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PRATIQUES LEAN ET SIX SIGMA - LEAN SIGMA IN RETAIL

LEAN SIGMA IN RETAIL BUSINESS EN

Lean Sigma implementation scheme in the retail business brings a lot of advantages that are described below.

The steps of the implementation scheme are NUMERAL ADVANCE know-how.

         


Business objectives for quality in retail business :

The objectives are to develop retail brands (general choice, convenient store, hard discount, Internet...) for the different retail channels and to open new markets, especially for export (European Union, ASEAN, ALENA…).

In building a relation with its market and its consumers, the retail brands will use some quality criteria.


Retail business quality criteria :

Quality criteria are what consumers are expecting. In fact, the cosmetics quality criteria have different levels of compliance, from mandatory for safety reasons to “good to have” for comfort reasons. The consumer is looking for :

  • practical access to the store,
  • good choice of goods,
  • competitive prices,
  • add-ons services such as product information or delivery.

The quality criteria of a retail organisation are grouped into three categories:

  1. Location criteria,
  2. Access criteria,
  3. Service criteria.

The quality criteria classification in retail business are:

Location are all the criteria that will identify the type of inhabitants that could become consumers.

Location criteria classification in Retail business

 

 

   Criteria

Description

  1 

  Crossroad

The sales outlet is located at a crossroad

  2   Residential The sales outlet lies in an residential area

  3

  Mall

The sales outlet lies in a mall

  4

  Down town

The sales outlet is at the center city

  5

  Bazar

The sales outlet is nearby a bazar

6

  Duty free The sales outlet lies in a duty free area

  7

  Transport

The sales outlet lies in an airport, train or metro station

Access is dealing with all the criteria that will attract the consumer to come inside the selling point.

Access criteria classification in Retail business

 

 

   Criteria

Description

  1 

  Website

The retail brand has a website with indication of the addresses of all outlets and how to access

  2   Easy location The access to the store is easy (whether walking or driving)

  3

  Wifi service

In the neighbourhood of the outlet, there is a free Wifi access

  4

  Geolocalization

Geolacalization service to get to the store

  5

  Home service

At the entrance of the store, a "black board" service for home service advertisement

Service are all the criteria that, once inside the outlet, the consumer is satisfied while going on his purchases.

Service criteria classification in Retail business

 

 

   Criteria

Description

  1 

  Shelf space information

 Information is given on how to get to the different types of products (dairy, meat, bread...)

  2   Theme information  The outlet has some shelves on specific themes such as "health" or "sport" or "family". These informations can be added to the initial information (1)

  3

  Product information

 Information about the products (origin, recipe, ingredients...)

  4

  Waiting queue

 Small waiting queue and indication of how long to wait

  5

  Price information

 Prices are clearly indicated are can be compared


Business plan for quality criteria :

Quality criteria are linked to the business by the fact that consumers will pay for it as long as they think the criteria bring them some value. Good location, easy access, product information, home services are values that the consumer is ready to pay for.

So, as for any business objective, quality criteria must be selected on the cost/revenue principle. This is building the business plan of the criteria in accordance with the marketing plan.  


 Lean Sigma in the retail business :

If the origin of Lean Sigma is with the mechanical and high tech industries, some important consumer's good companies have successfully been using Lean Sigma method for several years to improve their performance.

Lean Sigma is the most efficient method in managing the quality criteria in accordance with the business objectives. Indeed, Lean Sigma is an improvement method and each main food standards such as ISO 9001, ISO 14001, ISO 22000, BRC or IFS can benefit from this continuous improvement activity. From this starting point, it is easy to “plug-in” a Lean Sigma approach into the different Management Systems.


Lean method :

Lean method has for objective to reach optimum efficiency in the logistic area. Its three main business criteria are:

  • time delivery,
  • amount of stock and work-in-progress,
  • cash flow in production and stock.

In the consumer's good industry, Lean management system will be often integrated with the traceability management system.


Six Sigma method :

Six Sigma method has for objective to reach the right level of quality. The market has expectations about quality criteria such as reliability, ease of use, availability, flexibility… With Six Sigma, the business metric of quality is unique and universal: DPMO (Defect Per Million of Opportunity against market expectations).

In the retail business, some defects can be:

   Quality criteria

 

   Examples of Defect

  Safety / reliability

  Salmonella, Trichinella

  Compliance

  Missing information on label

  Product size

  140 instead of 150 gram of beef in the barbecue recipe

  Access

  No easy access for the nearest parking to the outlet

  Wifi

  Wifi at a to low rate

  Ease of use

  No recipe on the package or winter recipe in summer time

  Availability

  No stock on the shelf spaces during a promotion campaign

  Environmental requirement

  Poor usage of energy for heat or cooling process

Combining Lean and Six Sigma will lead to quick delivery and low cash-flow with no defect.


Business improvement with Lean Sigma :

Lean and Six Sigma are quantitative methods (statistical and analytical) for tracking defects and optimizing workflow.

The business improvements that Lean Sigma will bring are:

  • to focus on quality criteria expected from the market,
  • to benchmark its quality and efficiency level and to compare it with the competitive level,
  • to link financial and operational objectives through the quality criteria,
  • to use the Lean Sigma ISO standard for getting the Best Practices (ISO13053).

Experiences of using Lean Sigma as an improvement method have demonstrated decrease in general costs from 25 to 40% without new investment.

         


Deployment of Lean Sigma with NUMERAL ADVANCE :

The Lean Sigma programme will be introduced in four steps:


Diagnostic and benchmarks :

This first step is to evaluate the quality level (Six Sigma) and the efficiency (Lean) of your organisation focused on the selected criteria.

  1. The first step is to settle the most competitive criteria of the organisation.
  2. Then, market prices are collected in order to establish the Quality/Price benchmark on those criteria.
  3. Then, a second benchmark is processed for the costs of quality to fulfill those criteria.

NUMERAL ADVANCE can supply benchmarks for the major geographical regions around the world (Americas, Europe, Africa, Asia) and the main European countries.

NUMERAL ADVANCE proposes:

  • selection of the criteria,
  • evaluation of the company quality level on the different criteria,
  • benchmark with the market levels (markets expectations),
  • benchmark of the costs of Quality Management System (QMS),
  • diagnostic comments.

See details about criteria and business


Entering new markets with Lean Sigma :

The resulting numbers form the previous benchmarks will fuel the plan to open new markets. Indeed, knowing the type of criteria and the level of quality that are expected, it is easier to build a business plan that will take advantage of the strong points (location, raccess, home services, Internet delivery...) and turn them into revenues.

This quality business plan shall be build on the principles of Lean Sigma method : business objectives, quality contribution to business, team organisation, sponsorship, monitoring and corrective actions…

At a global level, criteria and their quality level are different from one region to the other (Americas, Europe, Asia…). The business plan will include a step by step approach starting with the markets that give quick results and preparing for the long term markets.

NUMERAL ADVANCE proposes:

  • selection of markets from the previously selected criteria,
  • financial figures from Lean Sigma to build the quality business plan (costs of QMS in its life cycle),
  • implementation of the quality business plan in accordance with the general marketing plan.

Lean Sigma implementation :

This step is to deploy the Lean Sigma practices and procedures designed to reach the business objectives. These practices and procedures can be integrated into the existing Management System (ISO 9001, ISO 14001, ISO 22000...).


Training and coaching Lean Sigma procedures :

The personnel will be trained and coached for the Lean Sigma practices and procedures that were previously implemented.