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APPLIED RESEARCH

CAN LEAN PRINCIPLES BE IMPLEMENTED IN FASHION RETAIL?

SUBMITTED BY
ANKITA CHANDEL
MFM 2017-19
NIFT, NEW DELHI
Contents
I. ABSTRACT ................................................................................................................................ i
II. ACKNOWLEDGEMENT ............................................................................................................ ii
1 RESEARCH PROPOSAL ............................................................................................................ 1
1.1 AREA OF STUDY .............................................................................................................. 1
The area of the proposed study will be apparel retail sector. ................................................... 1
1.2 INTRODUCTION .............................................................................................................. 1
1.3 BACKGROUND ................................................................................................................ 1
1.4 KEY TERMS ..................................................................................................................... 2
1.5 RESEARCH METHODOLOGY & PLAN OF ACTION ........................................................... 2
1.6 DELIVERABLES ................................................................................................................ 3
2 LITERATURE REVIEW .............................................................................................................. 4
2.1 RETAILING ...................................................................................................................... 4
2.2 RETAIL MARKETING ........................................................................................................ 6
2.3 RETAIL SECTOR IN INDIA ................................................................................................ 6
2.4 FUTURE OUTLOOK.......................................................................................................... 7
2.5 APPAREL RETAIL SECTOR................................................................................................ 8
2.6 LEAN RETAILING ............................................................................................................. 8
2.7 Recognizing the industry’s unique characteristics ....................................................... 11
2.8 Addressing retail store-specific challenges .................................................................. 12
3 METHODOLOGY ................................................................................................................... 15
3.1 Research process.......................................................................................................... 15
3.2 Research strategy ......................................................................................................... 15
3.3 Data Collection ............................................................................................................ 15
4 CASE STUDIES ....................................................................................................................... 17
4.1 CASE 1 -Integration of Lean Operation and Pricing Strategy in Retail (Toru Noda
University of Tsukuba) ............................................................................................................. 17
4.2 CASE 2- Lean thinking with improvement teams in retail distribution: ....................... 19
4.3 CASE 3: Lean delivers savings for Siemens Business Services ...................................... 21
4.4 Case 4 - Wipro Case Study............................................................................................ 22
4.4.1 Conclusion ............................................................................................................ 24
4.5 Case 5: The lean-performance relationship in services: a theoretical model.............. 24
4.6 CASE 6 ZARA – The Fast Fashion .................................................................................. 25
5 FINDINGS .............................................................................................................................. 27
5.1 Value stream mapping ................................................................................................. 27
5.2 Kaizen ........................................................................................................................... 27
5.2.1 Customer Fashion Joint ........................................................................................ 27
5.2.2 Fashion Retailer Joint ........................................................................................... 28
5.3 Visual Control Boards ................................................................................................... 29
5.4 Standardized Work....................................................................................................... 30
5.5 Just In Time .................................................................................................................. 31
6 CONCLUSION ........................................................................................................................ 33
7 SOURCES............................................................................................................................... 36
I. ABSTRACT

The purpose of this project is to study the application of lean principles in the
retail industry and to come up with the lean tools that are suitable for retail.

The project have been stages, for getting a better understanding and to collect
the primary data, various retail stores have been visited and unstructured
interviews were conducted with the store managers. A lot of case studies have
also been reviewed. The entire research has been conducted over a period of 12
weeks.

The outcome of the research is that the various lean tools that can be explored in
retail industry are Value Stream Mapping, Kaizen Circles, Visula control Boards,
Jidoka, Just In time and standardized work.

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II. ACKNOWLEDGEMENT

This document is based on extensive study done during a span of 16 weeks. All
this time I met and worked with many people. I am using this opportunity to
express our gratitude to everyone who supported us throughout the course of
this graduation project. I am thankful for their aspiring guidance, invaluably
constructive criticism and friendly advice during the project work. I am sincerely
grateful to them for sharing their truthful and illuminating views on a number of
issues related to the project.
I would like to express my warm thanks to my faculty guide, Mr. Sanjay Kumar,
whose support and guidance has been of great help, without which this project
would not have been well directed.
We would also like to express our gratitude to the employees of the company for
sharing their insights and overwhelming support.

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1 RESEARCH PROPOSAL
1.1 AREA OF STUDY
The area of the proposed study will be apparel retail sector.
1.2 INTRODUCTION
Analogous to the application of lean principles in the manufacturing sector, lean
approach in retail can help to reduce activities that add no value, directly impact and
help prevent the potential problems, and improve global operational flow. The markets
in apparel retail are getting wider day-by-day and with the advent of e-commerce, the
competition has become even fiercer. Garment retailers need to manage their
operations efficiently by coordinating the backend supply chain and providing better
products and enhancing customer satisfaction. Hence, brick and mortar apparel stores
need an effective way to survive in the changing times of e tailing.
The pioneering concept of lean manufacturing that focuses on dealing with bottlenecks
in the inventory can be used well in the apparel retail industry. Lean retailing fulfills what
the customer wants, when the customer wants it, where the customer wants it, and in
what quantity does the customer want it. This ideology was adopted by Wal-Mart, and
subsequently used by large retailers like J.C. Penny, Bloomingdale's, Macy's, Gap, and
Zara.
Many lean principles can be applied to the retail sector in order to reduce waste, reduce
company costs, increase efficiency, reduce execution time, increase profitability and
reduce inventories.

1.3 BACKGROUND
Retail sector as compared to manufacturing sector have shorter lead times, but since
concepts like Just-in-time, Hoshin Kanri, SMED, Poka-Yoke etc. there is a need to further
reduce the lead time in retail sector as well. With the successful employment of the lean
principles in the retail sector cycle times can be reduced to certain extent. The
philosophy of lean retailing works on identifying and minimizing wastages to simplify and
make the operations smooth. In lean retailing, waste is measured in consumption of time
and capital and not in physical material. Hence over-production, inefficient
transportation, unnecessary motions, inappropriate processing, rejects & defects, time
wasted in waiting, and over stocking are some wastages in a typical apparel retail set-up
that need to be worked upon.
The ever-changing demand and desires of customers, the availability of plenty of
options, and competitive prices are key areas every garment retailer needs to consider.
In case of apparels, the fashion and styles are changing fast and so the manufacturers
need to keep pace with the changing trends. Due to such problems apparel retailers
require a system like lean retailing to streamline all its operations and have an
uninterrupted work-flow designed every single time.

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The lean retailing follows certain principles that are described by James Womack and
Daniel Jones in their book titled Lean Thinking as follows:

 If your customers expect products to be delivered on trend, then eliminate obstacles


such as extra handling and improve processes that are inhibited by poor workflow
design.
 Plot the value stream. Identify and map all the steps involved in moving goods through
the system, all the way to the customer. Activities that add no value must be
eliminated.
 Make the process flow. Redesign processes that prevent the free flow of products to
the customer.

1.4 KEY TERMS


Just-in-time, Agile manufacturing, Kanban, One Piece flow, Customer Value, Hoshin
Kanri, Kaizen, SMART Goals, Value stream mapping

1.5 RESEARCH METHODOLOGY & PLAN OF ACTION


When seeking Lean execution in retail, it is vital to consider store operations and process
improvements from customer’s viewpoint.

