By creating the new position of Senior VP of Operational Excellence, Target gives due importance to the concept of ‘process improvement’ in retailing.
In recent years, we have been hearing buzzwords in the retail industry like ‘customer centricity’, ‘omni-channel’, ‘social media’ and Cloud Computing. Retailers have been placing much emphasis on software and hardware to support concepts such as mobility and mobile POS, Customer Relationship Management, and Business Intelligence. An area that often involves information systems, although not always, and doesn’t seem to get much mention, is process improvement.
In my opinion, but with exceptions, retail companies have not been placing enough emphasis on improving business processes but have spent more time and money on those areas named above, either because of external pressures or because they are the sexy disciplines of the times. The problem with overlooking ‘process improvement’ is that, while not always requiring new systems and technology, process improvement can contribute enormously to cost reduction and to taking cycle days out of the supply chain thus compressing the time-to-market of many products. Both of these improvements are, or can be, significant contributors to the success and competitive advantage of a retailer. Yet, it appears to me that retailers, as compared to – let’s say – manufacturers, do not pay sufficient attention to continuously looking to improve business processes.
Kaizen is a well-known Japanese term for ‘continuous improvement.’ As opposed the rather naïve approach that ‘if it ain’t broke, don’t fix it’, kaizen is the acknowledgement that no process or product is ever perfect and there is always room for improvement. Based on this concept, at the next opportunity to improve a process, businesses should do so. It is equally true that the cost of some improvements can outweigh the benefits (ergo my use of the word “opportunity”). The challenge to the business is to look at the long-term impact, calculate the payback period, and then determine if the improvement is or is not worth the cost. In many cases (I would venture to say ‘most), small process improvements can be introduced at relatively small cost or disruption. The improvement can be as simple as changing a form, or a report, adding a minor step to a process, or simply asking ‘why are we still doing this?’ and then eliminating a realistically unnecessary step. The consistency in improving processes is driven by the culture of the business.
Businesses should want to review their business processes periodically, and certainly when they sense that one or more of those processes is not producing optimal results.
All that said, it is worth noting that Target has the vision to have made process improvement such an important initiative and has created a new SVP-level position to shepherd it through.
For information on how the Retail Technology Group can help you with process improvement in your business, please contact us at info@retailtechgroup.com, or call 203-329-2621. We would welcome the opportunity to discuss our capabilities with you.