Total Quality Management

Application of Kanban System

in Hotel Industry
Submitted By
Group Members:
Noman Javed (Group Leader)
Bakht Ali
Muhammad Faris
Syed Hassan Hasan Zaidi
Muhammad Shoaib Anwer
Class:
BBA-7B (MOR)

Submitted To:
Course Instructor:
Mr. Azhar Nisar, Cdr (R) PN

Assistant Professor Bahria University

Submission Date: _______________

Our efforts on this report are solely dedicated to our loving

and supportive teacher

BBA-7B

Bahria University

ACKNOWLEDGEMENT
In the Name of Allah, the Most Gracious and the Most Merciful, All
praise and thanks are due to Allah, and peace and blessings be upon His
Messenger.

This Report could not be completed without the blessings of Almighty

Allah, the Omnipotent, and the Most Merciful. Without His Will nothing
in this world is possible. He gave us the strength and the will to strive
for success at every point in life. Even if we praise and thank him a
million times, we would not be able to compensate for that entire He has
given us.

we would also like to express our deepest gratitude to our teacher and
mentor, Mr. Azhar Nisar, Cdr (R) P.N, who encouraged us to put in our
utmost efforts in making this report, a milestone in our life. It was a
great learning and enlightening experience for us.

Application of Kanban in Hotel Industry

Page 1

BBA-7B

Bahria University

TABLE OF CONTENTS
Executives Summary
Abstract
Aims & Objectives

04
05
05

Introduction
Kanban
Origin
Kanban Cards
o
o

Withdrawal Kanban
Production Kanban

Three bin System

Visual Management System
Yum & Pizza hut Introduction
o
o

06
06
06
07
07
08

P.E.A.R.L.S
Mission Statement

Background History
Pizza Hut Pakistan
Head office

09
09
09

Report & Analysis

Part I

Supply Chain Network of Pizza hut

Pictorial Supply chain of Pizza hut
Ware house
Mode of transportation

10
12
13
14

Part II
Kanban System in Pizza hut
Pictorial Diagram of Inventory Flow
Research design and methodology

15
18
19

Conclusion
Recommendations
Comments by the researchers
Responsibility & work contribution among the group
Members

Bibliography
Questionnaire
Application of Kanban in Hotel Industry

20
20
20
22
23
23
Page 2

BBA-7B

Bahria University

REMARKS BY COURSE INSTRUCTOR

Application of Kanban in Hotel Industry

Page 3

BBA-7B

Bahria University

EXECUTIVE SUMMARY
During the past four decades Pizza Hut has built a reputation for excellence that
has earned the respect of consumers and industry experts alike. Building a leading
pizza company has required relentless innovation, commitment to quality and dedication
to customer service and value. The qualities of entrepreneurship, growth and leadership
have characterized Pizza Huts business through more than four decades of success.
Through the strength of its heritage, its culture and its people and franchisees, Pizza
Hut looks forward to more success in future.
There are different objectives of every organization. In order to achieve these
objectives different targets are set. Targets pass down the hierarchy depending on the
nature of the business. Therefore, in order to achieve the objectives, management
decides on different strategies. These strategies are divided into many sub-parts and
are useful for the running of the business. The employees and the management know
what they have to achieve through the targets which have been set to them and the
strategies they have adopted help them know the way they will achieve the objectives.
Pizza Hut has different targets set to them and they have adopted different
strategies to successfully achieve the targets set. These targets are set by the RSC i.e.
the Restaurant Support Centre in Shaheed-e-Millat road Karachi. These targets are
passed on to the RGM (Restaurant General Manager) and he passes them to the
workforce. These targets fall within the organizational structure in which there are many
people who have different targets to achieve. In order to successfully achieve the
targets they need to co-operate and work in a friendly environment.
Among those strategies Pizza hut is using the three-bin and card system of
Kanban successfully in their restaurants. As Pizza hut has a very strong Supply Chain
Network which support this strategy (Bin Card System) application in its restaurants.
In whole report we have discussed about the Kanban system in pizza Hut. In
order to know that how does Pizza Hut manage its inventory; we met with the key
individuals of Pizza Hut. After Interviewing and visiting their restaurants we came to
know that in pizza hut usually ingredients are perishable which are used in making a
pizza (core Business activity) so thats why they are very careful to keep them save in
the cold store room called in-store warehouse where they keep these items. Regarding
the inventory management of pizza hut, it cannot hold large inventory because of risk of
wastage of materials as it holds a large amount of perishable items in their inventory.
Data of customers is stored in the data warehouses of outlets. This data is come
from the OMS (Order Management System) of DSC (Delivery Support Center) and from
the restaurants as well. On the basis of this data demand is estimated according to the
mutual participation of all managers of the different outlets. Then inventory is set
according to the data and than three-bin system and bin-card system are used in order
to manage the inventory level in pizza hut.