 Retail strategy: For lean be successful in a retail organization, it is necessary that


departmental goals must align with companywide Lean principles, where in lean
concepts like Hoshin Kanri, Kaizen, SMART Goals, Value stream mapping comes
into play.
 Merchandise Management: It means having the right product at the right price
and at the right time. Failing to manage merchandise crates a great deal of waste
which evidently does not add value to the process. Lean principles like Kanban,
PDCA, and Root cause analysis can provide a great deal of use in reducing Muda
generated by the same.
 Store and distribution operation: This is the greatest area of waste and therefore
the greatest opportunity to apply lean principles. Distribution is all about
optimizing the trade-offs between handling costs and warehousing costs, and
maximizing the warehouse by utilizing it to the fullest , and minimizing the
handling costs and travelling time in parallel. Lean concepts like Bottleneck
analysis, Poka yoke, TPM, continuous work flow can be obliging in this.

The research in the above-mentioned area will follow a very rudimentary methodology,
which encompasses:

1) Studying the entire the process flow of apparel retail sectors by visiting the retail
stores.
2) Mapping a value stream map and identifying the various Muda in the process.

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3) Eradicating the various identified Muda’s which the help of apposite lean
principles.

The proposed research will take 12 weeks of time for its completion. During the
course, various retail stores will be visited to understand the areas where lean
principles can be implemented and which lean tools will help to make the entire
process more efficient & profitable.

1.6 DELIVERABLES
According to research carried out in practice, the effects of lean thinking in retail are:
increased comparable sales by up to 10 percent, reduced labor costs by 10 to 20 percent,
reduced inventory by 10 to 30 percent, and stock outs by 20 to 75 percent (Lean
Retailing: Achieving Breakthroughs in-store profitability, McKinsey &
Company).Various retailers like Zara, Walmart, TESCO and IKEA are known to have
successfully espoused the lean concept. Therefore lean enactment and techniques can
be successfully applied in the retail sector and will help to improve operational flow.

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2 LITERATURE REVIEW
2.1 RETAILING
Retailing is a distribution channel function where one organization buys products from
supplying firms or manufactures the product themselves, and then sells these directly to
consumers. A retailer is a reseller from which a consumer purchases products.
Retailing can be defined as the buying and selling of goods and services. It can also be
defined as the timely delivery of goods and services demanded by consumers at prices
that are competitive and affordable.
Retailing involves a direct interface with the customer and the coordination of business
activities from end to end- right from the concept or design stage of a product or
offering, to its delivery and post-delivery service to the customer.
Retailing broadly involves:

 Understanding the consumers’ needs


 Developing good merchandise assortment and
 Display the merchandise in an effective manner so that shoppers find it easy and
attractive to buy

Characteristics of Retailing:

 There is a direct end-user interaction in retailing.


 It is the only point in the value chain to provide platform for promotions.
 Location is a critical factor in retail business.
 In most retail business, services are as important at core products.
 There are a larger number of retail units compared to other members of the value
chain.
 This occurs primarily to meet the requirements of geographical coverage and
population density.
Retail Industry, one of the fastest changing and vibrant industries in the world, has
contributed to the economic growth of many countries.
The retailing concept is essentially a customer oriented, company-wide approach to
developing and implementing a marketing strategy. It provides guidelines which must
be followed by all retailers irrespective of their size, channel design, and medium of
selling.
The retailing concept covers the following four broad areas:

 Customer orientation- The retailer makes a careful study of the needs of the
customer and attempts to satisfy those needs.

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 Goal orientation- The retailer has clear-cut goals and devises strategies to achieve
those goals.
 Value driven approach- The retailer offers good value to the customer with
merchandise keeping the price and quality appropriate for the target market.
 Coordinated effort- Every activity of the firm is aligned to the goal and is designed to
maximize its efficiency and deliver value to the customer.

Retail Functions -

Providing an assortment of products and services –


All retailers offer assortment of products, but they specialize in the assortments they
offer. Supermarkets typically carry 20,000 to 30,000 different items made by over 500
companies. Offering an assortment enables their customers choose from a wide
selection of brands, designs, sizes, colours, and prices at one location.
Breaking Bulk -
Breaking bulk means physical repackaging of the products by retailers in small unit sizes
according to customers’ convenience and stocking requirements.
Normally retailers receive large quantities of sacks and cases of merchandise from
suppliers to reduce their transportation costs. In order to meet customer requirements
retailers, have to break or arrange the bulk into convenient units. The entire function
adds value to the offerings not only for the end consumers but also for the suppliers in
the value chain.

Holding Inventory –
To ensure the regular availability of their offerings, retailers maintain appropriate levels
of inventory. Consumers normally depend on the retailers directly to replenish their
stock at home. Therefore, retailers on periodic basis, maintain the required level of
inventory to meet the regular or seasonal fluctuations in demand. They need to maintain
equilibrium between the range, or variety carried and sales which it gives rise to.
Extending services –
Retailers provide multiple services to immediate customers and other members of value
chain. They display products so consumers can see and test them before buying. Some
retailers have sales people in the store or use their websites to answer questions and
provide additional information about products.

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2.2 RETAIL MARKETING
Retail Marketing is largely based on three Vs- Value, Volume and Variety. Though the
Retail marketing had the quantitative development across the globe, the quality is no
doubt being compromised with the Globalization. International quality products are
competing with indigenized products. This variation in size, quality and competition has
made Indian market face ridiculous growth. As the competition is between international
and indigenized products, its taking a great toll on both the sectors.
With the big giants entering the market, there is a grave competition in the Indian
Economy. After 1995 the great companies like Food world, Reliance, Planet M, Music
World and many others also entered the retail market. The visibility and the craze to
remain in the forefront of business has made many of the giant companies to move from
manufacturing to front line retailing. With this Retailing has become prominent giving
world-class shopping experience to the customers under one roof.

2.3 RETAIL SECTOR IN INDIA


The Indian retail industry is one of the fastest growing in the world. Retail industry in
India is expected to grow to US$ 1,100 trillion by 2020 from US$ 672 billion in 2020.
India is the fifth largest preferred retail destination globally. The country is among the
highest in the world in terms of per capita retail store availability. India’s retail sector is
experiencing exponential growth, with retail development taking place not just in major
cities and metros, but also in Tier-II and Tier-III cities. Healthy economic growth, changing
demographic profile, increasing disposable incomes, urbanisation, changing consumer
tastes and preferences are the other factors driving growth in the organised retail
market in India.
India’s population is taking to online retail in a big way. The online retail market is
expected to grow from US$ 14.5 billion to US$ 60 billion between 2016 and 2020.
In the past, only Kirana, Mom-and-Pop or friendly neighborhood stores selling products
of daily needs were visible in most parts of the country. It was at the outset of the 1980s
that manufacturer’s retail chains like DCM, Gwalior Suiting, Bombay Dyeing, Calico,

Titan, etc. came forward to open their outlets in metros and small towns, whereas multi-
brand retailers came into the picture in the 1990s only. As such, shopping centers
emerged from 1995 onwards (Sinha and Kar, 2007). However, India witnessed the
mushrooming of more and more retail stores in different parts of the country since the
beginning of this century.

