Mr. Miyagi in the Supermarket
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.
Read the Part II Of this Story
Read the Part II Of this Story
26 comments:
Nice Story;
I guess lean consultants in this instance have not identified the correct root causes to the problem. In addition, form the part of Richard, I do not think he has understood lean well enough. If the lean implementation is successful, it should be alive even when the consultants are not there.
Thanks for the great article. Waiting for the part 2 of the story.
thanks for the great article, I would say the main problem comes from the top management, they bought lean system as tools not as a continuous process where the leadership need to be in GEMBA to support passing lean thinking to the whole department.
Cheers Aagin
Dave:
as a supermarket he must have reduced his inventory and introduced some sort of kanban system based on consumption and shelf life and including within that some delivery options.
Maybe the manager took this too far and as a result never changed his order system frequently enough based on customer demand.
As a result demand would always be higher than supply on the popular items and customers would be unable to have what they want.
It's possible but that he also had more stocks of items customers didn't want so it would look like a horror store that had nothing you need but everything you don't.
Lean is great but you need to have a need to implement a tool, without the need the tool will always fail. " Need - tool - Thinking way- Culture"
have fun !
The stores repeat customers may not have liked the changes as the store manager may have thought. It may take some time for them to return (only three months) after the changes were being done. New customers will develop from the changes because of the new open layout. The drop in business may be from something other than the layout. It could be the products being sold need an update or competition from delivery service stores and big-box department stores out of the neighborhood.
Great story I'm excited to hear the follow up. Perhaps the old regular customers were taken abck by change. I know at my job the number one issue I tackle when I start to implemant Lean philosophies is getting the workers to grasp the idea of change, in a new way of performing the same old job.
The concept of Lean as I understand eliminates waste. Firstly, I Richard has stocked up too much of non-performing goods (as in overproduction). Secondly, maybe Richard has increased the prices of goods that he sells, instead of reducing the prices as an outcome of Lean process. In other words, if Richard had taken the concept of Throughput, Inventory snd Operating Expenses seriously instead of only listening to consultants, his shop would be performing well now.
Not sure if there is enough info to make any assumption on root cause but it could have been something as basic as road construction on one of the feeder routes that impacted sales. Even though it might not occur in the immediate area if it impacts travel from a significant population area it could have an impact. Lets see what part 2 brings.
Very interesting case.
My opinion is that the workers working in the shop were not aligned with the lean system created.It may lead to wrong perception and reflected on customers since workers have the direct link while servicing. Both should go concurrently to achieve the lean benefits.
If the space between racks are spacious than before, the number of racks should be lesser,unless the supermarket was expanded, This would mean that some products needed to be relocated to be displayed. I would assume that these products are the one being bought by repeat customers.
To find the root cause, let's start with the change in space, a before and after data of the new layout must be analyzed with regards to the products sales, then relate it with its before and after locations.
Does the fact that the store looked more spacious mean that customers are now having to walk more to complete their shopping, more time in the store ? And more space between racks may also give the impression that the store is offering less product, less choices ? It seems that Richard needs to talk with the customers that have left to better understand the cause of the revenue decline.
Richard has made some changes which are similar to Mr.Miyagi's suggestions.
Those changes have to be monitored for the parameters for which Richard is looking. One need to have better insight about this supermarket to identify the root cause
1. The lean concept may have been wrongly implemented , The service part might have been ignored , best service at minimum time..
2. The availability and replenishment of item on shelf upon pull back may be very slow.
3. The lean implementation is all aboout 5s concept, so the arrangement of similar item and access might have been ignored , causing old costomer very difficulty in tracing their item thus loosing time, and causing mental stain..
4. The lean concept of display and merchandising misght have been stopped , thus creating dull shopping environment.
5. The layout might have been (kundos pattern) faulty ,and may be inline with production line , thus causing customer go ringa ringa roses ..with less purschases , with maximum efforts.
6. The top management commitment and understanding of very concept of lean implementation may be questionable ..
7. The lean consultant hired may be expertised in toyota lean syatems , but not in retails management ...
8. productivity might have been totally ignored by hired consultant , and lot of service people employed in super market , may have been layed off , to show top management superficial benifit in terms of payments of salary amount reduction.
