If you could achieve one significant breakthrough in your store planning process, what would it be? Most store planning professionals agree that their ultimate goal is to reduce the total cost of remerchandising and store build outs. But how do you go about the process of achieving that goal?
Some executives might just direct their staffs to cut budgets in a given area and let them figure out how to control expenses. But is this the most effective way to reduce the total cost to the company? When direct operating budgets are cut, indirect costs can increase. When the front lines are not able to perform functions in the most efficient manner, these burdens often shift back to support departments. Many of the store build out costs are covered by corporate operating budgets such as freight, merchandising, design, and plannogramming.
And is slashing budgets always the answer? Scheduling freight is a tricky business. If no one is managing your freight, chances are, you let your vendors route your shipments. You pay whatever bill they send you. This may reduce your staffing budget, but is certainly does not reduce total costs. Our job as store planners is to conduct the entire process for maximum benefit to the company.
It is all a mater of perspective. Are you sitting in a tree on a high branch looking down? Or, are you standing on a nearby mountain examining all the trees below? Slicing and dicing individual operating budgets puts you on the proverbial branch.
I recently facilitated a store-planning symposium with market leaders from a diverse section of retail segments. They brainstormed specific goals to reduce the cost of store fixturing and merchandising programs. Here is a sample from their long list:
1. To improve the quality and effectiveness of their workforces,2. To reduce errors caused by date and design changes,
3. To reduce errors and inefficiencies caused by inadequate communication both internally and throughout the supply chain,
4. To eliminate documentation errors that increase setup and construction costs,
5. To improve vendor performance tracking and feedback mechanisms,
6. To reduce lost sales during remerchandising activities,
7. To use technology to minimize the cost of all transactions, and
8. To reduce construction cycle times.
Every store planner that I meet has the same goals... to be able to build new stores or remodel existing stores better, faster, smarter and cheaper than their competition.
Cycle time is a manufacturing term. It refers to the total amount of time that it takes to perform a given function. It can refer to a macro function such as remerchandising an entire store. Or, it can refer to a micro function such as the time it takes to setup a particular point-of-purchase display.
At the symposium, we asked what lessons that we could all learn from lean manufacturers. At first, store planners will give me the raised eyebrow when I start talking about manufacturing. They quickly see the connection between manufacturing any product and manufacturing a store. Every store planner that I meet has the same goals as do lean manufacturers: to be able to build new stores or remodel existing stores better, faster, smarter and cheaper than their competition.
Let's look at Toyota. Toyota was once a manufacturer of "cheap Japanese automobiles." Now a model of quality and technology, American automakers have entered into numerous joint ventures with Toyota. The benefit to Toyota is that they have enjoyed greater access to our markets. The benefit to American automakers is that they have had the opportunity to learn the secrets of Toyota’s success.
Toyota's winning ways began with Taiichi Ono when he began to attack "waste" in the production system as a strategic issue. He taught his workforce to identify and eliminate unnecessary movements, materials and time in the production system. No amount of waste was too small to eliminate. No person was exempt from generating process improvement ideas.
The call to eliminate waste was not limited to direct labor and materials, but overhead as well. Most overhead is considered to be waste, and should by definition be minimized. Taiichi Ono identified seven elements of waste:
1. Correction
2. Unnecessary -- processing steps
3. Waiting
4. Moving people and goods around
5. Excess inventory
6. Production of goods and services that no one wants
7. Obsolescence
Thus, the Toyota Production System and lean thinking was born.
By Pam Mitchell
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