Lean Retail is a systematic approach to eliminating all kinds of non-value adding activities in the processes with the creative involvement of all employees.
The retail industry is going through a challenging phase. With the advent of technology, the consumer has a better understanding of products and services in the market. This awareness among consumer coupled with exposure to international market causes shorter product life cycles. Inadequate retail space, shortage and retention of trained manpower bring profit levels down. 51% of FDI in the retail industry will redefine market boundaries and bring stiffer competition from global giants in the coming years. This could also bring profits down as over the past few years’ discounting is becoming an accepted practice. These challenges influence the true potential and growth of this sector and impact the bottom line.
Adopting Lean Practices will help retailers to significantly improve operationsfor doing the right things for customer in the long run.
In Lean retail, whether an activity is no-value adding or not, is decided from the customer’s point of view. Shoichiro Toyoda, President Toyota, defines Waste as, “anything other than the minimum amount of equipment, materials, parts, space, and worker’s time, which are absolutely essential to add value to the product.”An organisation practicing Lean Retail has only 3 types of value adding activities in the value chain – Keeping the right materials desired by customer, Selling and Billing. All other activities are considered non-value adding.
Lean Retail is a model for strategic assortment of inventory to meet customer requirements. The operational methodology is integral to Just-in-Time which maximizes flexibility by reducing the idle time of materials in order to respond to ever-changing customer demand. We have helped our clients in implementing Lean Retail for controlling costs and delighting the customer.
Why Lean Retail!
Lean Retailing makes it faster, easier and less expensive to respond to customer’s needs. It is an operational strategy that aims to identify and reduce wastes of time and resources. Implementation of Lean in retail processes removes bottlenecks enabling free flow of product to the customer. Inculcating a culture of continual improvement in the organisation results in small improvements throughout the value chain.
Lean Retail optimizes processes by identifying waste in the process which causes customer dissatisfaction.
The areas of waste identified in a retail industry are:
- Waste of Defects – Stocking commodities which are in bad quality, are rejected or need rework
- Waste of Overproduction – Keeping merchandise more than customers’ needs items block cash flow
- Waste of Waiting –Customers or staff unnecessarily waiting for information of material due to delays in delivery or being out of stock.
- Waste of Transportation –Unnecessary movement of commodities due to bad quality(exchange or return); useless moving of items between warehouse and store;
- Waste of Inventory – Bringing in large quantities of merchandise without matching demand creates excess inventory and blocks cash flow; Materials in transit, items kept in shelves or for seasonal demand cost a lot of space and effort.
- Waste of Motion – Staff unnecessarily moving, bending to pick or locate merchandise as per customer requirement
- Waste of Over-Processing – such as duplication of materials, invoices etc cause delay and rework.; not following schedule or setting up displays as per plan
- Waste of Employee Potential –Sales people are mostly engaged in menial tasks rather than upselling; not making improvements but wandering at workplace
Main Benefits of Implementing Lean Retail
Improve Inventory accuracy.
Improved on Time delivery performance.
Improved Service level from distribution center to store
Operating Expenses under Control for better Profitability
Awareness of Staff on Customer Delight “Wow Factors”
Redundant Non-Value Adding Activities identified & removed continuously
Our Areas of Expertise (Tools and Techniques)
|Operations Management||Performance Management||People Management|
|Adoption of Lean practices||Interconnection Of Goals||Rewarding top performers|
|Flow Improvement||Clarity of Goals||Creating Awareness on Best Practices|
|Waste Elimination||Standardization||Servant Leadership|
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