Apart from lean manufacturing, Mr. Miyagi was always kept very close eye on his family. Although he spent most of his time, here in US, he was in close touch with his family back in Japan. Recently, he visited them, ended up spending more than three months with his mother, brother and the sister. Yesterday, he came back to US. Mr. Miyagi’s supplies were short, so he decided to go to the nearby supermarket to get some rice and other stuff he needed.
Mr. Miyagi was visiting this supermarket frequently, probably because he doesn’t keep big inventories with him. The manager of the store knew Mr. Miyagi well as a customer. In fact Mr. Miyagi had given them some free advice before on how to improve. As most of the free stuff, although invaluable, these advices never put in to practice.
After three months, when Mr. Miyagi entered the store, he immediately noticed few changes. It looked more spacious and had more space between the racks, which Mr. Miyagi always wanted to see. He was happier, and curious. He did his shopping. On the way back to the cashier, he saw the manager of the store, Richard. Richard immediately recognized Mr. Miyagi and rushed towards him. Richard was curious to know where Mr. Miyagi was for all this time. Conversation went on for few minutes. Meanwhile, Mr. Miyagi pointed to the changes and talked about how good it felt as a customer to have more space and nice arrangement of items. The tone of the conversation changed. A disappointment appeared on the face of Richard. Mr. Miyagi was puzzled.
Richard, with his deep and concerned voice asked Mr. Miyagi “Did You like it?”. Mr. Miyagi replied “Obviously, why shouldn’t I” with his unique accent. It didn’t work for us, said Richard. It looks nice and customers feel good about the changes, but for some reason, we are seeing a drop in our repeat customers and in the revenue, said Richard. We are unable to see why this is happening. But nevertheless this happens, he added. Probably you may have new competition, replied Mr. Miyagi. Richard responded immediately, with a big NO. He said there was no new competition, around the area. Mr. Miyagi couldn’t help himself. His brain has already started root cause analysis.
Mr. Miyagi offered to help Richard. And Mr. Miyagi told him, how he was able to help a super market he used to visit with his “Lean Expertise”. Richard was stunned, and even kind of offended. With a controlled voice he said, “Oh God; that is the last thing I wanted. Do you know, all this is because this **** system. We paid more than $300,000, to get these done to so called lean experts. At the end of the day, everyone is happy other than cashiers. We are in big trouble”. Mr. Miyagi never heard something like this from any of his clients before. So he felt very uncomfortable. In addition, he had to prove Richard that his way of thinking; “Lean thinking” cannot go wrong. So he negotiated a deal with Richard. Mr. Miyagi will help the store to identify and tackle their problems. Unless, he sees a 10% increase in returning customers, and similar increase in revenue, within next three months, his services will be free. If he achieved his target, Mr. Miyagi will get a loyalty of 1% of the increased profit for the next 3 years. “But will it get even worst?”, Richard fired the obvious question to Mr. Miyagi. Mr. Miyagi personally assured Richard this will not going to happen and pointed out to him, it cannot get worse than what they have right now. Worst it can be to be back where they are.
Negotiation happened for little longer than for an hour. Finally they settled for 0.8% of the increased profit for 3 years as royalty, if the number of returning customers improved by 12% which Richard thought is essential to keep their business in good shape. Mr. Miyagi agreed. He went home with an appointment to meet Richard in two days’ time. His lean brain is working even while he was in sleep.
While Mr. Miyagi is thinking, what do you think? Point out to possible root causes which might have created this problem to Richard. Please leave your comments. I will see you with how Mr. Miyagi tackled the question in few days.