Application of Kanban in Hotel Industry

Page 4

BBA-7B

Bahria University

ABSTRACT
The purpose of our research was to know about the application of Kanban in
hotel industry of Pakistan that how organizations in this industry apply the concepts and
strategies of Kanban in their operations. In order to conduct a detailed research and to
further know about the implication of Kanban, we had following Aims & Objectives.

Aims & Objectives

To get knowledge about TQM course.
o How quality is achieved through TQM tactics.
o What measures organizations use for quality control.
To know about Kanban system and its application in hotel industry
o What is Kanban System and how it is implemented in Hotel Industry.
o How firms practically use this strategy (Kanban System)
o To know about the steps taken by hotel industry in order to implement the
Kanban System.
To know which kind of Kanban system is used in Pizza Hut
o To know that either they use Electronic Card System, Three-Bin
System or Visual Management System.
To get knowledge with the help of course instructor about the method of effective
research in todays competitive environment.

Application of Kanban in Hotel Industry

Page 5

BBA-7B

Bahria University

INTRODUCTION
What Is Kanban?
Origin
The term Kanban describes an embellished wooden or metal sign often
representing a trademark or seal. Kanban became an important part of the Japanese
mercantile scene in the 17th century, much like the military banners had been to the
samurai. In the late 1940s, Toyota began studying supermarkets with a view to applying
store and shelf-stocking techniques to the factory floor, figuring, in a supermarket,
customers get what they need, at the needed time, and in the needed amount.
Furthermore, the supermarket only stocks what it believes it will sell, and customers
only take what they need because future supply is assured. This led Toyota to view a
process as a customer of preceding processes, and the preceding processes as a kind
of store. 1
Kanban also spelled Kamban and literally meaning "signboard" or "billboard is a
concept related to lean and just-in-time (JIT) production. According to Taiichi Ohno,
the man credited with developing Just-in-time, Kanban is one means through which JIT
is achieved. Kanban is not an inventory control system. Rather, it is a scheduling
system that tells you;
What to produce
When to produce it
How much to produce
There are two type of KANBAN system which is given as follows
1: Kanban Card
2: Electronic Kanban System
1. Kanban cards
Kanban cards are a key component of Kanban that utilizes cards to signal the
need to move materials within a manufacturing or production facility or move materials
from an outside supplier to the production facility. The Kanban card is, in effect, a
message that signals depletion of product, parts or inventory that when received will
trigger the replenishment of that product, part or inventory. 1
Kanban cards, in keeping with the principles of Kanban, should simply convey
the need for more materials. A red card lying in an empty parts cart would easily convey
to whomever it would concern that more parts are needed. There are two types of
Kanban cards which are given as under;
Withdrawal Kanban
Withdrawal Kanban specifies the kind and quality of product which a manufacturing
should withdraw from the preceding process.
Production Kanban
Production Kanban specifies the kind and quality of product which is the preceding
process must produce.
Application of Kanban in Hotel Industry

Page 6

BBA-7B

Bahria University

2. Electronic Kanban System

In the last few years, Electronic Kanban systems, which send Kanban signals
electronically, have become more widespread. Many manufacturers have implemented
electronic Kanban systems. Electronic Kanban systems, or E-Kanban systems, help to
eliminate common problems such as manual entry errors and lost cards E-Kanban
systems can be integrated into enterprise resource planning (ERP) systems. Integrating
E-Kanban systems into ERP systems allows for real-time demand signaling across the
supply chain and improved visibility. Data pulled from E-Kanban systems can be used
to optimize inventory levels by better tracking supplier lead and replenishment times. 1

Three-bin system:
A simple example of the Kanban system implementation might be a "three-bin
system" for the supplied parts (where there is no in-house manufacturing) one bin on
the factory floor (demand point), one bin in the factory store, and one bin at the
suppliers' store. The bins usually have a removable card that contains the product
details and other relevant information the Kanban card. 1
When the bin on the factory floor becomes empty, i.e., there is demand for parts,
the empty bin and Kanban cards are returned to the factory store. The factory store then
replaces the bin on the factory floor with a full bin, which also contains a Kanban card.
The factory store then contacts the suppliers store and returns the now-empty bin with
its Kanban card. The supplier's inbound product bin with its Kanban card is then
delivered into the factory store completing the final step to the system. Thus the process
will never run out of product and could be described as a loop, providing the exact
amount required, with only one spare so there will never be an oversupply. This 'spare'
bin allows for the uncertainty in supply, use and transport that are inherent in the
system. The secret to a good Kanban system is to calculate how many Kanban cards
are required for each product. 1