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The retail industry in India has come forth as one of the most dynamic and fast paced
industry with several players entering the market but all of them have not yet tasted
success because of the heavy initial investments that are required to break even with
other companies and compete with them.
The diverse economic profile with a huge population base has contributed significantly
to the growth of the retail industry in the past. On the demand side, rising personal
disposable income, growing urbanization, improvement in employment and the
changing aspiration level of Indians have supported the consumerism and retail
expansion in India. The sector has been witnessing rapid transformation from the
unorganized to the organized, giving place to a modern retail format which gives unique
shopping experience to the customer.
In India the vast middle class and its almost untapped retail industry are the key
attractive forces for global retail giants wanting to enter into newer markets, which in
turn will help the Indian retail industry to grow faster. Indian retail is expected to grow
25 per cent annually. Modern retail in India could be worth US$ 175-200 billion by 2020.
The food retail industry in India dominates the shopping basket. The future of the Indian
retail industry looks promising with the growing of the market, with the government
policies becoming more favorable and the emerging technologies facilitating operations.
The projected improvement in economic activity, given improved policy environment
and alling inflation, is likely to provide the required impetus to the retail sector in the
coming years. Further, the expected moderation in interest rates is likely to support
consumption of different consumer products.

2.4 FUTURE OUTLOOK

India remains a largely untapped and unorganized retail market, with several
international retail companies yet to commence operations in the country. India holds a
substantial advantage over other emerging retail destinations owing to its strong
domestic consumption and low rate of market penetration by overseas retailers. “India's
new middle class is increasingly becoming brand conscious and willing to spend on
quality goods, a trend which is creating numerous business opportunities for mid-range
international brands. With political and economic sentiments already showing signs of
improvement, we believe this is the right time for international retailers to look at India
for expansion into the region," as per Mr. v Anshuman Magazine, Chairman and
Managing Director, CB Richard Ellis (CBRE), South Asia. E-commerce is also expected to
be the next major area for retail growth in India. The Boston Consulting Group and
Retailers Association of India published a report titled, ‘Retail 2020: Retrospect,
Reinvent, Rewrite’, highlighting that India’s retail market is expected to nearly double to
US$ 1 trillion by 2020 from US$ 600 billion in 2015, driven by income growth,
urbanization and attitudinal shifts.

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The report adds that while the overall retail market is expected to grow at 12 per cent
per annum, modern trade would expand twice as fast at 20 per cent per annum and
traditional trade at 10 per cent.
Retail spending in the top seven Indian cities amounted to INR 3.58 trillion (US$ 53.7
billion), with organized retail penetration at 19 per cent as of 2016. Online retail is
expected to be at par with the physical stores in the next five years.
Ecommerce companies are increasingly going beyond digital marketing and targeting
offline customers as well. With this growth in the e-commerce industry, online retail is
estimated to reach US$ 70 billion by 2020 from US$ 0.6 billion in 2011.

2.5 APPAREL RETAIL SECTOR

India has been projected as one of the most sought-after retail destinations by many
national and international consultancy firms. In the whole retail sector, clothing has
emerged as one of the leading segments in terms of growth and a frontrunner in terms
of growth in output. Since the beginning of this century, India has witnessed an increase
in the number of retail stores in different parts of the country. The emergence of apparel
retail stores in smaller cities of the country is definitely an attempt to tap the potential
in the market.
Although food and grocery retailing had been dominant since the inception of modern
retailing in India, yet in the past few years, clothing has emerged as one of the leading
sectors in terms of growth and a frontrunner in terms of growth in output.

2.6 LEAN RETAILING

Lean retailing is now a reality that has forced manufacturers to build standard products
on demand using build-to-order techniques. The retail markets are characterized by a
strong competition, short product life cycles, long product development lead times, and
highly volatile demand. Today's powerful retailers insist on low prices and refuse to carry
inventory. That is why lean retailers are now expecting manufacturers to provide rapid
and frequent replenishment of retail goods based on real-time sales.
Lean retailing is an emerging concept and has already been adopted by retail
organizations in the Western countries using technology such as barcodes, RFID (across
the product value chain from raw material sourcing through production through final

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delivery at the retail store) and item-level inventory management and network
architectures.

Lean retailing aims to continuously eliminate “waste” from the retail value chain, waste
being defined as any activity/process that is not of “value” to the customer. A
fundamental principle of lean retail is to identify customers and define the “value” as
those elements of products or service that the customer believes he should be paying
for, not necessarily those that add value to the product.

Lean retailing in about -

 Total integration in the process from ordering to delivery


 Increasing delivery frequency with reducing number of tracks
 Increase sales combined with decrease inventory.

It requires simplifying the workflow design in delivering products to customer. Given that
the connotation of value is customer-centric, simplifying the workflow design requires
streamlining the core and associated processes so that any kind of waste is eliminated.
Removing bottlenecks throughout the supply chain is a principle driving lean retail. It
entails redesigning processes to eliminate activities that prevent the free flow of
products to the customer. Further, lean retail requires following a culture of continuous
improvement. Continuous improvement (or “Kaizen”) focuses on small improvements
across the value chain that rolls up into significant improvements at an overall level.
Kaizen not only can lead to elimination of wasted effort, time, materials, and motion but
also focus on bringing in innovations that lead to things being done faster, better,
cheaper and easier. Involvement of staff at the lowest levels is very important in Kaizen
activities and that means that companies must invest in training, up-skilling their talent
pool in Lean Principles.
Lean principles and techniques can be successfully applied in the retail sector. In the
retail sector, lean approach improves operational flows. Lean retail encourages
manufacturers’ to produce standard products in accordance with the created (placed)
orders from retailers pursuant to the demand of their consumers.

Characteristics of the retail market are strong competition, shorter product life cycle,
longer product development time and high sensitivity of demand. In order to be more
competitive and profitable today's retailers operate strategically oriented to lower prices
and gain exemption from holding unnecessary stocks. Lean retail is an example of best
practices of successful operational strategies which management need to accept - to
maximize the operating efficiency of the retail process.

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Lean opportunities for retailers and wholesalers fall into three primary categories:
Retail strategy - For Lean to be successful in a retail or wholesale organization,
departmental strategies must align with and support a company-wide Lean strategy.
Merchandise management - This involves developing, securing, pricing, supporting, and
communicating the retailer's merchandise offering. Ultimately, it means having the right
product at the right price and the right time. Failing to manage merchandise using Lean
principles creates a great deal of waste—which doesn't add value for anyone.
Store and distribution operations- This is the greatest area of waste—and therefore the
greatest opportunity to apply Lean principles. Distribution is all about optimizing the
trade-offs between handling costs and warehousing costs, and maximizing the
warehouse's total cube—utilizing its full volume, while maintaining low materials
handling costs and minimizing travel time
Lean is a modern retail operating strategy which requires maximum efficiency coupled
with identification and elimination of waste. It requires simple workflow, eliminating the
loss of effort, time, materials and motifs. With acceptance of lean approach managers
are able to reduce activities that add no value, directly impact and help prevent the
potential problems, and improve global operational flow. When seeking Lean
improvements in the retail environment, it helps to consider store operations and
process improvement from the customers' viewpoint as they make their way through
the store.

