Retail businesses today face difficulties in developing and
implementing a process that improves the product quality since there are so
many vendors, manufacturers and international companies involved. They need to
promulgate a set of standards that every company in the supply chain needs to
follow by setting acceptable standards that must be met whether the company is
a local business or a foreign company. The industry is consumer based which
requires a high customer satisfaction level. The process that can be used to
solve this problem is Lean Six Sigma.
Lean Six Sigma (LSS) is a continuous improvement method that
combines Lean Thinking and Six Sigma. This method is not only applicable to the
manufacturing industry but also to other types of industries like
pharmaceutical industry, healthcare industry etc because the flexibility of LSS
and DMAIC (Define, Measure, Analyze, Improve, Control) will help other
companies including retailers to adjust to specific industry needs, enable them
to better understand customer needs and increase profits.
Lean provides a means for reducing the lead times in any
process whereas the Six Sigma methodology provides the retailers a means of
reducing variation by establishing a foundation for data driven management.
These tools and methods give the executives a way to establish and maintain
strategy to execution links in their pursuit of becoming high performance
businesses.
Benefits of
LSS to retailers:
·
Enables retailers to better define the problem.
Traditionally retailers list numerous problems ultimately loosing focus on the
measures that are not performing at the desired level. LSS also enables the
retailers to get to the process behind the problem by helping them to express
what output measures will be different and help quantify the improvement in the
output measure.
·
Helps retailers to measure the process. Retail
companies generally overlook the process aspects and thus miss out on the
non-value added aspects of the process. This will help them to highlight the
waste in the process
·
Drives the retailers to use data analysis to
replace experiential or reactionary methods. This helps them to identify the
critical processes contribute most to the output. Addressing the critical
factors and rectifying them will enable change performance that can be
sustained.
·
Ensures change will be sustainable through a
control plan which includes identifying the process, identifying the critical
process factors that should be monitored, methods for monitoring, standard
state for these factors and response plan when they are not performing to the
standards.
This will allow corrections to be made earlier in the
process before the product reaches the customer and saves the retailer from
incurring an external failure cost which may result in loss of reputation and
customer goodwill. The use of LSS allows a simultaneous top-down, middle-out
and bottom-up approach to process improvement, creating a collaboration of
activities that will satisfy customers, stakeholders and associates
However in light of today’s competitive markets and prospect of dull
sales, leaders are looking for alternatives routes to growth. Unlike in the
1990’s when executives embraced six sigma with missionary zeal, today the
executives are looking for a fast way to save money. Six Sigma requires
organizational culture change and has its disadvantages. The feverous focus on
measurements can kill innovation and the investments can take months or years
to pay off.
Therefor I feel that retailers and
companies today are looking at techniques which will provide a quick return on
investment.
However large retailers like Target claimed that these Six Sigma Programs
have led to over $100 million in savings over the last 6 years whereas Best Buy
implanted a Lean Six Sigma program to projects like streamlining appliance
installations which saved them about $20 million. They have helped the
companies to boost profits without putting more people on the payroll
especially in the time of recovery from recession. With more and more retailers
turning to Lean Six Sigma and other methodologies will the world face a jobless
recovery?
Sources:
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