Visual Management System:

Visual Management is a structured approach to ensuring quality, and reducing
waste, throughout your work processes. Visual Management is a structured approach to
reducing waste, optimizing productivity and ensuring quality. In this one-day workshop
youll learn visual management techniques for
Exposing waste so it can be eliminated and prevented from recurring
Making a companys operation standards known to all employees so they can
easily be followed
Improving workplace efficiency through organization Visual Solutions &
Improvements can make your processes safer and more efficient. VSI gives you
advice and can help you implement visual management in your company.
By using visual management, VSI can cut your costs drastically. Visual management is
visualizing goals and presenting criteria, describing standard procedures and simple
tools to prevent unnecessary errors. This makes it possible for employees to work faster
and/or safer, because they don't need to read manuals anymore. 1

Application of Kanban in Hotel Industry

Page 7

BBA-7B

Bahria University

Something about Pizza Hut

Introduction
YUM (lip-smacking), word is derived from yummy which means delicious &
Tasty. YUM is a Brand name and the objective of this brand in to provide delicious &
tasty food to their worldwide customers and to put a YUM on their customer Face.7
Pizza Hut is one of the flagship brands of Yum! Brands, Inc., which also has
KFC, Taco Bell, A&W and Long John Silvers under its umbrella. Pizza Hut is the
worlds largest pizza chain with over 12,500 restaurants across 91 countries and has
annual sales around $10 billion.
Pizza Hut is a YUM! Food brand, which means it, has a comprehensive
sustainability report that the public can access. Pizza Hut is also in the process of
exploring green building design and has already incorporated some efficient fixtures in
its stores. Pizza Hut offers boxes made with some recycled content. Pizza Hut also
offers some natural ingredients in some of its items. Finally, Pizza Hut is beginning to
track the impact of its supply chain. 2
Pizza Hut is known for its
Good Quality Food (Hygiene)
Brand Name
Food worth its Price
Good Service
New Kind and Styles of Pizzas in its Menu.

Pizza hut has a very good culture through which they motivate their employees.
They use different training methods i.e. H.W.W.T (How We Win Together) for their
employee training. H.W.W.T consists of following points:
P.E.A.R.L.S
PASSION for excellence in doing everything
EXECUTE with positive energy and urgency
ACCOUNTABLE for growth in customer satisfaction and profitability
RECOGNIZE the achievement of others and have fun doing it
LISTEN and more importantly, respond to the voice of the customer
Mission Statement
We take pride in making a perfect pizza and providing courteous and helpful
service on time all the time. Every customer says, "I'll be back!" We are the employer of
choice offering team members opportunities For Growth, Advancement, And Rewarding
Careers in a Fun, Safe Working Environment.2

Application of Kanban in Hotel Industry

Page 8

BBA-7B

Bahria University

A Brief Back Ground Story of Pizza Hut:

1958: The legacy of Pizza Hut began, when two college-aged brothers from

Wichita, Kansas, Frank and Dan Carney opens first Pizza Hut restaurant after
borrowing $600 from their mother.
1959: Pizza Hut is incorporated in Kansas and the first franchise unit opens in
Topeka, Kansas.
1968: International market entered with opening of Pizza Hut restaurant in
Canada.
1969: Red roof adopted for restaurants.
1972: Pizza Hut, Inc. listed on New York Stock Exchange under the symbol PIZ.
1977: Pizza Hut, Inc. stockholders overwhelmingly approve merger with
PepsiCo, Inc. for an undisclosed sum.
1986:Delivery service, as a new concept, is initiated
1993: Pizza hut comes to Pakistan with a dine-in restaurant opened in Karachi.
1996: Pizza hut opens a dine-in restaurant in Lahore.
2007: Pizza hut brought out Thick n Thin Pizza and began to re-franchise dine-in
restaurants.
2009: Pizza Hut offering baked fillings in the corner of the pizza. 2

