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Solving Retail Problems

Lean Retail Management

Amit Garg Sr. Retail Functional Consultant

Email Phone IM 91-9880641822 amitkgarg22 (Skype)

What is Lean Thinking? What is Lean Retail? Why Lean Retail? What does customer value Waist in retail store Customer store experience Benefits of Lean Retail Implementing Lean Retail Principles of Lean Retail Execution Retail Scenario-SAP Warehouse and DC Management (Lean WM)

Tescos Lean Supply Chain UK

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

What is Lean Thinking?


Empowered People

Value Stream

Flow & Pull


What is Lean Retail?

The Lean Retail approach centers on a number of Lean techniques: Simplifying work design Using pull to drive replenishment Removing bottlenecks throughout the supply chain Eliminating wasted: Effort Time

Womack, 2006

Lean Retail

Tools from the Lean Concept translate well into the retail industry The Lean principles remain the same but the application may change Focus on the value stream

Get aligned Get everyone engaged Start with the customer Creativity is the greatest resource Silos are the greatest obstacle

Why Lean Retail?

Lean is all about identifying and eliminating waste Waste is seen differently in Lean: One of the stumbling blocks to Lean is understanding the concept of waste. Traditionally waste has been viewed as an object. It is very easy to envision a barrel of scrap and identify it as waste In Lean thinking the term waste actually refers not to the physical material but rather the relationship of the resource to the end customer In Lean, waste is measured in consumption of resources time and capital

Benefits of Lean Retail

Myths About Retail Operations
It is impossible to provide better customer service without increasing labor costs

Lean Retailing Perspectives

Lean retail improves customer service and frontline employee satisfaction without increasing labor costs Overall demand are highly variable, many parts of it are predictable

We cant predict customer demand, so we must be ready 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 will reduce inventory and out-of-stocks Lean Retail requires very little capital investment and consistently delivers substantial impact through sales increases and cost reductions Lean retail increases consistency and standardization while empowering local management
McKinsey & Company

Implementing Lean Retail Causes of Waste and Noise



Category Mgmt

Route Planning

WFM & Efficiency

Product Focus

Guidon Performance Solutions 2009

Principles of Lean Retail Execution

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 should be eliminated. Make the process flow. Redesign processes that prevent the free flow of products to the customer. Pull from the customer. Lean execution requires a clear understanding of demand and current inventory, pulling merchandise to stores and to the shelf based on what customers want. Pursue perfection. Root out any remaining waste. Then do it again, and again, and again.
James Womack and Daniel Jones, authors of Lean Thinking:

Retail Scenario-Warehouse and DC Management (Lean WM)

Scenario This scenario describes the processing of merchandise in the distribution center with inventory management done at the level of storage location Lean Warehouse Management. Benefits Since storage procedures depend on space limitations, organization and the type of merchandise being stored, this scenario should be seen as one example of an implementation.

Key Process Steps Goods Receipt Processing Return Deliveries Goods Issue Processing Warehouse Physical Inventory rights reserved. 2011 SAP AG. AllTools and Workbenches

Process Flow Diagram

Warehouse and DC Management (Lean WM)
Retail Warehouse Specialist

Create Purchase Order

Create Inbound Delivery

Posting Rough Goods Receipt

Retail Sales Person

Goods Receipt with Reference to Rough Goods Receipt

Process Flow Diagram

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

Retail Warehouse Specialist

Article document for goods receipt

Create Return Delivery

Output of article document as goods issue slip

2011 SAP AG. All rights reserved.

Process Flow Diagram

Warehouse and DC Management (Lean WM) Goods Issue Processing

Retail Warehouse Specialist

Create Outbound Delivery

Create transfer order as picking document

Alternative 1: Confirmation without differences

Alternative 2: Confirmation with fifference

Post goods issue

Mass processing of outbound deliveries

2011 SAP AG. All rights reserved.

Process Flow Diagram

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

Retail Warehouse Specialist

Create physical inventory document

Process physical inventory

Clearing differences Analyse physical inventory

Alternative 1: Manual creation of physical inventory

Alternative 2: Creation of physical inventory via batch-input

2011 SAP AG. All rights reserved.

Document Flow in the Warehouse

PO Inb. Delivery

Rough GR



There is no stock keeping in Lean-WM, but just recording of movements using transfer orders.


Outb. Del.



Inventory Management - IM vs. WM

Inventory Management on article level Fixed storage bin can be maintained in the article master Site (text field) Storage Location No additional level of stock keeping below IM. Warehouse number and type are just used for the recording of stock movements using the transfer order, but no stock posting is triggered when moving merchandise at this level.

Whose number Storage type

Using Lean WM
When you implement Lean WM, inventory management takes place solely at storage location level. The system does not update the stock data at storage bin level using the quants like the Warehouse-ManagementSystem (WMS) . You use Lean WM solely for processing goods receipts and goods issues. Using Lean WM, you process the warehouse movements in basically the same way as if using the Warehouse Management System: you work with deliveries, and you create transfer orders for these deliveries. These transfer orders serve as pick lists. The use of transfer orders in Lean WM provides the following advantages:

You can reprint transfer orders at any time. You can split transfer orders and thus distribute the workload better among the staff in your warehouse. You can use mass processing functions based on the transfer order (for example wave picks).

2011 SAP AG. All rights reserved.

Mass Processing of Deliveries

Delivery Delivery Delivery Delivery Delivery Delivery Delivery

Manual creation in the outbound delivery monitor using selection by:

Shipping point Picking date Route, carrier ... Free selection

Automatic generation using selection by:

Picking date / time Additional filter by several criteria (e.g. route, shipping point, ship-to-party ...)

Group of Outbound Deliveries or Wave Pick

Considering capacity restrictions:

Weight, volume Maximum items on the picking list Working time ...

Mass Processing of Deliveries

Delivery Delivery

Delivery Delivery Delivery Delivery

Collective Follow-On-Processing: Create transfer order Confirm transfer order Post goods issue

Group of Outbound Deliveries or Wave Pick

2011 SAP AG. All rights reserved.

Rough Workload Estimate

Planned Goods Issue

Calculation of workload using:

Logistics Load Category Unit of Measure Whse no. / storage type Warehouse process

Estimated Workload in:

Quantity Weight Volume Execution time

Delivery Delivery

Information on: needed manpower needed transport capacity

Processes Goods Receipt and Return Deliveries

Processes Picking and Goods Issue

2011 SAP AG. All rights reserved.

Process Physical Inventory


SAP CISCO Lean Manufacturing in World

Email IM Phone 09880641822 amitkgarg22 (Skype)

Amit Garg Sr. Retail Functional Consultant

Overall 11 years experience in Retail Domain In Procurement ,Sourcing, Supply Chain Management Buying ,Merchandising, Category Management , Supplier/Vendor Management ,Retail IT, Process Consulting and Business Analysis. Depth knowledge of Retail & CPG Business Processes and its dependencies