2.7 Recognizing the industry’s unique characteristics

Although retailers are similar to many other for-profit companies in one aspect: growth
and profitability are the key metrics, the retail industry has many characteristics and
attributes that are unique among industries. This distinctiveness is especially evident
when compared to the traditional manufacturing industry, Only recently have retail
companies begun to turn a serious eye toward applying the successful principles behind
Lean Six Sigma (LSS)—for so long viewed as a part of the manufacturing world—as a way
to foster a process-oriented culture within their organizations. As retailers become
interested in building a continuous-improvement capability to enable competitiveness,
growth and high performance, a difficult challenge has repeatedly arisen in retail LSS
deployments: How do we apply LSS in the stores given the unique challenges? This article
explores some answers to this question and highlights examples from pioneering
retailers that have successfully deployed LSS in stores, creating significant bottom-line
results. 3 where LSS originated. For retailers to successfully deploy LSS programs beyond
the corporate office and into stores, companies need to first recognize and address the
industry’s specific characteristics:

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Direct relationship with ultimate end-user customer.
Many manufacturers may produce units to order, but never see the end customer. Some
try to simulate the interaction by posting a photograph of the buyer with the product
while other industries collect demographic data to predict customer behavior. Most
industries, however, are not as directly impacted by the distinctive, constantly changing
and inconsistent behavior of actual customers. This intense customer interaction is
particular to retailers, and demands rapid responses to meet ever-changing customer
needs.
Large number of independently operated stores.
In manufacturing environments, companies typically have from a few to a couple dozen
sites. Conversely, retailers can have hundreds or thousands of stores. For example, Best
Buy has more than 1,100 stores, while Kroger has some 2,400 and Wal-Mart/Sam’s Club
around 3,900. To complicate matters further, individual stores either operate as nearly
independent entities or are actually privately owned as typical in the hospitality subset
of retail. Each of these customer-facing outlets has at least some level of autonomy,
making corporate-wide changes extremely complex and difficult to execute. Typically,
decisions made at corporate are disseminated throughout the organization as one would
expect, but the challenge lies in the consistent execution of a large number of changes
required at each store. Tight margin pressures. While margin is a common and important
measure in most for-profit companies, it is a critical measure for retail companies in
order to remain competitive. In the current era of margin degradation, retailers have
turned to a common practice of reorganizing the corporate office regularly to manage
and reduce selling, general and administrative (SG&A) costs (the primary focus in most
retail LSS deployments). In addition, store costs, particularly labor hours, are constantly
being reviewed and adjusted. But these corporate-driven activities usually fail to
adequately instill sustainable improvement efforts. Although labor-hour allocation,
simplistically, is a balance between profitability and customer experience, neither
tightening SG&A nor readjusting labor allocation establishes the framework to build real,
long-term positive impact to the industry’s three critical players: customers, employees
and shareholders.

2.8 Addressing retail store-specific challenges


The concept of deploying LSS for retailers is understandably daunting because of not
only the difficulty in addressing the unique challenges in stores, but also the limited
success in consistently executing and sustaining changes in stores. However, by
understanding these challenges, specific approaches can be developed that address
these issues and increase the probability of success. Some of the store challenges of

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particular difficulty include change inputs, labor hours, customer experience, turnover,
consumer and employee demographics, and store autonomy:
Change inputs from multiple functions.
Stores are inundated with changes and improvements from multiple departments
simultaneously, forcing store management to determine which solutions to adopt and
which to ignore or postpone. In addition, because corporate departments are often
working in silos, the changes stores are asked to implement frequently conflict, requiring
store managers to make choices between options. Because of this local and necessary
decision making, corporate initiatives that are designed to create better conformity
among the stores actually create more variation. Furthermore, implementation of
relatively simple changes becomes more complex than expected because of different
footprints, models, and sizes, and created solutions are rarely one size fits all.
Tightly budgeted labor hours.
To maintain profitability, store labor hours are constantly being manipulated to reduce
labor costs. This constant constraint does not allow associates to work on process
improvements without impacting store operations. Many retailers avoid sending
associates to a class to learn to be more effective or efficient when these valuable hours
away replace not only functional labor hours but also customer service hours, reducing
store sales dollars. Moreover, because resources are limited, stores have little
bandwidth to implement additional local improvements that would serve as
differentiators from competitors. The sheer number of daily or weekly processes in
stores can be staggering. For instance, one store manager with a large global retailer
explained that he has to manage 40 processes (e.g., covering payroll, loss prevention,
regular reporting, hiring, etc.) each week by himself before consideration can even be
given to process improvements.
Minimized impact to customers.
The impact on customer service within the stores because of expected process changes
cannot be overlooked. In many cases, the negative impact of making store adjustments
on the customer experience is minimized by executing physical changes after hours or
when blocked from customer view. However, this approach potentially delays and/or
limits what stores can implement quickly.
High turnover.
The turnover rate in retail is more than 35 percent as an industry compared to 26 percent
in other industries.* Some retailers experience turnover in stores approaching 100
percent per year, which has profound impact on the sustainability of improvements. As
such, continual basic training consumes most of the allotted education labor hours given
to stores, and store management is reluctant to invest in additional training when the
time required for a positive return on investment (ROI) exceeds the expected tenure of
most store associates.

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Inexperienced employee demographics.
A contributing factor to turnover is the employee demographic in retail (more than 50
percent of all employees are between 16 to 19 years old), which impacts the educational
and business acumen level of frontline associates. Retailers are naturally reluctant to
provide much decision freedom to associates because of their limited business
experience. Furthermore, the limited ability of inexperienced, part-time associates to
learn and apply statistical tools makes long-term, impactful change in the stores more
difficult to accomplish.
Constantly evolving consumer demographics.
Evolving consumer demographics drive the need to alter stores to meet specific local
requirements. The recent trend to design stores based on customer segmentation is an
example of applying demographics specifically to local customer demands. However, the
design of more neighborhoodfocused stores creates a number of internal problems. For
example, simple planogram changes require hundreds of versions to satisfy each store’s
individual needs, delaying the speed at which changes can be implemented. In addition,
this type of demographic identification and planning creates different experiences for
customers who visit multiple stores, causing confusion with different footprints, design
and assortment.
Significant store autonomy.
To exacerbate current challenges, individual store managers typically have autonomy
within each store that creates replication complexities. There is usually no reward or
benefit to sharing information among stores whose managers are in competition with
their peers and whose leadership traditionally has had a strong “notinvented-here”
mentality toward mandated changes. To successfully apply LSS in the stores as well as to
sustain improvement changes, the industry and storespecific challenges must be
addressed and managed in the deployment design and planning of an LSS program.
Another critical requirement to establish a successful LSS program is to include the active
participation of frontline associates. They interact with customers daily, observe
customer reactions and understand today’s customers better than anyone else. This
unique customer insight, along with a tailored LSS approach in stores, is critical in
deploying LSS successfully in retail.

