handled, in stride, without burden, and to the customer’s
satisfaction” [14]. And given the fact that Starbucks today is
still at the top of its game, he was right to assume his mission
was a success.
[3] “What Consumers Want from Brands in 2016.” Carol
Cone on Purpose. 01.11.2016. Accessed 10.21.2016.
http://www.purposecollaborative.com/what-consumers-wantfrom-brands-in-2016/#
[4] J. Overstreet. “4 Ways Consumer Attitude Will Shift by
Next Year.” National Retail Federation. 01.26.2016.
Accessed 10.21.2016. https://nrf.com/news/4-waysconsumer-attitudes-will-shift-next-year
[5] T. Woensel, M. Fisher, J. Fransoo. “Teaching Retail
Operations in Business and Engineering Schools.” Beta.
2010. Accessed 10.21.2016.
http://cms.ieis.tue.nl/Beta/Files/WorkingPapers/wp_317.pdf
[6] “Six Sigma vs Lean Six Sigma.” Villanova University.
2016. Accessed 10.21.2016.
https://www.villanovau.com/resources/six-sigma/six-sigmavs-lean-six-sigma/#.WAv2lJMrLVq
[7] D. Weiser. “How Lean Six Sigma Works.” Investopedia.
05.13.15. Accessed 10.22.2016.
http://www.investopedia.com/articles/investing/051315/howlean-six-sigma-works.asp
[8] “Pros and Cons of Six Sigma Methodology.” Six Sigma
Online. 2016. Accessed 10.21.2016.
http://www.sixsigmaonline.org/six-sigma-trainingcertification-information/pros-and-cons-of-six-sigmamethodology/
[9] Corey. “Starbucks’ Productivity Secrets: More to it Than
Caffeine.” Knote. Accessed 10.21.2016.
http://knote.com/2014/10/28/starbucks-productivity-secrets/
[10] J. Dager. “Does Starbucks Consider Themselves a Lean
Organization?” Customer Think. 08.28.2013. Accessed
10.21.2016.
http://customerthink.com/does_starbucks_consider_themselv
es_a_lean_organization/
[11] “Howard Shultz’s Starbucks Memo.” Accessed
10.21.2016. http://d1m3qhodv9fjlf.cloudfront.net/wpcontent/uploads/2015/10/Howard-Schultz-memo-2007.pdf
[12] R. Carey. “Starbucks’ Lean Ruins the Experience.”
Quality Digest. 08.09.2009. Accessed 10.21.2016.
http://www.qualitydigest.com/inside/twitter-ed/Starbuckslean-ruins-experience.html
[13] M. Graban. “Real Lean at Starbucks or Tayloristic
Industrial Engineering?” Lean Blog. 09.14.2010. Accessed
10.21.2016. http://www.leanblog.org/2010/10/lean-atstarbucks-or-tayloristic-industrial-engineering/
[14] J. Shook. “A Lean ‘Teachable Moment.’” Lean
Enterprise Institute. 08.07.2009. Accessed 10.21.2016.
http://www.lean.org/shook/DisplayObject.cfm?o=1085
[15] B. Roemmele. “Why is the Starbucks Mobile Payments
App So Successful?” 03.13.2014. Accessed 10.21.2016.
STARBUCKS AND BEYOND: HOW THE
LEAN SIX SIGMA METHODOLOGY IS
CHANGING RETAIL OPERATIONS
Through their entire retail operations experience with
Lean Six Sigma, Starbucks has been open and honest with its
customers and staff about its failures and successes. Their
successes with Lean Six Sigma methodology mark a very
significant example of a retail store which customers from all
backgrounds all around the world interact with every day on a
very personal level. And this entire process was orchestrated
and led by a current staff member of one of the best Industrial
and Operations Engineering departments in the country. The
balance between efficiency and personality that Starbucks has
been able to find is remarkable. In the past few years most
notably this process has led to its massively successful
Starbucks Mobile app including a rewards, payment, and
ordering program--the first and still most successful of its
kind [15]. This app, a continuation of Starbuck’s Lean Six
Sigma goals has given customers both a personalized rewards
program, and a highly efficient and reliable yet customizable
way to both order and pay their coffee promptly and
conveniently. During highschool, I would order coffee many
mornings every week. I had to pass my school’s exit to get to
the closest Starbucks, but it was still consistently faster and
more enjoyable than going to the Panera much closer to my
school. When I walked in, the barista was already looking for
me. They all knew my name, handed me my consistently
delicious drink with a “Goodmorning Eileen!” and a smile,
and I was on my way. That is what I call quality, personal
customer care. While this may seem trivial to humanity as a
whole think of what this experience is giving me: extra time,
a friendly face-to-face interaction with a member of my
community, and delicious coffee to kick-start my day. This is
what the Lean Six Sigma Approach to Retail Operations can
offer society. And to think analytical out-of-touch engineers
are behind the whole thing.
SOURCES
[1] M. Hudson. “Customer Experience Engineering.” The
Balance. 10.19.2016. Accessed 10.21.2016.
https://www.thebalance.com/customer-experienceengineering-3994937
[2] S. Thimothy. “What You Should Know About Consumers
in 2016.” American Express Open Forum. 2016. Accessed
10.21.2016. https://www.americanexpress.com/us/smallbusiness/openforum/articles/ceos-know-todays-consumers/
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http://www.forbes.com/sites/quora/2014/06/13/why-is-thestarbucks-mobile-payments-app-sosuccessful/#790f76344c2a
ACKNOWLEDGEMENTS
I would like to thank the men and women who work every
day to make retail operations for efficient and enjoyable for
customers like me. I would specifically like to thank the
baristas at my hometown Starbucks for remembering my
name and my order every time. I would also like to thank my
roommate for providing comic relief when I needed a break
from writing this paper, and my mother for always being
there when I needed to rant about how much work is on my
plate.
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