Pizza Hut Pakistan

Pakistan has been a big success for pizza hut. It was the 1st global heavy weight
in the food business to venture into the countrys virgin market, and more significantly, it
was the 1st one to survive. Later, when other global food franchises arrived in Pakistan,
they assumed that pizza would take a back seat and novelty would take over the
consumers palate. But Pakistani consumers were not done with pizza hut.
Pizza Hut come to Pakistan on December 14, 1993 and took the culinary scene
by surprise. Since then Pizza Hut has 43 restaurants across 11 Major cities, including
Karachi, Lahore, Peshawar, Islamabad, Rawalpindi, Hyderabad, Multan, and
Faisalabad amongst others. MSR (Pvt.) LTD Is in the process of opening Pizza Hut
restaurants at many more locations to service a larger customer base across the
country.
Pizza Hut has set new standards of dine-in restaurants and quick delivery of
oven hot pizzas, and can be considered as a pioneer in starting the trend of franchises
in Pakistan. Pizza hut currently has a work force of approximately 2400 under its
umbrella; making it the biggest employer amongst all the restaurants. 2

Head Office
MCR (Pvt.) LTD, a group of Habib Oil Mills (Pvt.) Ltd, is responsible for
maintaining the operations of pizza hut in Pakistan. MCR (Pvt.) LTD Headquartered in
Shehnaz Arcade, Shaheed-e-Millat road, Karachi, Pakistan.2

Application of Kanban in Hotel Industry

Page 9

BBA-7B

Bahria University

REPORT & ANALYSIS

(Part I)
As we have described the Kanban system in detail and we know that (JIT) just in
time is the part of Kanban system or we can achieve JIT by implementing Kanban
system so in order to get the delivery of material within the time every organization
makes strong relationship with its suppliers. So pizza hut is also one of them to manage
its inventory by applying Kanban system in organization and by building strong
relationship with its supplier. So first of all have a look on supply chain of pizza hut;

Supply Chain Network of Pizza Hut

Supply chain of pizza hut starts from the suppliers of pizza hut. There are direct
suppliers and indirect suppliers of Pizza hut. Direct suppliers of Pizza hut are three,
Meat market (K & N Chicken)
Vegetable market
Sauce companies 4
And all other material like Cutlery, Cold-Drinks, Flour, Buns, Oil Tins, and all
other raw material come from their warehouse named as Commissary (Commissary
means a store that sells food and supplies to the personnel or workers in a military post,
mining camp, lumber camp, or the like.)3
That material is purchased by Commissary means indirect suppliers of Pizza hut are:
Pepsi Company
Bake parlor company (Buns)
Habib oil Mills (First mineral water)
All direct material is demanded on daily basis and the mode of transportation
which they used is trucks mostly they are Shezore. On every day end pizza hut
manager forecasts the demand of next day and gives the order to the suppliers than
next day morning the goods come to the Pizza hut. 4
All indirect material i.e. Cutlery, Cold-Drinks, Flour, Buns, Oil Tins, etc is
purchased by the ware house named by Commissary. The material comes from
warehouse by the trucks on every Wednesday.
Then Pizza hut takes the orders from its customers who come to pizza hut for
Dine-In and serve them in 17 minutes, and also take the orders for the delivery service
and Deliver them in 30 minutes. There is a specialized system in pizza hut Delivery
Support Center (DSC) which connects all the 43 outlets of Pakistan with DSC. 4

Application of Kanban in Hotel Industry

Page 10

BBA-7B

Bahria University

Customer Service Representatives (CSR) takes the delivery orders on pizza hut
HOT-LINE 111-241-241 and punches that order to the respective outlet. The order list
is printed 1 time in three different places of the restaurant, 1st in the kitchen make desk,
2nd at the Cashiers Counter, and 3rd at the Managers table than the backing process of
order starts according to the customer requirement. For Din-In they just take 14 minutes
to prepare the pizza and serve it to the customer. 4 They claim that:
If we are unable to serve our customer within 14 minutes than there is no need to pay
money to us
For Delivery order they will take 30-39 minutes (depending on the certain
geographical locations) for delivery at the door steps of customers.
We can also better understand their supply chain network through a pictorial
diagram which is on next page.