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3 METHODOLOGY

3.1 Research process

This subchapter is going to be an overview of the main steps in the research process. The
process started with the definition of research question based on the problem definition.
The problem definition has been an indicative point for the different choice along the
whole research process.
The development of research design process has been reviewed and modified several
times during research process, for instance when some unexpected data of the case
company has been collected or some interesting results are discovered in the analysis.
The data collection process lasted for two months and interview-guide has also been
modified several time based on the analysis of previous interviews and observations.

3.2 Research strategy

We studied some lean fashion supply chains in order to conclude any findings or
theories. The reality that lean management methods is not widely adapted in current
supply chains in the fashion industry (lack of phenomena to study) makes it impossible
to conclude some final theories.
This research is designed to be an exploratory research which is intended to explore
defined research question and provide a basis for more conclusive researches in the
future (Research- 86 methodology.net, 2016).
According to Brown (2006), exploratory research is suitable for problems that very little
or no researches has been conducted. This research is intended to explore the
possibilities when fashion retailers incorporate lean management and forms a basis, in
the form of a framework, for lean management implementation by practitioners and
conclusive research could be done by researchers afterwards.

3.3 Data Collection

The most common methods of data collecting are interviews, observations,


documentation etc. All the three methods have been used in this research although
interviews are the primary one.

15
An unstructured interview was used to collect the primary information. An
unstructured interview is like a conversation between the informant and researcher.

Direct observations have been done at the operation facility (the store) and storage
rooms of various fashion retailers.
Documentation, as an important source of evidence, has also been reviewed before,
during and after researcher started interviews and observations. Various case studies
have also been studied for the same.

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4 CASE STUDIES

4.1 CASE 1 -Integration of Lean Operation and Pricing Strategy in Retail (Toru
Noda University of Tsukuba)

The study is based on the importance of integration of marketing and operation as a


corporate strategy to develop a lean model in retail. The research question for this study
is whether lean as an alternative to scale can be successfully applied to the retail industry
and how to develop a competitive advantage by introducing lean to retailing. This study
provides a case which explains that stable pricing strategy plays an important role to
achieve a successful implementation of lean production system for retailers.

The prime objectives of this study were achieved by utilizing an extensive review of the
literature and a case study of Company X that transformed its business model. The case
study (Eisenhardt, 1989) was selected for the research as an effective method of eliciting
productive findings and compelling conclusions. The case study is based on mid-size
Japanese retailer which sold foods, consumables, apparels, and general merchandise
goods which was facing financial trouble and was losing its sales. The Company X decides
to transform its business model by implementing the lean operation system and EDLP.

The three aspects where taking into account to transform its business model: marketing
transformation, operational transformation and support business transformation. The
following actions were taken for lean transformation at the stores:
1. Multitasking
2. Kaizen
3. Standard operations practices

The lean operation system was established by


1) Simplifying the process with eliminating wastes,
2) Standardizing the process with multitasking, and
3) Levelling work load.

17
18
New work practices such as multitasking, team activities, and Kaizen meetings helped
lean operation be successfully implemented.
The results were averaged and the annual store labor productivity was improved by 34%
and selling & general administration cost over sales was reduced by 3.5% for three years.
It created funds for price investment, and financial performance dramatically improved.
Company X was successfully turned around by the end of 2009. From 2007 to 2009,
Japanese economy and consumer consumption were stagnated and there were no other
special reasons for Company X increased sales. The case of Company X verified that lean
could be successfully implemented in retailing and added values. The point is creating a
continuous operation flow in the value chain and the whole business flow needs to be
designed to minimize variation. Lean in Retail has two elements. One is waste
elimination. The other is creating continuous business flow. Both contribute to cost
reduction, but creation of continuous business flow has brought a much bigger impact
on financial performance based upon the case of Company X.
We can infer from this case study that for a Retail Organization to benefit from lean
implementation there should be elimination of wastes, continuous flow throughout the
process chain and standardization of methods/processes.

4.2 CASE 2- Lean thinking with improvement teams in retail distribution:

The study presents a methodology for change management to adopt lean practices in
distribution centers. The lean culture is difficult to implement in companies from the
retail and distribution sector due to the volatility of customer demand, the high degree
of human participation and the demanding mechanical and repetitive activities in retail
and storage activities
The aim of this paper is to propose a methodology based on change management
principles for adopting lean techniques related to improvement teams in a non-
manufacturing organization. The main research questions addressed in this paper are:
How can the change management principles help lean practices be adopted in a logistic
platform or a distribution center?
How to ensure management involvement and worker participation in the adoption of
lean tools in those organizations?
The presented case study has been used to develop, test and refine the methodology.
This methodology consists of three key steps for the adoption of change management
and how those steps should be carried out.

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Those three steps are:

1. Preparing and Planning for Change


2. Developing Change
3. Embedding The Change

The Improvement Committee analyzed the current situation to identify opportunities to


help introduce lean activities in the warehouse. Several opportunities were detected,
such as: Worker need and desire for training, improvement opportunities in warehouse
processes (order picking, shop returns, etc.), improvement in order preparation,
warehouse cleanliness, storage location improvement or reduction of maintenance
costs. The Committee selected only those improvement opportunities that were most
feasible in terms of time, cost and impact to warehouse management.
The Improvement Committee also visited another distribution company, this one
dedicated to appliance supply and storage. This company’s warehouse had seen a high
degree of improvement, with organization based on employee involvement and
teamwork in lean activities. This visit allowed the Improvement Committee to better
understand the final result of the project.
The project was officially presented to the warehouse, explaining the elements of the
program, which included voluntary participation, training financed by the company and
team recognition. Lean principles were introduced to workers during training and later
strengthened during the problem-solving process. Therefore, the teams focused on
improving issues related to reduction of both movement and waste, the latter being
linked to accumulated materials or broken products.
The lean philosophy mainly focused on process improvement, which is based on waste
elimination.
Results show that the methodology was suitable for establishing a lean culture in the
company and it resulted in good outcomes in terms of productivity, employee attitudes
and participation. The main focus of this philosophy is to reduce cost by eliminating
waste, which is achieved through the use of rigorous problem-solving methods and
continual improvement of those efforts. The methodology was successfully
implemented and both management and members of the Improvement Committee
perceived a positive change in this organization’s culture. The approach was rooted in
the culture of the organization and made in line with the vision and objectives
established by management and through the development of the principles of the
workforce. The study shows that for successful implementation of lean and changing
towards lean management requires a combination of committed management, proper
training and an environment that enables organizations to sustain improvement. The
study found that the use of lean tools with improvement teams is also useful in
organizations that are not directly related to production.
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From this case study it is evident that for lean to be implemented, areas that require
improvement must be identified first. This case study also emphasizes the importance
of employee participation and training. Positive attitude of employees helps in creating
a work culture that is focused towards improvement. Waste elimination is achieved by
rigorous problem solving, which in turn helps in process improvement.

