Tamago Ya- The King of Operational Excellence
We always keep talking about operational excellence through operational harmony. From HBR case studies to Ivy League courses, one gets to hear these terms a lot. There are a lot of companies from McDonalds to Walmart to Amazon that have time and again demonstrated operational excellence by streamlining supply and demand that has in a way pleased their customers to an extent that they turned loyalists. Unfortunately not many have heard about operational excellence that the Japanese achieved , who in fact were the first ones to even realize there is such a thing. The rest as they say is history. I am not going to talk about what Toyota unleashed in the automobile sector but rather a very unusual, underrated example that not many have heard about and it’s quite powerful. It appeared as a case study in one of my Stanford classes on operations but has stuck with me till date because what this company achieved by any means isn’t possible at all.
Say hi to Tamago Ya- one of Tokyo’s leading Luncheon Service. What makes Tamago Ya unique is the fact that everyday they serve lunch to 70,000 plus people in Tokyo and yet there waste is just 0.06%. Now this is the point where we might think of powerful scheduling algorithms that might be called into play but that’s where it gets interesting. But before we even go there, one would need to understand the actual reason why Tamago Ya has such minimal waste. So everyday the process starts at 4 AM when Tamago Ya has vendors supplying them fresh ingredients, vegetable, fish and meat for cooking those lunches. For every category there are multiple vendors to take care of any last minute contingency. This is the sequence of events that happen daily
The Tamago Ya drivers gather inputs from customers by talking to them informally every morning and evening to understand the actual demand and then forecast based on it
Tamago Ya receives its ingredients from its set of vendors at 4 AM.
The food preparation starts at 6:30 AM and till then everything is running on the forecasting that’s been done on the demand by the drivers.
By 8:30 AM the first batch of vans load the food to be enroute to different areas and even till then no actual orders have been received.
By 9 AM orders start happening through phone, fax or through the internet. Production is continued based on forecasting estimates and with actual orders a little bit of adjustment is made.
Between 10 AM to 10:30 AM, the first batch of drivers arrive at their respective locations.The drivers then wait for headquarter to call and inform them about any new order to make further adjustments.
By 10:25 AM the second batch of vans depart for their actual customer locations based on long distances.
By 11 AM the third batch of drivers depart to fulfil orders at small distances.
Between 11 AM and 12 PM, the difference between actual orders versus forecasted orders is adjusted one final time to patch up the difference. Tamago Ya also runs a special set of vans called adjusters loaded with extra lunch boxes to take care of the demand adjustment.
While all this is happening there is a 3 way communication happening between the drivers, the call centers and headquarters to ensure the deviations are taken care of.
The customers are instructed to finish lunch by 1:30 PM because beyond that time , they will go bad.
Then at 5 PM the drivers appear again to pick up the lunchboxes and talk to their customers in a more informal way to understand the demand for the next day. Based on the demand inputs collected , a meeting happens every evening to discuss forecasting.
On an average Tamago Ya delivers 70000 lunches per day. That number could have changed now.
Now that we understand how operationally effective Tamago Ya’s strategy is for demand fulfilment, let’s look at certain unique practices that the company indulges
To start with, Tamago ya’s forecasting process is a fully manual process. There are no systems that do forecasting using some machine learning algorithm. The backbone of their forecasting process is the conversations their drivers have with the customers to collect their feedback and also understand the demand curve for the next day. It’s an engineering marvel and a gigantic feat unheard of in today’s world with as minimal waste as one can imagine.
Tamago ya uses reusable tiffins than disposable even though they are a bit expensive because they can be used for over a year and are not made from plastic which is injurious to health. At the same time, these reusable tiffins are created in a shape that allows almost 400 plus tiffins to be stuffed in a van easily which is twice the amount of tiffins that vans usually can carry if it were disposable tiffins. So they reap enormous profit by using reusable tiffins.
As stated earlier Tamago Ya has access to the best ingredients available in the market and it never compromises on the quality of food. Ingredients and vendors are changed if they don’t pass a quality check on a daily basis.
All the transportation and logistics happens via effective co-ordination between drivers, call centers and headquarter which results in picking up optimal routes for delivery which ensure timely delivery of luncheon across Tokyo.
The menu is decided 14 days in advance to avoid any last minute glitches instead of a month long period observed by most restaurants to have provisions for any changes.
The menu for a day remains the same but the menu changes every day accommodating any change based on inputs received from customers the previous evenings.
Last but not the least, every employee who works for Tamago Ya is an ex convict. They have all served jail and were employed directly from there to give them a second chance.
This is one of the most creatively amazing companies I have heard of till date. Fact is the founder Isatsugu Sugahara was a convict himself and when he started as an entrepreneur after his release he discovered it’s actually quite difficult for ex convicts to secure a job as society shuts their doors on them. A lot of ex convicts get into depression while a lot commit suicide. He was empathetic to them and decided to only hire ex convicts in Tamago Ya. This was a revolutionary move because it changed the lives of many people who were out of the prison system and were looking for a ray of light and this was it.
Tamago Ya proves how one can run an effectively amazing companies with minimal technological support if one listens to customers effectively and takes out effective insights out of it. The real question is- Are companies willing to listen in this world where everyone loves to talk?