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Processes management dynamics

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Retail Process Management Presentation

Retail Process Management Presentation

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  • 1. Process Management - Dynamics Unit 4
  • 2. 1 – AFTER STUDYING THIS UNIT, YOU SHOULD BE ABLE TO:
    • Explain retail process effectiveness in terms of sigma level
    • Describe retail process assessment approaches.
    • Create retail processes leveraging the retail industry process standards.
    • Improve retail process performance using performance improvement methods.
    • Avoid pitfalls of process management
    L E A R N I N G O B J E C T I V E S
  • 3. Process Effectiveness
    • A business process should always be customer oriented and customer focused
    • The customer can be an internal customer or an external customer
    • Internal customers are employees and external customers means buyers
    • A business process is effective only when it meets the needs of a customer.
    • This unit discusses some effectiveness indicators, which measure the quality of a business process.
    1 –
  • 4. What is Six Sigma?
    • Six Sigma is a comprehensive system for achieving, sustaining and maximizing business success.
    • Six Sigma is driven by close understanding of customer needs, disciplined use of facts and data, and statistical analysis
  • 5. Six Sigma
    • Many retail business run at 3 sigma level or below.
    • To gain market share, the retailers process effectiveness needs to be higher
    • Six sigma processes are the process results in only 3.4 defects per million opportunities (DPMO)
    • Sigma is a mathematical term which measures how much a process varies from perfection, based on the number of defects per million opportunities.
    1 –
  • 6. Six Sigma cont …
    • The 6 sigma was deployed in manufacturing industries to reduce wastage due to defects and rework and additional costs.
    • The focus was to do it right the first time, hence saving expenditure and increasing profitability.
    • Approach equally applicable in service industries
  • 7. Sigma Levels Sigma Level DPMO Percentage Defective Percentage Yield 1 691,462 69% 31% 2 308,538 31% 69% 3 66,807 7% 93% 4 6,210 1% 99% 5 233 0% 100% 6 3.4 0% 100% 7 0.019 0% 100%
  • 8. Sigma levels Yield DPMO 30.9% 690,000 69.2% 308,000 93.3% 66,800 99.94% 6,210 99.98% 320 99.9997% 3.4 100 Rounds of golf per year Miss 6 putts Per round Miss 1 putt Per round Miss 1 putt Every 9 rounds Miss 1 putt Every 2.33 years Miss 1 putt Every 163 years Sigma 1 2 3 4 5 6
  • 9. Six Sigma in Service Industries
    • Service industries like airlines operate at 12 sigma levels
    • Customers would not like to fly with an airline at 6 sigma process effectiveness levels, i.e. in every million take-offs and landing process, 3.4 times the flight may crash
  • 10. Process Assessment Approaches
    • Processes can be assessed at the following stages: -
      • Approach of the process development
      • Deployment of the process
      • Method of recording the learning from the process
      • Integrating the learning from the process to improve process
      • Results of the process compared to the best in class benchmarks
        • Acronym: ADLIR
  • 11. Approach
    • The approach refers to the technique of methods used to create the process.
    • Is the approach appropriate to the requirement of achieving business results?
    • The approach needs to be affectively utilising the methods deployed.
    • The approach should be repeatable and predictable
    • Repeatability and predictability are the hall mark of a robust process led organisation
  • 12. Approach cont...
    • In the first phase of existence, organisation are reacting to problems experiences.
    • In the second phase, they are adopting systematic approaches in key areas that create a significant influence on the business
    • Only 20% of the processes are created using a systematic approach
    • In the third phase, organisations align all their processes to achieve their leadership position
    • The final phase is when organisations are leaning from their mistakes and learning from the outside world. It is the ideal state.
  • 13. Deployment
    • Deployment refers to the extent to which the approach is implemented to address the retail business environment.
    • It also refers to if the approach is deployed consistently across all relevant processes.
    • Sometimes you may find an approach is applied consistently in one department but not across other departments with relevant processes
  • 14. Learning
    • This refers to improvising the approach by continuous evaluation and improvement efforts.
    • Finding unique game changing solutions (game changers) through innovation.
    • E.g. no body now likes shopping behind the counter, but to pick and compare products
    • Are such efforts of creating game changing solutions encouraged?
    • If you encourage only then do you learn and create them.
    • Leaning should also be shared from one department to another (Knowledge management)
  • 15. Integration
    • Integration refers to the extent to which the approach created is aligned to organisational needs
    • This refers to the extent to which measures, information and improvement systems are complementary across processes and work units.
    • Finally it refers to the plans, processes, results, analysis, learning and actions being uniformly meshing across processes and departments or work groups to enable organisation goal achievement
  • 16. Results
    • Service industries like airlines operate at 12 sigma levels
    • Customers would not like to fly with an airline at 6 sigma process effectiveness levels, i.e. in every million take-offs and landing process, 3.4 times the flight may crash
  • 17. Benchmarking
    • Is a continuous process of comparing or measuring processes of manufacturing products, selling products, providing services with competitors considered as leaders
    • Is the process of finding out the best process organizations anywhere in the world
    • Benchmarking is the way of the organisation saying it is willing to learn
    • Existing or new retail business can directly benchmark and create processes that are of 5 th generation (leapfrogging from 1 st or 2 nd generation)
  • 18. Retail Industry Process Standards
    • GSI
    • eCom
    • ARTS
  • 19. 1. GSI
    • GSi (formerly EAN – European Article Number) offers universal product code (UPC)
