Retail Lean Management

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Lean Retail Management

Solving

Retail

Problems

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Amit Garg Amit Garg

Sr

Sr. Retail . Retail Functional ConsultantFunctional Consultant

Email [email protected] Email [email protected] Phone 91-9880641822

Phone 91-9880641822 IM

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Topics



What is Lean Thinking?



What is Lean Retail?



Why

Lean Retail

?



What does customer value



Waist in retail store



Customer store

experi

ence



Benefits of

Lean Reta

il



Implementing Lean Retail



Principles of

Lean Retail Ex

ecution



Retail Scenario-SAP

Warehouse and DC Management (Lean WM)

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Tesco’s Lean Supply Chain

UK

Tesco can provide all the things Tesco can provide all the things one needs to run a household, one needs to run a household, literally from soup to nuts and literally from soup to nuts and everything in between.

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W

ha

t is Lean T

hinking

?

Value

Stream

Empowered Empowered People People Value Value Perfection Perfection Flow & Flow & Pull Pull

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What is Lean Retail?



 The Lean Retail approach centers on a The Lean Retail approach centers on a number of Leannumber of Lean techniques:

techniques: 

 Simplifying work designSimplifying work design



 Using pull to drive replenishmentUsing pull to drive replenishment



 Removing bottlenecks throughout the supply chainRemoving bottlenecks throughout the supply chain



 Eliminating wasted:Eliminating wasted:

  EffortEffort   TimeTime   MaterialsMaterials   MotionMotion

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Lean Retail



 Tools from the LeanTools from the Lean

Concept translate well into Concept translate well into the retail industry

the retail industry



 The Lean principles remainThe Lean principles remain

the same but the the same but the

application may change application may change



 Focus on the value stream -Focus on the value stream

-

 Get alignedGet aligned



 Get everyone engagedGet everyone engaged



 Start with the customer Start with the customer



 Creativity is the greatestCreativity is the greatest resource

resource



 Silos are the greatestSilos are the greatest obstacle

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Waste is seen differently in Lean: Waste is seen differently in Lean:



 One of the stumbling blocks to One of the stumbling blocks to LeanLean is understanding the concept of

is understanding the concept of waste.

waste.



 TraditionTraditionally waste has ally waste has been viewedbeen viewed as an

as an object. object. It iIt is very s very easy toeasy to

envision a barrel of scrap and identify envision a barrel of scrap and identify it as waste

it as waste



 In Lean thinking the term wasteIn Lean thinking the term waste actually refers not to the physical actually refers not to the physical

material but rather the relationship of material but rather the relationship of the resource to the end customer the resource to the end customer

Lean is all about identifying and

Lean is all about identifying and eliminating wasteeliminating waste

In Lean, waste is measured in

In Lean, waste is measured in consumptionconsumption

of resources

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Myths About Retail

Myths About Retail OperatiOperationsons Lean Retailing Lean Retailing PPerspectiveserspectives It is impossible to provide better

It is impossible to provide better customer service without increasing customer service without increasing

labor costs labor costs

We can’t predict customer demand, We can’t predict customer demand,

so we must be

so we must be ready for anythingready for anything

Product availability can only be

improved through increased amounts

of inventory on hand

We would need a lot of capital to

invest because this program may not

pay back for years

By giving stores more control, I lose

network wide consistency and

standardization

Lean retail improves customer service Lean retail improves customer service

and frontline employee satisfaction and frontline employee satisfaction

without increasing labor costs without increasing labor costs

Overall demand are highly

Overall demand are highly variable,variable, many parts of it are

many parts of it are predictablepredictable

Lean retail will reduce inventory and Lean retail will reduce inventory and

out-of-stocks out-of-stocks

Lean Retail requires very little

Lean Retail requires very little capitalcapital investment and consistently delivers investment and consistently delivers

substantial impact through sales substantial impact through sales

increases and cost reductions increases and cost reductions Lean retail increases consistency and Lean retail increases consistency and

standardization while empowering standardization while empowering

local management local management

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Implementing Lean Retail

Cause

s of

Wa

ste and Noise

P P r r o o d d u u c c t t _F_F o o c c u u s s W W F F M M & & E E f f f f i i c c_i_i e e_n_n c c y y R R o o u u t t e e P P l l a a_n_n n n i i n n g g C C a a t t e e g g o o_r_r y y M M g g_m_m t t L L a a y y o o u u t t / / _P_P l l a a_n_n n n o o g g_r_r a a_m_m s s P P r r o o_m_m o o t t _i_i o o_n_n

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Principles of Lean Retail

Execution



 If your customers expect products to be delivered on trend, thenIf your customers expect products to be delivered on trend, then



 eliminate obstacles such as extra eliminate obstacles such as extra handling and improve processeshandling and improve processes



 that are inhibited by poor workflow that are inhibited by poor workflow design.design.



