Off Target

When Target came to Canada in 2011, not only were consumers surprised that the retailer opened up over one hundred stores across the country, but so was the business community. To do such a “big bang” approach, you either know what you’re doing or you’re taking a major risk. Unfortunately for Target, its major risk did not pay off.

Target’s biggest failing was in not piloting its entry to Canada with one or two stores before launching full scale. Any project manager worth their trade will tell you that starting small and building up when it makes sense to do so is the best guarantee of success.

In addition to missing the mark with their full-scale roll-out across Canada, Target missed out on the basics of operations management. For one thing, their demand forecasting appears to have been a dismal failure. If they had forecast properly, they would have learned that Canadians preferred the U.S.-type Target stores and not reincarnations of Zellers.

Target also missed out on strategic capacity planning as well as facility layout design. Their inventory systems management was absent, to say the least. This also speaks to their lack of adequate supply chain management. When inventory is scant (as it was at Canadian Target stores), one might reasonably presume that the retailer was using some type of customized just-in-time fulfillment. However, this, too, appears to not have been part of Target’s strategy.

A material requirements planning or enterprise resource planning software would have helped Target manage its stocks and stores. However, we can see that even if Target had such a system, it, too, failed them.

And what about quality? Quality and price are generally prominent factors for consumers. Integrating quality into every element of an operation allows an organization to reduce its prices while still remaining profitable. Clearly, quality does not appear to have been a high priority for Target.

While one can hypothesize about Target’s demise in Canada, it provides little comfort to Target employees. As well, the company itself is now targeted (pardon the pun) as a losing venture:  At least, in Canada.

One thing is certain, though: Target really did miss its mark!

Value: Defined

Lots of people are talking about value these days – especially in light of Lean culture.

The Merriam-Webster dictionary provides eight definitions for “value.” The definitions relate to market price, luminosity, and denomination. From a business perspective, value is related to market price and the customer’s perception of a fair return on an exchange.

From a Lean perspective, value is anything that the customer is willing to pay for – as long as it meets these three criteria:

  1. The customer cares about it.
  2. The product or service must be physically transformed or the step toward transformation must be an essential prerequisite for another step.
  3. The product or service is delivered “right the first time.”

“Non-Lean” organizations sometimes have a tough time determining what it is that their customers’ value. But determining value is actually not that difficult. It comes down to ensuring that the above three criteria are met – all the time. Look at it this way:

  • An organization with efficient processes is able to keep its costs down. This results in a greater ability to attract more customers and translates to value for the customer.
  • An organization with inefficient processes incurs higher production costs. These costs get transferred to the customer. The customer does not see this as value.

Inefficiency can be a business killer. This is where Lean organizations have an edge over non-Lean organizations.

Lean cultures enable waste reduction in business processes that directly contribute to value for the customer. Lean cultures help businesses thrive.

If your customer values your product or services, they will pay your asking price. If your offering does not meet your customers’ criteria for value, the customer may still pay for it, but will definitely be shopping around next time they want the same thing.

Next time you complete a transaction with your customer, ask them to rate the value that they just received from you. Their response will tell you how well you are actually doing compared to how well you think you’re doing. Consider it a reality check.

Value is the key to organizational survival. If an organization consistently delivers poor value to its customers, it goes out of business. It’s that simple.

In God we Trust, for Everything Else There’s Data

Statistics are all about data. But did you know that data can be manipulated to provide you with the results that you thought you should have had in the first place? Don’t get me wrong. I believe data is very important. Without it, we’d be hard pressed to provide evidence in specific situations. However, if data is not collected in a controlled manner, the data can be useless. Let me explain.

To collect data, one needs to first understand the purpose for doing so. And in business settings, the place to start is to identify low performing processes. Collecting data on these processes will provide you with the evidence you need to identify areas in the process that need improving. Here are some basic steps to help you with your data collection plan. 

  1. Measure. Identify what you will measure. Is it speed of order entry, quality of service, number of customer complaints, time to process help desk alerts, etc.? Be specific.
  2. Type of Measure. This relates to what you are measuring and can also tell you when you have enough data. For instance, if you’re measuring quality of service, you will possibly measure one or two inputs to the service plus two or three outputs of the service as well as one process measure. The key is to focus on the vital few versus the useful many. Usually, only two or three items will account for over 80% of what is important to the customer; and that’s what needs to be measured.
  3. Type of data. This relates to either discrete or continuous data. Generally, continuous data is the preferred type of data to collect because it gives you information about magnitude. Examples of continuous data are time and temperature.
  4. Operational definition. This is important to determine exactly when data collection starts and stops. If measuring time to complete order entry, when do you start your timer and when do you stop? Is it when the order is received by the order entry clerk or is it when the order is made by the customer? You can see how being precise in this case will enable you to collect the correct data.

There are other considerations in a data collection plan, but the above four considerations are key to ensuring that the data you collect serves the purposes for which it is intended. Other considerations when collecting data for process improvement purposes includes identifying specifications (i.e., the least acceptable measure in the process such as 30 minutes is the upper limit for order entry) and targets (i.e., what customers would consider ideal – this is not always achievable, but it’s good to have stretch goals).

When collecting data, ensure that you have good measurements. This means that data should be easy to understand, they are important to the customer (either directly or indirectly), and the data motivates people to action.

 

What is Value-Add and How Does it Impact Efficiency?

Mary explains the meaning of “value-add.” The criteria are:

  1. The customer is willing to pay for it
  2. The process, object, or service has to be physically changed
  3. The process, object, or service is done right the first time

In this podcast, she also shares eight common areas for waste and provides examples of each. They are:

  1. Defects
  2. Overproduction
  3. Waiting
  4. Non-utilized talent
  5. Transportation
  6. Inventory
  7. Motion
  8. Extra processing

This podcast is also available as an article: What is Value-Add and How Does It Impact Efficiency?

Clarity, Collaboration and Creativity

Mary explains what benefits she brings to the table when she is working with her clients.  These include clarity, collaboration and creativity.

 

 

 

Identifying Processes for Improvement

In this podcast, Mary discusses how to determine if a process needs improvement. She also offers six steps on how to tell the difference between needs and requirements and breaks down customer requirement into four groups: “nice to haves,” “must haves,” “frustrators,” and “delighters.” By knowing your customers’ requirements, the organization can plan appropriate products and services.

 

Distinguishing Between Needs and Requirements

Understanding what your customers need and what they require is imperative when it comes to productivity. Determining between the two will take your company from being an average organization to a top notch organization.

How Can “Voice of the Customer” be Used to Improve Organizational Performance?

In Lean Six Sigma, a specific methodology is used to address improvements in an existing process. These improvements are based on “the voice of the customer.” In other words, the organization’s motivation for improving organizational performance is based on what the customer is telling the organization. This makes sense since the organization’s sole purpose is to serve its customers. Without customers, the organization fails to exist.

Read more.

Managing Inventories

This podcast addresses the importance of keeping a lean supply of stock. Cost to carry inventory for one year is about 25 to 30 cents for every dollar spent on the stock in the first place. Guidelines for managing inventory are shared, so that you can stay lean and profitable.

Characteristics of the Perfect Team

This podcast explains how you can achieve a great team. Four areas to consider when building teams include: individual and collective behavior styles, time for team formation, resource requirements, and team inspiration. In addition, strong leaders who understand team dynamics can help build a perfect team.