4.3 CASE 3: Lean delivers savings for Siemens Business Services


The case study is regarding Siemens Business Services which has made significant
reductions in the cost of administering one of its accounts through the innovative use of
Lean methods in an office environment.
The Lean program aimed to:

 Help people to understand the challenges facing the organization;


 Provide a vision of the organization as successful, competitive and Lean; and
 Equip employees with improvement tools and techniques and a way to tap into
their own knowledge and discretionary effort to improve processes and drive out
waste.
 Managers and team leaders were given:
 An introductory workshop, building awareness of the need for Lean and their
key role in its implementation;
 A two to three-day "back to the floor" exercise, providing first-hand experience
of the day-to-day issues at team level;
 A two-day workshop focused on leading and facilitating Lean teams; and
 Preparation to co-deliver team training workshops.

Team members took part in:


1. An introductory workshop similar to that provided for managers and team
leaders;
2. A workshop focused on identifying each team's core purpose and agreeing an
agenda for Lean application;
3. Kaizen blitz events, which aim, through real-time application to real problems, to
transfer the learning to the work place; and
4. Learning reviews, checking progress and agreeing action plans

The benefits of lean -


1. At one site, unnecessary internal travel by people has been reduced by 65 per
cent;
2. At another, 100 days a year have been saved through the removal of reminders
and indemnity forms and claims personnel are inputting their own warrants,
improving response times to the customer by one day; and at site three, a team
identified a potential saving of 50 per cent in manual work - revised to an actual
saving of 75 per cent after one month of trialing.
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3. In the last year, teams came up with some 1,200 improvement ideas, more than
500 of which have been implemented.
4. Another significant benefit has been the development of an internal capability in
Lean facilitation, through the knowledge and skills developed by the in-house
facilitators. This is seen as key to the credibility and sustainability of Lean.
5. In addition, the roles and responsibilities of operational managers, team leaders
and resource coordinators have been revised to take account of, and support,
the new ways of working.
6. There is positive feedback from managers and teams at all sites. Daily work group
meetings have improved communications and helped focus on business
performance and continuous improvement

From the above case study, we identify how lean practices can be implemented in an
office environment. We learn how the knowledge, suggestions and feedbacks of the
employees alone, if implemented properly, can largely alter the way an organization
works.

4.4 Case 4 - Wipro Case Study

The case is about Wipro which decided to take the lean approach in 2004 for profound
transformation and improvements to provide a competitive edge over their competitors.
It took Wipro three years of the successful implementation of lean and is still refining
the process. Wipro great success of translating lean into IT sector has led to its adoption
by many other service sector industries. The case shows the applicability of lean
management in service industry involving knowledge work by investigating its
implementation at Wipro service firm.
Wipro wanted to differentiate itself from its competitors by providing better quality and
faster delivery of software products as well as reduce their cost. So they decided to adopt
lean management for highly skilled employees, strong industry demand, to deal with
rising labor costs and surpass their competitors.
According to the lean the seven wastes: overproduction, unnecessary transportation,
inventory, defects, over processing, and waiting should be eliminated from the business
operations. And Wipro was loaded with these wastes which includes my routine
activities which needed a lot of time and also which didn’t even require judgment and
expertise like printing documents, information requested to arrive at a decision and
setting up meetings to name a few.
They realized that the amount of inefficiency that could be eliminated from their jobs
was being grossly underestimated by workers. Thus the key factor is to systematically
make these wastes visible and act upon it at an organizational level.

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Adoption of TPS by four step process:
Wipro established a four-step process to adopt TPS –

1. Identify and specify the task in detail for clear and better understanding of work
by members to accomplish the work.
2. Streamline communication by establishing direct communication pathways
between members to eliminate miscommunication/delay to reduce waste.

Waste elimination:
5 why approach- Finding waste in knowledge work is not easy and to find out those
Wipro used the approach called 5 why in which the process is assumed to wrong instead
of assuming it to be right and the worker is supposed to continually ask questions until
the root cause of every activity isn’t identified.
1. Restructuring of the project along functional lines
2. Assignment of individuals as primary and backup leaders of each function
3. Responsibility of creating standard solutions
4. Training other members of the group.

To ensure that each and every member acquire broad skills, members rotated into a
different functions each quarter. These measures initially added to the time needed to
perform work but soon the projects were delivered on schedule and the team was able
to speed up the process.
Identification of small forms of waste –
The teams were encouraged to find out the smalls forms of waste and not only the big
ones. The knowledge operations are littered with a nickel that goes unnoticed: inbox
cluttered with unnecessary mails, waiting for regularly scheduled meeting to start as
members arrive late; creation of unnecessary reports.
Identification of wastes and rooting it out would help members to free them up and do
more valuable work. The use of 5 whys should be utilized and devote time for recognizing
and eliminating waste.

3. Simplify the process architecture for understanding interconnections.


4. Adopt hypothesis-driven problem solving.

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4.4.1 Conclusion
Wipro thus made the implementation of lean management system possible in
knowledge work. They altered many processes through specified tasks, simplified
process architectures, hypothesis-driven problem solving and streamlined
communications. And it resulted in improved operational performance.
The processes are long and complex with multiple decision points in knowledge work
and lean helped Wipro to make the processes that takes place inside people’s head
visible.
Especially the Visual control board made invisible work process visible and other
techniques helped in creative problem solving and critical thinking of team members.
Standardization is important because if all the members are not doing the work in the
same way it would be difficult to provide the customer with consistent high quality
services every time. And lean also constantly pushes the members to think critically to
improve the process so that they can respond to complex level of service and
complicated systems to make the right decisions and satisfy the customer.
Wipro does proved Lean isn’t just about manufacturing; it is about standardization of
process, making problems visible and developing team members critical thinking ability
so that the problems can be solved to improve the work processes.

Lean is about using the best approach to complete a task which leads to customer
satisfaction. Lean is about having a motivated staff whose goals match with the
organizational goals. And Wipro’s motivated and trained work force with good
leadership from the top management and involvement of everyone in the organization
from top to bottom in the process of implementing lean with its focus on providing fast
and better quality services than the competitors to their customers lead to success.

4.5 Case 5: The lean-performance relationship in services: a theoretical model

The purpose of the mentioned case is to address the gap between the lack of theoretical
models establishing the core constructs of lean service, their interrelation and impact on
organizational performance. The study identifies a comprehensive set of lean technical
practices, lean supportive practices, inhibitors and expected outcome of lean service.
Expected relationships among those constructs are established by developing a
conceptual framework.
Some of the Lean Technical Practices that can be followed include 5s, Automation, Group
Technology, Kaizen, JIT, Kanban, etc. Lean Supportive Practices that can be followed are
appropriate reward system, employee empowerment, employee involvement,
employee commitment, improving teamwork spirit, leadership, etc.

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The study throws light on the benefits of lean service implementation:

 Freeing staff time


 Identification and elimination of waste
 Improvement in capacity
 Improvement in customer perception of product/service quality
 Improvement in customer satisfaction
 Improvement in employee’s satisfaction and their performance
 Reduction in costs
 Reduction in inventory
 Reduction in lead time and cycle time
 Reduction in staff turnover and absenteeism
 Savings in space
 Profitability

The study also deals with the inhibitors of lean practices viz., Employees resistance to
change, Functional hierarchical management structure, Human errors in the
implementation process, Implementation of multiple improvement programs, Lack of
knowledge of the practices and Their origin in manufacturing.