Application of Kanban in Hotel Industry

Page 11

BBA-7B

Bahria University

Pictorial Supply Chain of Pizza Hut

Direct Suppliers
(Supplies on Daily Basis)

S-1
Meat Market

S-2
Vegetable
market

S-3
Sauce
Companies

Restaurants

Requirements
Carry Out
&
Delivery
Orders

1) DOUGH
2) FILLING

3) TOPPINGS
4) BAKE CHEESE

Take
Away
&
Dine-In
Custome
rs

Ware house

Commissary

In-Direct Suppliers
(Supplies on Weekly Basis) Wednesday
S-4
Pepsi
Company

Application of Kanban in Hotel Industry

S-5
Bake Parlor
Company
(Buns)

S-6
Habib Oil Mills
(First Mineral Water)

Page 12

BBA-7B

Bahria University

Ware House
The fast food chain recounts its transition from early data mining efforts to a
project where it recovered the costs of software licensing and started generating
revenue. Pizza Huts ware house is situated in Bahadurabad from where they have got
all the material except direct one. Its ware house is named as Commissary.4
All management programs are built on a data warehouse of millions of customer
records gleaned from point of sale transactions at its restaurants. They know your
favorite topping, what you ordered last and whether you like salad with your meat lover's
pie. Much of that has to do with data mining, a technology that converts details from
customer data into competitive intelligence that companies use to predict trends and
behaviors. 4
Pizza Hut uses a product called Teradata Warehouse Miner and after a year
using it to better manage direct mail campaigns, the chain and its parent company, Yum
Brands (Pizza Hut is one of eight restaurants in the group that includes Kentucky Fried
Chicken and Taco Bell) are starting to see results.
The chain, which is affiliated with Pepsi Corp., first got into the CRM game by
using the more than 10 years of order history in its database, consisting of all purchases
delivered to households that ordered by telephone.
Database vendors (i.e. in Pakistan, Millennium Software (Pvt.) LTD) are pushing mining
into the warehouse and they are doing it so companies can exploit all the technology of
data mining from the database. 4
"Pizza Hut is taking advantage of this,"
The added benefits of in-database mining include minimizing data redundancy, reduced
proprietary, data structures, simplified data and system management. They said;
"You get better results using a larger amount of detailed data. You eliminate the human
factor that can lead to potential errors during data movement and samples,"

Application of Kanban in Hotel Industry

Page 13

BBA-7B

Bahria University

Mode of Transportation
They use two types of vehicles for their transportation
Motorcycles
Trucks

Motor Cycles
(For Order Delivery Services)

Trucks
(For Materials Transportation from Commissary to Restaurants)

Application of Kanban in Hotel Industry

Page 14

BBA-7B

Bahria University

(Part II)
After discussing the supply chain of the pizza hut now we will describe that how
Kanban system is applied in the pizza hut for managing the inventory;

Kanban System in Pizza Hut

As we have selected the topic as Kanban System in hotel industry. Hotel
industry is the large & growing industry in Pakistan which creates opportunities for
national or International companies that they invest in this sector; other reason may be
that Pakistani people are very fond of eating delicious food which also creates
opportunity for companies to grow in this sector.
That is why we have selected a company from this sector which is Pizza hut.
Our target was to check the implication of Kanban System in pizza hut. In order to
search the information and get the idea that
How the Pizza Hut managers manage its inventory?
What is system that they are following in order to manage the inventory?
For this purpose we met with key individuals of pizza hut management. We got
an appointment from the Mr. Shakeel Ahmed who is the Multi Unit Manager at pizza
hut delivery support centre. I Noman Javed as a group leader also got an opportunity to
meet with Pizza hut Auditor Mr. Aftab Ahmed who shared fruitful information related
to our project. I also visited the pizza hut restaurants located at Bahadurabad (shaheed
millat road) and Muhammad Ali Society Branch in Karachi to see their operations.
On the day of appointment we visited Delivery support center of pizza hut
situated in Shehnaz arcade where we met Mr. Shakeel Ahmed for Interview. We asked
from Mr. Shakeel Ahmed that
How do you manage inventory?
Is there any Kanban System that is applied in pizza hut restaurants?
Then before coming to the main point Mr. Shakeel Ahmed told us some
important points about their manufacturing system. Actually in pizza hut what happens
that before starting the production process they set a Buffer Ratio means the
percentage of product that could be wasted during a production. They set a buffer ratio
of 10% means 10% is the probability of wastage of material or products during a
production.4
Now comes to the Inventory management, when branch manager going to forecast
the demand he or she will keep following factors in his mind.
Useful life of the material (Shelf Life)
Lead time (Time From the Commissary to Store)
Sales trends (Previous Customer History)
Application of Kanban in Hotel Industry