 Plot the value stream. Identify and map all the steps involved inPlot the value stream. Identify and map all the steps involved in



 moving goods through the system, all tmoving goods through the system, all the way to the customer.he way to the customer.



 Activities that add no value should be eliminated. Activities that add no value should be eliminated.



 Make the process flow. Redesign processes that prevent the freeMake the process flow. Redesign processes that prevent the free



 flow of products to the flow of products to the customercustomer..



 Pull from the customer. Lean execution requires a clear Pull from the customer. Lean execution requires a clear



 understanding of demand understanding of demand and current and current inventoryinventory, pulling, pulling



 merchandise to stores and to the merchandise to stores and to the shelf based on what customersshelf based on what customers



 want.want.



 Pursue perfection. Root out any rPursue perfection. Root out any remaining waste. Then do it again,emaining waste. Then do it again,



 and again, and again.and again, and again.

James Womack and Daniel Jones, authors of James Womack and Daniel Jones, authors of Lean Thinking: Lean Thinking:

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R

etail

Scenario-

Warehouse and

DC Management (Lean WM)



 ScenarioScenario



 This scenario describes the processing of merchandise in theThis scenario describes the processing of merchandise in the

distribution center with inventory management done at the level of distribution center with inventory management done at the level of storage location

storage location – – Lean Warehouse Management.Lean Warehouse Management.



 BenefitsBenefits



 Since storage procedures depend on space limitations,Since storage procedures depend on space limitations,

organization and the type of merchandise being stored, this organization and the type of merchandise being stored, this scenario should be seen as one

scenario should be seen as one example of an implementation.example of an implementation.



 Key Process StepsKey Process Steps



 Goods Receipt ProcessingGoods Receipt Processing



 Return DeliveriesReturn Deliveries



 Goods Issue ProcessingGoods Issue Processing 

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Process Flo

w Diag

ram

Warehouse and DC Management (Lean WM) Warehouse and DC Management (Lean WM)

Create Purchase Create Purchase Order Order Goods Receipt Goods Receipt with Reference to with Reference to Rough Goods Rough Goods Receipt Receipt R R e e t t a a i i l l S S a a l l e e s s P P e e r r s s o o n n R R e e t t a a i i l l W W a a r r e e h

h o o u u

s s e e S S p p e e c c i

i a a

l l i i s s t t Posting Rough Posting Rough Goods Receipt Goods Receipt Create Inbound Create Inbound Delivery Delivery

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Process Flo

w Diag

ram

Warehouse and DC Management (Lean WM)

Warehouse and DC Management (Lean WM) – – Return Deliveries (Optional)Return Deliveries (Optional)

Article Article document for document for goods receipt goods receipt R R e e t t a a i i l l W W a a r r e e h

h o o u u

i a a

l l i i s s t t Output of Output of article article document as document as goods issue goods issue slip slip Create Return Create Return Delivery Delivery

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Process Flo

w Diag

ram

Warehouse and DC Management (Lean WM) – – Goods Issue ProcessingGoods Issue Processing

Create Create Outbound Outbound Delivery Delivery Alternative 2: Alternative 2: Confirmation Confirmation with fifference with fifference R R e e t t a a i i l l W W a a r r e e h

h o o u u

i a a

l l i i s s t t Alternative 1: Alternative 1: Confirmation Confirmation without without differences differences Create transfer Create transfer order as order as picking picking document document Post goods Post goods issue issue Mass Mass processing of processing of outbound outbound deliveries deliveries

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Process Flo

w Diag

ram

Warehouse and DC Management (Lean WM) – – Warehouse Physical Inventory (Optional)Warehouse Physical Inventory (Optional)

Create physical Create physical inventory inventory document document Process Process physical physical inventory inventory R R e e t t a a i i l l W W a a r r e e h

h o o u u

i a a

l l i i s s t t Clearing Clearing differences differences Alternative 1: Alternative 1: Manual creation Manual creation of physical of physical inventory inventory Alternative 2: Alternative 2: Creation of Creation of physical physical inventory via inventory via batch-input batch-input Analyse Analyse physical physical inventory inventory

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Document Flow in the Warehouse

GOODS ISSUE GOODS ISSUE GOODS RECEIPT GOODS RECEIPT

FIXED

STORAGE

BIN

PUTAWAY PUTAWAY TRANSFER ORDER TRANSFER ORDER PICKING PICKING TRANSFER ORDER TRANSFER ORDER Outb. Del Outb. Del.. PO PO Inb. Delivery Inb. Delivery Rough GR Rough GR There is no stock There is no stock keeping in Lean-WM, keeping in Lean-WM,

but just recording but just recording of movements using of movements using transfer orders.

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Inventory Managemen

t -

IM vs.

