Go Lean. Even in Retail.
Maria Camila Ruiz
For a business to thrive, it must offer a desirable product that people will pay for. Regardless of industry, every business wants to ensure its customers are happy so they continue purchasing its products or services. As the old proverb notes, the customer is king. That said, how can organizations improve the current state of their product processing and service provisions so their customers will remain loyal? Lean is your answer.
Lean is a combination of tools, techniques and paradigms used to eliminate waste within an organization. The purpose is to provide a continuous flow of products or services to customers as they need them in the ways they need them. Said another way, lean is a mechanism for speeding things up in the organization without adding resources. The term became popular in the book The Machine that Changed the World by Womack, Jones, and Roos (1990), where it was described as a way of using half the resources in half the time with half the effort, which results in fewer defects in increasing amounts of higher quality products or services.
Lean is commonly used in manufacturing, but it can be implemented in any industry. It is often confused with six sigma; six sigma is based on statistics, while lean is simpler and more straightforward. Below are five key principles that are fundamental to the lean methodology:
- Value: Value is defined by customers’ needs and whether they are willing to pay for a product or service, including all its inherent costs. Value can vary as it can be based on time, cost, materials, and more.
- Value Stream: This includes all processes and sub-processes involved in creating the final product or service provided. It is a map of processes with their internal steps to identify non-value adding sub-processes and waste.
- Flow: Once only value-adding processes and sub-processes are left, we ensure no interruptions, delays, or bottlenecks are present. This enhances flow within the processes.
- Customer Pull: Products are made, or services provided, as the customer needs them. Basing demand on customer expectations reduces inventory. This is in contrast to the outdated organizational thought that producing as much product or services as possible (i.e., push versus pull) leads to higher profits.
- Excellence: It is important to create a culture of quality in the workplace because things often change. By making excellence part of every day at the office, continuous improvement becomes possible.
How to use lean in Retail?
Lean can also be applied to retail. Customers often prefer their shopping experience to include fast checkout, exceptional service, and available product. For retailers, this means focusing on efficiency and error-proofing within employee processes and sub-processes. Below are some recommendations on how to establish lean principles within a retail environment.
Ensure you have the supplies you need. First, identify the resources, including people, technology, and materials, that are adequate to apply the lean methodology.
Make lean a priority. Everyone, from executives to store employees, must commit to implementing lean for success. Also, ensure that lean efforts are connected to your business goals.
Establish ownership. Make it clear who owns lean across your business. This will bring empowerment, pride and commitment to plant a seed of lean thinking across the board.
Take the right measurements. As is commonly heard in business, what cannot be measured will not be improved. Define your key performance indicators (KPIs) to help measure how changes in your sub-processes affect your business.
Determine the type of customers that shop your stores. For instance, in urban areas, customers might want a speedy experience, while in rural areas, they might desire a social one. Consider your prototypical customer:
- Impulse customers usually have small baskets and do not want to wait in line.
- Discount customers take full advantage of deals, but they need information on them.
- Loyal customers come back to your store because they align with your mission.
Define what adds value to your customer: Analyze what might help your shoppers transition from impulse to loyal customers. Look into every detail. It might be having more express registers, providing cut versus whole fruit, selling fresh coffee, or conversing with customers. Again, value-adding activities are defined by customers’ needs.
Look at store processes and sub-processes: Department by department, review the different tasks employees perform. This will provide visibility and clarity into how a product or service is offered. Also, look for disruptions in processes and sub-processes that slow down product or service presentation.
Make changes in the processes by cutting waste: Now, find ways to eliminate disruptions in the processes and sub-processes. In lean, eight types of waste exist: excess transportation, too much inventory, surplus motion, waiting, overproduction, over-processing, defects, and tasks assigned to overqualified employees.
Look for ways to better organize the workplace. This goes hand-in-hand with eliminating waste, but certain tools like 5-S can help. 5-S is a Japanese methodology that stands for sort, straighten, shine, standardize, and sustain.
Keep it up: Train everyone in lean principles so they are aware of the changes. Show them the impact. As lean becomes a habitual way of thought inside your company, your culture will result in employee excellence and customer loyalty.
In ending, remember this. Lean is simple but not necessarily easy!
Womack, J. P., Jones, D. T., & Roos, D. (1990). The machine that changed the world. New York, NY: Free Press.