Page 15

BBA-7B

Bahria University

Suppliers behavior (issues in Transporting Goods to Store)

o Late payment
o Transportation issues (Strikes or other reasons)
Daily usage (Average Quantity)
Product availability (Scare or alternatively available)
Storage Capacity (In-Store Warehouse Capacity) 5
Before going into detail we would like to elaborate some of the important above
mentioned points. As we all know that the ingredients which are used in the production
of pizza are mostly perishable items. If they are hold for longer period of time then they
cannot be used in the production process. So before ordering of material the useful life
of material is kept in mind. 5
Then inventory is decided on the bases of customers demand. Pizza hut uses the
data ware house System where all the data about the customers is stored. That Data
helps managers in forecasting the demand. Data shows that how much times the
customers visit a particular outlet in a week and which things are preferred more by a
customers. 5
Third main point is the supplier behaviors means whether they can deliver the
products in time or not. And that our suppliers are capable to provide our raw material
when we need it or is any previous balance in remaining on pizza hut related to
payment which can create hurdle in supplies of materials. These are the main factors
which a manager kept in mind regarding the inventory forecasting. 5
After this evaluation the manager then set the minimum or maximum level of
inventory that he or she will order for the restaurant. 5
Now we come to the main point that is about managing inventory regarding the
Kanban system of controlling the inventory. Mr. Aftab Ahmed (Auditor) told us that we
are using the old system name as three bin system or they called Bin-Card system.
They are using the FIFO method in managing the inventory as well. 5
According to that system different compartments of different products are kept in the
In-Store warehouse of the restaurant. There are bin-cards on each container having a
specific type of material. This card has to two columns & multiple rows on it. One
column in heading in Transfer-In and second column heading is Transfer-Out. 5
In pizza hut supervisors are responsible for maintaining the check & balance of
inventory control. There are two supervisors in one store for maintaining this activity. 1st
one is Back Store Supervisor (BSS) responsible for maintaining the inventory of the
items which are used in the kitchen & in production of pizza. 2nd one is the Front Store
Supervisor (FSS) responsible for maintaining the dine-in related inventory activities i.e.
management of plates, tables, tissues, goody bags etc. They use the Bin-card system
only in their core business activity which is pizza production.6

Application of Kanban in Hotel Industry

Page 16

BBA-7B

Bahria University

When the material which comes from the supplier or commissary the Back Store
Supervisor (BSS) will put those things into the container and write in the bin-card
transfer-in column the amount of material that is added to the previous inventory. And
when there is a need of material in the kitchen arise the BSS take that thing from the
store and put it in the kitchen by mentioning the amount of material on the bin-card
transfer-out column. Same process will happen for all the materials. 6
The compartments or containers used in cold storage of in-store warehouse are in
blue color. Usually what happens in pizza that demand is based on weekly basis, Outlet
manager send the demand to the commissary at least 3 days before Wednesday.
Those outlets which are situated in Karachi gets the material from commissary once in a
week but May varies according to the demand. But those outlets which are far from
Karachi i.e. Hyderabad outlet, gets the material in 2 or 3 weeks from the commissary
but it also may varies according to the demand. 6
The supervisors visits in the in-store warehouse for check & balance of inventory
shows the visual management system but on the whole bin-card system is used in pizza
hut for inventory management.
Supervisor keeps the data in his register about each type of ingredient which is used
in production of pizza then he add this data in his system software called Inventory
Management System (IMS) which can be checked by the manager afterward. Manager
checks the software report which shows the level of remaining inventory. If the quantity
recorded by the supervisor shows the results below the set point then a red light
emerged. Then manager considers that inventory is going to be finished. So he includes
that material in the list of the existing demand.5
So this is what that whole process pizza hut use in his restaurants for managing
the inventory. But we can better understand this through following pictorial diagram.

Restaurant
Supervisors

Back store
supervisor
Responsible for:

Front store
supervisor
Responsible for:

Inventory
management
related to pizza
production.

Managing dine-inn
related activities
i.e. management
of plates, goody
bags, etc.

Application of Kanban in Hotel Industry

Page 17

BBA-7B

Bahria University

Pictorial Diagram of Inventory Flow:

(From Supplier to End users)
Commissary:
Following items are come
from commissary on weekly
basis i.e.
Oil Tins,
Flour,
Cheese,
Breads,
Mineral water,
Pepsi etc.

All the required

material
supplied by the
commissary &
direct suppliers
to the
restaurants.

External suppliers:
(Direct Suppliers)
Following items are
purchased from the direct
suppliers on daily basis i.e.
Fresh Vegetables,
Meats (K&N),
Sauces,
Fruits,
Eggs (For Soups)
etc.