WM

Storage Location Storage Location Site Site

Inventory Management on article Inventory Management on article

level level

Fixed storage bin can be Fixed storage bin can be

maintained in the article master maintained in the article master (text field)

(text field)

No additional level of stock keeping No additional level of stock keeping

below IM. below IM.

Warehouse number and type are Warehouse number and type are just used for the recording of just used for the recording of

stock movements using the stock movements using the transfer order, but no stock transfer order, but no stock

posting is triggered when moving posting is triggered when moving merchandise at this level.

merchandise at this level.

Whose number Whose number

Storage type Storage type

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Using Lean WM

When you implement Lean WM, inventory management takes place solely When you implement Lean WM, inventory management takes place solely

at storage location level. The system does not update the

at storage location level. The system does not update the stock data atstock data at storage bin level using the quants

storage bin level using the quants like the Warehouse-Managementlike the Warehouse-Management--System (WMS) .

System (WMS) . Y

You use Lean ou use Lean WM solely for WM solely for processing goods receipts and goods processing goods receipts and goods issues.issues. Using Lean WM, you process the

Using Lean WM, you process the warehouse movements in basicallywarehouse movements in basically the same way as if

the same way as if using the Warehouse Management Susing the Warehouse Management System: youystem: you work with deliveries, and you create transfer orders for these

work with deliveries, and you create transfer orders for these deliveries.deliveries. These transfer orders serve as pick lists.

These transfer orders serve as pick lists. The use of transfer orders in Lean

The use of transfer orders in Lean WM provides the following advantages:WM provides the following advantages:

•

• YYou can reprint ou can reprint transfer orders transfer orders at any time.at any time. •

• YYou can ou can split transfer split transfer orders and orders and thus distribute thus distribute the wthe workload better orkload better amongamong

the staff in your

the staff in your warehouse.warehouse.

•

• YYou can use mass processing fou can use mass processing functions based on the transfer order unctions based on the transfer order (for (for

example wave picks). example wave picks).

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Mass Processing of Deliveries

Manual creation in the outbound delivery Manual creation in the outbound delivery

monitor using selection by: monitor using selection by: 

 Shipping pointShipping point



 Picking datePicking date



 Route, carrier ...Route, carrier ...



 Free selectionFree selection

Automatic generation

Automatic generation using selection by:using selection by: 

 Picking date / timePicking date / time



 Additional filter by several criteria Additional filter by several criteria



 (e.g. route, shipping point, ship-to-party ...)(e.g. route, shipping point, ship-to-party ...)

Considering capacity restrictions: Considering capacity restrictions: 

 Weight, volumeWeight, volume



 Maximum items on the picking listMaximum items on the picking list



 Working timeWorking time

  ... Group of Outbound Group of Outbound Deliveries Deliveries or or Wave Pick Wave Pick Delivery Delivery Delivery Delivery Delivery Delivery Delivery Delivery Delivery Delivery Delivery Delivery Delivery Delivery

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Mass Processing of Deliveries

Collective Follow-On-Processing: Collective Follow-On-Processing:



 Create transfer order Create transfer order



 Confirm transfer order Confirm transfer order



 Post goods issuePost goods issue

Group of Outbound Group of Outbound Deliveries Deliveries or or Wave Pick Wave Pick Delivery Delivery Delivery Delivery Delivery Delivery Delivery Delivery Delivery Delivery Delivery Delivery Delivery Delivery

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Rough Workload Estimate

Information on: Information on:



 needed manpower needed manpower



 needed transportneeded transport capacity capacity Estimated Estimated Workload in: Workload in:   QuantityQuantity   WeightWeight   VolumeVolume 

 Execution timeExecution time

Calculation of Calculation of workload using: workload using:



 Logistics Load CategoryLogistics Load Category



 Unit of MeasureUnit of Measure



 Whse no. / storage typeWhse no. / storage type



 Warehouse processWarehouse process

Planned Planned Goods Issue Goods Issue Delivery Delivery Delivery Delivery Delivery Delivery Delivery Delivery Delivery Delivery

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Processes Goods Receipt and

Return Deliveries

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Processes Picking and Goods

Issue

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Process Physical Inventory

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References

 

SAP

 

CISCO



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Overall 11 years experience in Retail Domain In Procurement ,Sourcing, Overall 11 years experience in Retail Domain In Procurement ,Sourcing, Supply Chain Management Buying ,Merchandising, Category Management , Supply Chain Management Buying ,Merchandising, Category Management , Supplier/Vendor Management ,Retail IT, Process Consulting and Business Supplier/Vendor Management ,Retail IT, Process Consulting and Business Analysis.

Analysis. Depth Depth knowledge knowledge of of Retail Retail & & CPG CPG Business Business Processes Processes and and itsits

Amit Garg Amit Garg

Sr

Sr. Retail . Retail Functional ConsultantFunctional Consultant

Email [email protected] Email [email protected] Phone 09880641822 Phone 09880641822 IM