Through this case study, we learn which lean manufacturing practices as well as lean
supportive practices can be adopted in Retail and the benefits of their implementation.
We also learn to identify the various inhibitors to lean implementation in a retail
environment. Identification of inhibitors helps us device methods to reduce them if not
eliminate them.

4.6 CASE 6 ZARA – The Fast Fashion

This case study is about how ZARA managing its retailing and logistics in becoming the
most leading apparel retailer in the world. By providing consumer with current high
fashion styles at reasonable prices, ZARA managed to make more than $14.5 billion in
sales with more than2000 stores worldwide. The company has succeeded by breaking
virtually every traditional rules in the retailing industry. Zara’s business model is keenly
focused on four strategic elements which is design &production, logistics, customers and
stores.
The company owns its supply chain and competes on its speed to market, literally
embodying the idea of “fast fashion” at affordable prices. ZARA’s success comes from
having complete control over all the parts of its business starting from design, production
and distribution of their products. That is why Louis Vuitton’s fashion director, Daniel
Piette, described the company as “possibly the most innovative and devastating retailer
in the world.”
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The competitive organizational behavior is one of the important categories for the
success of Zara. Some of the significant competitive sources by Zara are:
Low Cost: As per the classical model of Porter, the concept of differentiation and cost
are some of the important sources of competitive advantages. This type of strategy is
completely based on the efficiency and the cost control objectives. The competitive
strategy involves certain manufacturing items, distribution products as well as the
couture designs (Lamberg and Tikkanen, 2006).
Differentiation: This means to provide different brands as well as the customer service
to acquire the proper market share. The company has different technical strategies as
well as the information and the logistics systems with the help of the use of controlled
mechanized system (Rugman and Girod, 2003). Zara's most of the operations are
centered on the primary manufacturing opportunities in Spain. In this case, 50 percent
of the items has been designed and manufactured based on different style patterns and
the designs (Massa and Testa, 2009).
Manufacturing of the small lot: The designed supply chain is there to support the small
production capabilities and proper shipments. It helps in the reduction of the waste,
which has been formed by lots of wasted designs (West, Ford and Ibrahim, 2015).
Supply chain operations: The innovations and the process as well as the product
development leads to higher demand for the products. Zara also has some types of extra
capabilities as well as the proper flexibilities to run the manufacturing plants across India
and at the same time having some advantage of adding the temporary laborers in the
case of urgencies.

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5 FINDINGS

5.1 Value stream mapping


A value stream of a product is showing all the different activities that are required for a
company to produce and deliver a product or service to the customers from phase of
raw material or components. Some of the activities are value adding while others are
not adding any value to the product at all. According to Myerson (2012), value stream
mapping of current state should be considered as the first step for any lean
implementation. A current state map visualize the whole value stream and forms the
base for improvements (Rother and Shook, 2003, Braglia et al., 2006).
In the case of fashion retailers, they are receiving finished products from their suppliers
and therefore no more manufacturing is needed. However, they still need to prepare the
products before they can place them in the store or in the inventory.
In particular the sales staff need to check if the received products are the products that
they have ordered, check both quality and quantity (where emphasis is on quantity), put
on price tags and put the products (if the products are clothes) on hangers.

5.2 Kaizen

5.2.1 Customer Fashion Joint


Characteristics of fashion industry and luxury fashion consumption tells us the
purchasing decision making of fashion products are high impulse and different
consumers emphasizes on different values of fashion products. The different values are
for instance, social value, perceived conspicuous value, quality value etc. These factors
should be considered when we identify values for targeted customers.
Brand is one of the central concept in fashion industry . What do the customers think
about those brands? Do they consider those brands in the same way as the members in
the purchasing team? Brand equity could provide a basis for evaluating which aspects of
brands the local fashion consumers emphasize. A
n activity which has been identified as a non-value adding activity is not contributing to
the value in the perspective of the end costumers, not in the perspective of the fashion
retailers. The value even varies from customer to customer. Value adding activities for
some customers are wastes for some other customers (Melton, 2005).
Following lean principles, companies should take care of customer inputs and feedbacks.
Because there is no meaning to increase productivity when the customers need only half
of the amount that the companies provide. In the case of fashion retailer, there is no
meaning to serve all the shoppers when the service quality drops for everyone you try
to help.

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By clear identifying of customer values, it will provide the fashion retailers guidelines
when considering new market opportunities. Lean will not push products to market, but
rather let the real market demand drive the production. An ideal situation within lean is
to only produce what customer needs, otherwise the products will be a waste for the
company. For instance the marked down merchandise increase the inventory cost and
generate very little profit (sometimes no profit). Lean supply chain is pulled from
customers.

5.2.2 Fashion Retailer Joint


After evaluating all the practical lean management methods, Jidoka (quality at source) is
identified to be a suitable lean method to deal with this kind of quality issue. Jidoka
indicates that quality should be assured at the source. When a quality problem occurs,
the root cause of the quality problem should be addressed immediately and do not wait
days before the group come together and discuss the causes of the quality problem.
Quality at source within lean production has been originally described for situations
where machine make a mistake. Here we use the principle of the concept and move
beyond to apply this management method to any quality problem that occurs within the
business. For instance, the problem of that a reward system which usually works in other
companies does not work in our company. If quality at source has been a management
method and these mentioned quality issues will probably never happen again.
After the first occurrence, the root causes would be found and a solution will be decided.
Unlike in production facilities, the behavior of consumers in the store cannot be
controlled. Consumers will check the merchandise and merchandise will be unorganized.
The problem is that the merchandise should not stay unorganized for 2 hours’ time, as
this picture will strongly affect other consumers’ perception of the store. The next time
these issues happen, the solutions will be followed, then the issues will be quickly fixed
and will not last for more than 2 hours’ time.
Lean management will find the origin of each mistake and never allow same problem to
happen again, otherwise this will be an enormous waste for the business. The general
manager of the store will not be at the store all the time to check quality. In order to
achieve quality at source, the manager should push the responsibility down to every
employee.
As I observed those quality problems, two sales staffs on the same floor are not dealing
with any customers. They (at least one of them) have namely the time to solve the
problem. The shelves where the quality problem occurred is not easy to observe, one
solution could be that the sales staffs should identify these ‘’difficult’’ areas and walk
around the same floor every 30 minutes (for example) in order to discover unorganized

28
merchandise or other types of problem. When these employees have responsibility, they
will be more proactive to discover and solve defects.
Mangers should encourage and empower them to address any nonvalue adding
activities that they see and that nobody else has noticed. They are the ones who knows
how to do the works best. They will probably come with better solutions and ideas.
Employees will feel more empowered and responsible. Their capabilities will be utilized
in higher degree by giving them authority and responsibility.

