Lean Retail and Wholesale
Use Lean to Survive (and Thrive!) in the New Global Economy with Its Higher Operating Expenses, Increased Competition, and Diminished Consumer Loyalty
Paul A. Myerson
Mc Graw Hill Education
New York Chicago San Francisco Athens London Madrid Mexico City Milan New Delhi Singapore Sydney Toronto CONTENTS
Preface xv
PARTI
Current State
CHAPTER 1 Introduction: Using Lean as a Tool to Survive and Thrive in Retail and Wholesale 3
Why Implement Lean in Retail and Wholesale? 4 Challenges in Retail and Wholesale 5 Need for Lean in Retail and Wholesale 6 Retail Strategy Viewpoint (Including Sales and Marketing, Location, Human Resources Management, IT, Supply Chain Management, and Customer Relationship Management) 6 Merchandise Management Viewpoint (Planning, Buying, Pricing, and Communications) 9 Store and Distribution Operations Viewpoint 10 The SCOR Model and Lean Retail and Wholesale 12 Making Change Successful 13
CHAPTER 2 (R)evolution of Retail: From the General Store to E-commerce 15
Retail Versus Wholesale 15 Retail and Wholesale Defined 15 Retail Classifications and Types 16 History of Retail 17 Pre-World War II 17 Retail Growth (1945-1975) 17 Big-Box Stores and Category Killers (1975-1990) 17 Retail Consolidation (1990-2000) 17 The Twenty-First Century (2000-Present) 18
vii viii I Contents
Retails Value in the Distribution Channel 19
Value as a Utility 19 Value as an Activity 19 Vertical Integration 20 Value Chain 20
Activities That Add Value 20 Strategies for Tough Times 21
CHAPTER 3 The Lean Journey: From Goods to Services 23
Evolution of Lean 23 Manufacturers and Wholesalers Partner with Retailers 25 Lean Office 27 Lean Supply Chain and Logistics Management 27 Integrated and Agile Supply Chain 28 Current State of Lean 29
CHAPTER 4 Lean Retail and Wholesale: Early Signs of Promise 31
Plan 31
Source or Make 32 Why VMI in Retail? 33 Deliver 35 E-commerce 37 Return 38 Where Do We Go from Here? 39
PART II
Future State
CHAPTER 5 Thinking Lean: Basic Lean Concepts and Tools—Building a Solid Foundation 43
What Is "Waste"? 43 Inventory Waste 44 Transportation or Movement Waste 45 Motion Waste 46 Waiting Waste 46 Overproduction Waste 47 Overprocessing Waste 47 Defect or Error Waste 48 Contents | ix
Behavioral Waste (or Underutilized Employees) 49 Waste in Retail Store Operations 49 Thinking Differently 50 Basic Lean Tools 50 Standardized Work 51 Visual Job Aids 53 Visual Workplace 55 Layout 56 Workplace Organization and Standardization: 5S 58 Sort Out 59 Set in Order 61 Shine 61 Standardize 62
Sustain 63
CHAPTER 6 Thinking Lean: Advanced Lean Concepts and Tools—KISS (Keep It Simple and Straightforward) 65 Batch Size Reduction and Quick Changeover 65 Batch Size Reduction 66 Quick Changeover/Setup Reduction 66 Kanbans 70 Quality at the Source 72 Work Cells 72
Balancing a Work Cell 73 Total Productive Maintenance 74 Overall Equipment Effectiveness 75 Lean Analytical Tools 78 Tools for Gathering Data 78 Tools for Organizing Data 78 Tools for Identifying Problems 78 Lean Six Sigma 79 Lean Six Sigma in Retail 81 DMAIC 81
CHAPTER 7 Being Lean: Retail Strategy—Sales and Marketing, Location, Human Resources Management, IT, Supply Chain Management, and Customer Relationship Management 83 Retail Strategic Plan 84 Mission Statement 84
Situation or SWOT Analysis 84 x I Contents
Setting Objectives 86 Obtaining and Allocating Resources 87 Developing the Strategic Plan 87 Strategy Implementation and Control 88 Lean Strategic Focus: Retail Value Chain 89 Marketing and Sales Strategy 90 Product 90
Price 90 Place 90 Promotion 91 Lean Marketing 91 Sales and Marketing Waste—Final Thoughts 96 Location Strategy 97 Retail Location Theories 97 Retail Location Lean Opportunities 98 Human Resources Strategy 99 Labor Productivity 99 Lean Failure 100 Implementing Lean 101 Working Together 102 Information Systems and Supply Chain Strategy 105 Retail Technology Basics 105 Retail Supply Chain Technology (Information Flow) 106 Retail Supply Chain and Logistics Management (Material Flow) Ill Customer Relationship Management Strategy 114 CRM Defined 114 CRM Goal 115 CRM Best Practices 115 CRM Process 116 CRM Status 117