Restaurant
(Requirements)
1) DOUGH
3) TOPPINGS
2) FILLING
4) BAKE CHEESE

Kanban
System
applies in
restaurants
only.

Carry Out
&
Delivery
Orders

Application of Kanban in Hotel Industry

All the
production of
pizzas &
inventory
management
related
activities are
done in
restaurants

Final products
i.e. pizzas,
appetizers,
desserts, etc,
transfer to the
customer.
Take Away
&
Dine-In
Customers

Page 18

BBA-7B

Bahria University

RESEARCH DESIGN AND METHODLOGY

Research design is all about how the research is done. We have researched on the
application of KANBAN in the hotel industry. For the research on the hotel industry we
visited the PIZZAHUT various time. We all know that research design is conducted in
two ways
1. Exploratory research
2. Conclusive research
In exploratory research we do the primary and secondary research .where as in
the conclusive research we use the statistical approaches. Here we used the
exploratory research. Instrument that we used to collect the data is
1. Questionnaire
Methods of data collection
1. Observation
2. Survey (visit)
3. Interview
Sources of data collection:
1. Primary source:
Visit
Interview
2. Secondary data:
Internet
Books
Above all were the methods, source of data collection that we used for the
research on the KANBAN application in the hotel industry.
More data that we gained about the Kanban application in PIZZAHUT was
through the .personal interviews. We visited Pizza hut various time and met with the
Key People in the pizza hut i.e. Mr. Shakeel Ahmed (Multi unit Manager), Mr. Aftab
Ahmed (Auditor) & Mr. Illyas Sheikh (Branch Manager).
We also gained information about the Kanban from books & internet as well.
When we became completely aware about the Kanban then we visited the PIZZA HUT.
During the interview we used the questionnaire that were structured by all us
before interview, but when we started to ask questions we wanted to know more and
more about the Kanban importance in PIZZA HUT. So we asked some unstructured
questions as well. The question that we asked is attached at the end of the report.
We also get information about Pizza hut from the training manual provided by the
above mentioned people
And further we used the secondary source in order to gain more information
about the Kanban application in PIZZA HUT. Secondary source were
Internet hunting i.e. Google, Wikipedia, pizza hut website, yum website etc. other
was the text books through which we become aware about the Kanban.
Application of Kanban in Hotel Industry

Page 19

BBA-7B

Bahria University

CONCLUSION
As we did the research on the application of Kanban in the hotel industry, for this
we visited Pizza hut, we found that by applying the Kanban application (Bin-Card
System) they are able to meet the demand of customers in a very effective way and
along with meeting the customers demand they are managing their inventory as well.
The flow of material, from supplier to end user, is divided into various parts. Kanban is
not applies in all departments but it is used mainly in restaurant in-store warehouse of
pizza hut. In order to suggest that where it should be applied, we added some
recommendations and from the research we come to the point that bin card system &
visual management system( types of Kanban) are used in pizza hut.

RECOMMENDATIONS
As Pizza hut effectively using the old system of Bin-Cards for inventory management in
there restaurants but we recommend them if they use electronic card system they can
grow more than now. They can gain following benefits:

They can reduce waste

Efficiently utilize the resources
Reduce the chances of human error
Reduce the cost
Effective demand estimation
Reduce the lead time

COMMENTS BY GROUP MEMBERS

Noman Javed: (Group Leader)
In the Name of Allah, the Most Gracious and the Most Merciful, I would like to
say that I have learned a lot from this activity. Through this research I come to know the
practical implication of Kanban system that how firms practically applying the concepts
in the real work of life situation.
As a group leader its very difficult task to make the events happens according to
our desires but the instructions provided by the course instructor Mr. Azhar Nisar Cdr.
(R) helps me a lot in managing the group related activities which will not only enhance
my group leading skills but also helps me to learn & write a research report. I have also