5.3 Visual Control Boards

Visual management and workplace organization have not been especially mentioned in
the theory of fashion retailing. One reason might be that workplace organization in
different industries share the common characteristics. Lean management methods, 5S
method and visual management, has been identified to analyze these issues.
The interviews indicate that there could be troubles in the information flow within the
company and might affect the management of supply chain when information flows too
slowly, to wrong employees or is misunderstood. A good flow of information is essential
for organizational learning as well (Shtub and Karni, 2010). Information flow through
emails is used currently to make sure information will be delivered to the right
employees and totally understood by them. Visual management is proved to enhance
information sharing and contribute to achieve ’’zero lost information’’ and could
therefore be a complementary method.
By adapting visual management we could ensure that the most important information
will be delivered to the right employees. One example of how visual management could
contribute to better information flow is using a white board to inform the employees:
what has been done, what are we doing and what are we going to do. When an employee
leaves from work with some undone tasks, she/he could write it down on the white
board to inform the employees in the next shift. The white board also helps every
employee to get an overview of the activities going on in the house.
The values of the company (which also should be developed) should also appear visually
somewhere in the house, to remind the sales staffs how they should treat every single
consumer. Readers might think that the employees could talk to each other ‘’face to
face’’ to communicate the working tasks and the sales staff could remember the
company values, why are we making it more complex? That is because we are humans
and we forget things easily when we have several tasks going on. Thus the whiteboard
will always remind us what we should do next.

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Visual management could also help white board to prevent quality problems . These
shelves which are difficult to observe could be drawn on paper and each floor could have
their own version. Sales staffs could look at the paper in order to find out which shelves
they should observe more carefully.

Most common wastes in retail business today are product defects, unnecessary
motions, redundant employees, waste of time and excess inventory (Lukic, 2012). The
common area for employees (kitchen, meeting room and office) are located on the
second floor. When sales staff on the basement floor want have a cup of coffee during
working hours, there has not been designed any proper facility to place their coffee cups.
Employees on the basement floor have to place their coffee cups and personal
accessories one some random furniture in the small storage room next to the checkout
counter. This might lead to quality issues, for instance when the coffee is spilled at some
products in the same cramped storage room. This is observed in during one single
observation, other similar situations might exist at other places in the company.
Lean method, 5S, should be used to organize the entire workplace to reduce the chance
for quality problems appear. I assume that one important reason for that this situation
has not been changed for long time is that: it is totally acceptable for the employees the
way it works right now. Thus this situation might also be prevented if Kaizen culture is
adapted.
5.4 Standardized Work
Following the theory of standardized work, standardized work could reduce variability,
occurrence of injuries and strain and makes training of new operators easier. These
decided standardized work also forms a base for further improvement. When everyone
is doing the same job differently, where should the standpoint be for improvement?
Lean principles tells us the importance of team work, the employees who are doing the
tasks everyday know how to do it best. We should combine the best practices and
prepare standardized procedures.
The waste/non-value adding activity, unnecessary motions, could then be prevented by
a standardized procedure. The sales staff could then use the time which she spent on
unnecessary motions to some value adding activities.
However, on the contrary, Noda (2015) argued that standardized work does not fit to
service industry. Because service industry is characterized by simultaneous production
and consumption of services. The need of every customer varies and thus decentralized
decision making is often required (Noda, 2015).Standardized procedures might not work
well for some working tasks, for instance how the sales staff treat consumers in the
store, because these working tasks are depending on the specific context.

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5.5 Just In Time

Strategic partnership with supplier and JIT delivery are the central concepts within lean
supply chain. Achieving long-term strategic partnership and JIT delivery from all suppliers
will increase the responsiveness and help to better manage orders and volatility of
demand.
JIT delivery will also lead to less inventory in the store. Less inventory makes it easier to
address defects and thus improve quality and organize. Less inventory leads to reduced
obsolescence, less time spending on finding the right one to move to the store and
improved flexibility to react to changes (when something become very popular that we
do not have in the store, we will have the capital and space to order them from supplier
quickly). The risk relied in the capital invested in inventory will be reduced. Less inventory
will also create more space for items of other styles.

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32
6 CONCLUSION

In general, the application of lean approach allows the company to reduce costs, increase
efficiency, reduce execution time, reduce waste of all kinds, increase profitability and keep low
inventories. It also contributes to customers' satisfaction, improving product quality and increase
staff morale.
The core of lean retail is primarily a commitment to eliminating waste. Similar to the
manufacturing sector and following the model of lean approach, the main types of waste in retail
are: excess inventory, product defects, unnecessary motion, redundant employees and a waste
of time. Managers in retail can use similar tools and principles for identifying all types of waste
to improve their operational efficiency. Lean techniques include:
(1) simplifying the design of work (organization of individual work process should be such as to
provide a high degree of feasibility and possible control, so that it has clear start and finish),
(2) the use of withdrawal (pull) to create a replenishment (provided that the supply of goods is
fuelled with actual demand of customers, as opposed to forecasts or anticipated demand, so to
keep inventory levels low and free space),
(3) removing the bottlenecks through the supply chain (by eliminating inefficiency with shorter
delivery time, lower transport costs and defects, and improving the flow of goods and operational
performance)
(4) elimination of waste of effort, time, materials and movement (by identifying the core business
values, with the elimination of excess movement, time, materials and labor used in the process).
The effective implementation of lean approach in retail makes greater cost efficiency, increased
worker productivity and less waste of time and effort. This in return significantly affects the
improvement of customer satisfaction and store profitability.

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In the retail customers' demand is elastic. Retailers need to adapt inventory movements to
customer demand. What may help is successful implementation of the concept of lean retail. The
concept of lean is a combination of lower retail inventories and more frequent filling in the shop.

34
With lower inventories at the store, retailers will not have a large amount of unsold goods under
the terms of a collapse in demand.
With frequent filling, store manager does not have to periodically control the "popular" items.
Lean retail requires
(1) bar codes, which allow retailers to control the sale of each of the ten thousand products in
stock,
(2) electronic data interchange, a computer system network that allows retailers to quickly and
inexpensively communicate with suppliers,
(3) modern distribution center which is a fast channel of goods from suppliers to sales locations.
Basically, the concept of lean retailing is to give quick response to fluctuations in demand rather
than holding large stocks. Lean retail enables faster movement of goods from suppliers to sales
locations.
The application of lean principles, RFID technology and inventory management at the level of
individual items significantly contributes to creating value for customers and retailers. The
essence of applying five principles of lean retail are the following:
1) If customers expect that products to be supplied are in trend, it is necessary to eliminate
obstacles such as extra grip and improve processes that result from poor design diagrams.
2) The pursuit of value system, which consists of identifying and mapping all the steps regarding
the movement of goods through the system all the way to the customer; activities that do not
add value should be eliminated
3) Execution of the process flow, in terms of process redesign that will ensure the free flow of
products to customers,
4) The withdrawal from customers means that lean performance requires clear understanding of
demand and current inventory levels, and that the withdrawal of goods to the store and shelves
is based on customers wants,
5) Perfection, which is reflected in the fact that the remaining waste need to be rooted out, and
then the same thing again. Ultimately, all this has a positive impact on business performance of
the shops and retailers in general.

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7 SOURCES

 Google Scholarly Articles


 Ebsco database
 Research Gate
 ProQuest
 Lean Thinking- By James Womack & Daniel Jones
 The Toyota Way- By Jeffery Liker

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