CHAPTER 8 Being Lean: Merchandise Management—Planning, Buying, Pricing, and Communications 119 Lean Merchandise Management 119 Lean Manufacturing and Retail Merchandising Comparison 120 Merchandise Management Process 121 Factors That Affect Merchandising 121 Merchandise Manager's Role 124 Forecasting Process 125 Determining the Merchandise Requirement 132 Contents | xi
Acquisition 138 Lean Buying 138 Merchandise and Assortment Planning Software 141 Wholesale Forecasting and Inventory Planning 143 Sales and Operations Planning (Also Known as Integrated Business Planning) in Retail and Wholesale 144
CHAPTER 9 Being Lean: Store Operations Management 149
Recent Trends 149 Store Operations 151 Service Matrix 151 Service Blueprint 152 Management Responsibility 153 Store Design, Layout, and Visual Merchandising 162 Store Design 162 Store Layout 163 Visual Merchandising 167 Customer Service 170
CHAPTER 10 Being Lean: Retail and Wholesale Distribution 175
Eight Wastes Applied to Warehouse Operations 176 Lean Thinking in the Warehouse 176 'Assembling" Orders 177 Reverse Logistics 179 Value Stream Mapping in the Warehouse 181 Lean Tools in the Warehouse 182 Lean Warehouse Examples 183 Lean Enabling Technology in a Warehouse 186
CHAPTER 11 Being Lean: Getting Started—Lean Assessments and Value Stream Mapping 189
Lean Opportunity Assessment 189 Value Stream Mapping 191 Value Stream Mapping Defined 191 Benefits of Value Stream Mapping 192 Value Stream and Product Family 193 Takt Time 193 xii I Contents
Value Stream Manager 193 Goals and Objectives 193 Steps in Creating a Current-State Value Stream Map 194 Data Collection 195 Future-State Value Stream Map 197 Where to Look 199 Implementation Plan 202 Lean Teams 202 Team Charter 204 The Team Makeup 204 Kaizen Events 205 Kaizen Event Management 206
CHAPTER 12 Staying Lean: Leadership, Culture, Teams, and Key Success Factors 209
Building a Lean Organization 209 Organizational Culture 210 Lean Culture 211 Key Success Factors 212 Management Leadership and Support 212 Lean Training 213 Lean Infrastructure 213 Teamwork and Lean 214 Making Teamwork Happen 215 Elements Needed for Sustainability and Success 215 Leadership Model 215
CHAPTER 13 Becoming Even Leaner: Partnering, Outsourcing (Private Labeling), Import (Logistics), Technology, (Lean) Six Sigma and Lean Systems 219 Partnering 219 Condis-Henkel Example 220 Veropoulos-Elgeka-P&G Hellas-Unilever Example 221 Liquor Control Board of Ontario Example 221 Outsourcing (Private Labeling) 222 Benefits 223 Import (Logistics) 224 Keys to Global Logistics Excellence 224 Technology 226 Technology in Partnering 227 Contents | xiii
Technology in Retail Marketing 228 E-commerce 229
M-commerce 230 (Lean) Six Sigma 231 Big-Box U.S. Retail Leader Example 233 Staples Example 234 Additional Lean Six Sigma Retail and Wholesale Examples 234 A Lean System 235 Toyota Production System 236 DuPont Production System 237
PART III
Lean Forward
CHAPTER 14 Critical Thinking and Continuous Improvement: Methodology, Education, Training, and Analytics 241
Methodology or Approach 241 Example: North American Distributor's Approach 243 Example: Spanish Supermarket Chain's Approach 243 Training 244 Training Methods 244 Traditional Methods 244 Selecting the Training Delivery Method 247 Consultants 247 Training—Key Management Team (Seminars, Certifications, and the Like) 247 Training—General Workforce 248 Training—Tools and Tips 249 Games 249 Handouts and Forms 249 Language Barrier 250 Measuring Success 250
CHAPTER 15 Denning and Measuring Success: Measurements and Current Statistics 253
Key Performance Indicators 254 xiv | Contents
Dashboards to Display and Control Metrics 256 Indicators 256 Review Scorecard during S8rOP 256 Relevant Lean Retail and Wholesale Supply Chain and Logistics Metrics 257 Delivery Reliability 257 Responsiveness 258 Flexibility 258 Cost 258 Asset Management 258 Balanced Scorecard 258 Retail Balanced Scorecard Examples 259
CHAPTER 16 The Road Ahead: Thoughts and Suggestions on the Future of Lean in Retail and Wholesale 261
People, Process, and Technology Views 261 People 261 Process 263 Technology 264 Trends 265 Retail 265 Wholesale Distribution 267 Wrap-Up 268 Conclusion 269
APPENDIX A Case Studies 271
APPENDIX B Lean Assessment Scorecard 291
References 305
Index 313