Application of Kanban in Hotel Industry

Page 20

BBA-7B

Bahria University

learned the TQM concepts for management which also helps me a lot in the making of
the report. I would like to conclude this report by the following words;
Pizza hut uses old system Kanban i.e. Bin-Card system in its restaurant for
managing the inventory. Although they are utilizing this method very effectively but in
my view if the use advance system of Electronic Kanban in their restaurants, it benefit
them more as compare to the old system.
In the end I would like to say thanks to my course instructor who encourages &
helps us a lot in making of this report.
Bakht Ali
Being a group member I tried my best to do my work according to the instructors
suggestions. Whatever we have done the work in group was so interesting. I personally
enjoyed it. Because this research report required lot of efforts and I examined myself
that how much I am able to work on any project. I learned so many things by working on
this research report. Because earlier we just submitted the reports and we could not get
the information about our mistakes. But this was the first report that showed our
mistakes because of instructors check and balance. I am personally very thankful to the
Mr. Azhar Nisar who gave us such opportunity by which we aware about our
capabilities, mistakes and efforts.
Syed Hassan Hasan Zaidi
It the first time that every member of group put his efforts in the project, because
I have seen that in group it usually happens that most work is done by one individual.
As a member of group I got so much knowledge about research and I gained
information about my capabilities and efforts. In the last want to say that I enjoyed my
work and learned a lot and I am very thankful to Mr. Azhar Nisar who assigned us such
a project which required our efforts.
Muhammad Faris
This report helps us to know the practical application of the Kanban system in a
hotel industry. How the Kanban system helps in managing and controlling the inventory
system. Companies which use the Kanban system can avoid the wastage of materials.
It requires committed &involved management. It makes sure that the material will be
available when we actually needed it. The closer the Kanban design meets the needs of
your business environment the more effective the system. But, equally important to the
design of the system is how it is implemented. By using Kanban System Company can
easily determined supply or production according to the actual demand of the

Application of Kanban in Hotel Industry

Page 21

BBA-7B

Bahria University

customers. It is used as a demand signal that immediately propagates through the

supply chain.
After studying TQM helps us how to implement and design a quality policy or
quality assurance in the org. continuous is the key in implementing and achieving the
quality culture in the organization.
If we make the quality product and satisfied the demand of our customers it will
ultimately reduces the cost of the organization. For this to happen company should have
involved and committed management have good relationship with its employers. Quality
management is a key for the success of any org. quality should always come first.
Muhammad Shoaib Anwer
Through research and methodology I learn that Kanban system is very helpful for
inventory management and Kanban play a important role to handle the supply of the
inventory and material which is used to produce finished goods .Kanban system show
the minimum level of inventory and it tell us when we need raw materials or it gives the
signal to management to need of goods and inventory.
TQM, we learn that, Quality is very important for any company and for survival of
any organization and Quality gives satisfaction to consumers.
Recommendation is that the pizza hut used Kanban system as more efficiently
an. Due to this pizza hut can work efficiently in inventory management and it production
process of pizzas.

Responsibility & Work Contribution among the Group Members:

I Noman Javed was responsible for arranging the visit & conducting the interview
from the key individuals of pizza hut. Also responsible for editing of the report.
Shoaib Anwer & Muhammad Faris is responsible for internet hunting to get the
information regarding Kanban system & pizza hut.
Bakht Ali & Syed Hassan Hasan Zaidi is responsible for gathering data from the
interview conducted by Noman Javed & data gathered by the Shoaib Anwer & Faris.
After receiving data their work is to arrange & elaborate data in front of group
members.

Application of Kanban in Hotel Industry

Page 22

BBA-7B

Bahria University

Bibliography
1. www.wikipedia.org

(3:45pm Thursday March 24, 2011)

2. www.pizzahut.net.pk (12:30pm Tuesday March 15, 2011)

3. http://dictionary.reference.com/browse/commissary (4:45pm, Wednesday May 11, 2011)
4. Multi-unit Manager of pizza hut Deliver support center (DSC), Mr. Shakeel Ahmed.
(3:00pm Tuesday March 29, 2011)

5. Auditor of Pizza hut, Mr. Aftab Ahmed (6:45pm Tuesday May 3, 2011)
6. Branch Manager, Mr. Illyas Sheikh (5:00pm Tuesday May 10, 2011)
7. www.yum.com (3:00pm Wednesday May 13, 2011)

QUESTIONIARE

How KANBAN is applied in PIZZHUT?

KABAN system tell us about the scheduling system that what to produce? Is
scheduling system is applied or not, if yes then how?

Through KANBAN system JIT is achieved, would you implement JIT system or
not, if yes then how?

Is PIZZAHUT utilizing the Kanban card or electronic Kanban system?

At what minimum level of material in PIZZAHUT when KANBAN system works or
applied?

If management decide for keeping safety stock then how many KANBAN system
will be needed?

There are two types of KANBAN CARD. Which one PIZZAHUT used?

o
o

With drawl Kanban

Production Kanban

KANBAN system requires monthly or weekly planning. Would you follow that?
Kanban system is not suited with short production. Then how you handle that?

Application of Kanban in Hotel Industry

Page 23