    • Barcodes have brought tremendous gains in efficiency to many retail businesses as machine readable font
    • GSI has expanded beyond barcodes to include:-
      • Radio Frequency Identification (RFID)
      • Product Data Synchronization
    • A company works with a GSI member that is located in the country it is located
  • 20. 2. eCom
    • GSI eCom encompasses a group of standards that address common business processes in the supply chain
    • These processes tend to be well suited for consumer products & retail trade industries
    • This is where most of the adoption of eCom has occurred to date
  • 21. 3. ARTS
    • Association of Retail Technology Standards (ARTS) is a standard organisation dedicated to the retail industry
    • ARTS tend to focus on Application-to-Application (A2A) standards
    • ARTS has developed 4 Standards:
      • The Retail Data Model
      • Unified Point of Service (UnifiedPOS)
      • IXRetail XML schemeas to integrate applications within the retail enterprise &
      • Standard RFP’s to guide retailer selection of appliocations and provide a development guide for vendors
  • 22. Process Improvement Methods
    • Six Sigma
    • Lean Thinking
    • ISO 9000 Quality Standards
    • TQM
  • 23. 1. Six Sigma
    • Refers to the standard Deviation from the Mean of the performance data
    • The more the variation, the more the business sales is unpredictable
    • Ideally, predictability needs to be created by process improvements
    • Predictability ensures lesser loses on account of:-
      • Higher inventory & carrying costs
      • Stock out resulting in loss of business opportunities
    • Six Sigma is all about reducing variation
  • 24. Six Sigma Process (DMAIC)
    • D – Define
    • M – Measure
    • A – Analyze
    • I – Improve
    • C - Control
  • 25. DMAIC Problem Solving Methodology D efine the goals and customer requirements M easure the process to determine current performance A nalyze and determine the root cause(s) of the defects I mprove the process by eliminating defects C ontrol future process performance Measure Define Analyze Improve Control
  • 26. 2. Lean Thinking
    • Lean is about focus, removing waste, and increasing customer value
    • Lean is only about value added processes & elimination of non-value added processes
    • Another way to look at lean is focus on revenue generating activities
    • Eliminate or minimize cost and effort on non revenue generating activities
  • 27. Steps of Assessing Lean Operations
    • Identify value added or value creating services.
    • Determine the value stream (sequence of activities)
    • Eliminate non value adding activities
    • Allow customers to “pull” products/services
      • E.g.
        • picking up their products on their own
        • Assisting in the billing of their own product
        • Taking the purchased merchandise to their homes
  • 28. 3. ISO 9000 Quality Standards
    • ISO asks to DOCUMENT what you DO and DO what you DOCUMENT.
    • It has a simple PDCA cycle
      • Plan
      • Do
      • Check
      • Act
    • Repetition of this cycle brings incremental improvements and does not let the process performance slip
  • 29. 4. TQM
    • TQM integrates all the retail organizational functions (Inventory, Merchandising, Sales, etc) to focus on meeting customer needs and the goals and objectives of the retailer.
    • TQM empowers every employee of the organisation with the responsibility of ensuring quality in their respective areas
    • TQM aims to get it right the first time every time
    • TQM seeks to identify the source of each defect, and prevent it from entering the final product or service
  • 30. TQM cont….
    • TQM enforces quality assurance to meet changes in products and services
    • TQM identifies root causes and offers processes to eliminate and mitigate the root causes of a defect
    • TQM is essentially a people dependant process
    • To derive full benefit of TQM, people in any organisation should be synergized
    • Quality is not the job of a department but every employee of the organiosation
  • 31. Process Pitfalls & its Consequences
    • Ahead of time
    • Piecemeal approach
    • Workforce reduction
    • Quick fix solutions
    • Not enabling end-users
    • End users should not be ignored
    • Not celebrating
  • 32. 1. Ahead of Time
    • Process improvements using technology appear to be an easy solution to become a retail business leader
    • While technology can promise visibility, productivity, and fast results; do not invest ahead of time.
    • Take the time to get the business, process and management dimensions in place before you attack the technology
  • 33. 2. Piecemeal Approach
    • Don’t think about process improvements in a piece meal manner.
    • Look at improving processes but also ensure that there are cross functional solutions cutting across all departments
    • Think about how the value chain comes together in the organisation
    • Create a separate team who will be responsible for driving the process improvements
  • 34. 3. Workforce reduction
    • Do not use process management or improvement as a tool for a hidden agenda of workforce reduction. This will guarantee failure
    • Employees will not re-engineer processes to find themselves eventually redundant and getting laid off
    • Process management and improvement is to get higher productivity and gains
    • If the business grows then it is not necessary that employees need to be laid off.
  • 35. 4. Quick Fix Solutions
    • Don’t teach your team how to do a quick fix and one-time solution
    • Conduct the training that will teach the team about process improvements for life
    • Figure out ways to encourage continuous and sustaining change
    • Include senior management, IT staff and the end users in the process design and improvement stage
  • 36. 5. Not enabling end users
    • Empower process users and support them with the policies, authority, rewards and recognition, compensation, and other means of facilitation.
    • Don’t overlook the need to make this happen
  • 37. 6. End Users Should Not Be Ignored
    • Don’t overfund technology & infrastructure at the expense of the doors/end users
    • Treat end-users as customers
    • Allow them to add more value
  • 38. 7. Not Celebrating
    • Remember to celebrate key successes and achievements
    • Motivate others to improve processes and get recognition and rewards
    • Improvements may be incremental or exponential but celebrate
  • 39. *END* 1 –