9. Meeting/ tranings with old reliable coutomer and making them aware of new working systems and its benifits might have been totally ignored ..
Ajay......
Data is not enough to conclude anything. Floor is spacious means total available stock/variety has been reduced? Whether the prsent stock kept is base on value or volume? If he has stocked up slow moving high priced or fast moving material? Need basic data to conclude something and give solution.
I think we need more information about the customer turnover, other changes that has happened in the supermarket otherthan change in layout to identify the root cause. Here we have only understood that the layout is changed which is not sufficient to arrive at the root cause of less repeat customers.
A fascinating paper.
I love reading your writing
I got a lot of input
thanks and encouragement to keep writing.
Very nice
Even though super mkt people understood the theory of lean they were not up to the task when they apply theory into practice
Cultural differences between the US and Japan
When the customers see more space they might think that super mkt has reduced its stuff thats why more space is available so they swished on to another super mkt.
Majority of people dont like changes.
The mere fact that Richard's team is unable to point out why there's a drop in thier revenue and somehow they are loosing some of repeat clients apparently not because of lean. Lean Management is increasing value and not the other way around...It is a continuous process and thus, Richard's team has to realize this...
Mr. Miyagi could just solve this issue as easy as will be...
Classic...Firstly, who would have implemented an Improvement without:-
Using the PDCA cycle and understanding that CHECK is critical.
secondly, To bring about change, you must keep EVERYONE informed about what was going to happen -NO SURPRISES.
Thirdly, there couldn't have been a Survey to customers to understand what impact the Proposed solution would have.
Lets see..
5 Why's
1) Supermarket is loosing money
Why
2) drop in repeat customers
Why
3) Customers did not like new layout
Why
4) It was changed without consulting a large group of customers (Voice of the customer)
Why
5) Because of Mr. Miyagi
Mr Miyagi is the root cause.....
I believe that a reduction in returing customers, means frustrated customers, and such frustration of customers might probably be caused by not being able to find what they are looking for as easy as possible or not finding it at all (Stockout)or finding what they need as easy as possible but having to stand in queues for a longer time in on the first time they visit the shop because customers are not being served at the exit point as fast as how they are finding their needs.
What is the voice of the customer.
Do they want this change.
Or how do they want the store to look.
Reading the article it seems customers do not return as the store looks as though it is about to close. Have they taken it too far.
Good article , the personal who work in supermarket also will have learn lean.
My thoughts:
Richard was basically dealing with something that is extremely difficult to get a buy-in, "Change Management." He modified and upgraded his systems and processes but probably never bothered to look at consumer psychology. Whether it is a customer or an employee or even a family member, moving out of his/her comfort zone is a phenomenon that demands enormous amounts of patience and perseverance from the person trying to impart change. It is probably at this juncture that Richard failed. One fine morning, Richard's customers were, in all likelihood, bewildered to see the store totally "messed up." The guy who directly marched toward the rack where his favorite cookies are usually kept probably found cat food instead. The teenage girl who searched for her shampoo in the usual location probably found detergent there. It is not clear from the story whether Richard had taken any measures to proactively deal with such potential confusions.
Ideally, Richard should have started with some basic 5S practices which his customers would find value in e.g., color coding, sign boards, etc. and slowly ramped up to where he is currently.
Best of all comments is the apparent lack of LISTENING to the customer. If people talk enough with their customers they will learn which changes are welcome by the customer and which are not. Also it is critical to find out if there is enough Leadership in the culture of the store, which seems to be one of the weaknesses.
Hello,
Changes sometimes fail if not properly informed to all concern.
Let me share my personal opinion WHY it fails. Below might be the factors of failure:
1- Fast moving and slow moving items were not identified for proper inventories.
2- Personnel are not aware of the changes.
3- Lean System was not implemented as it should be.
4- Suppliers were not inform of the changes.
Eager to see the next part of the story.
Eager to see the next
Customers might have felt that
1. space is created at the cost of stocks on demand and perceived a stock out situation of reqd items
2. change, in itself, was not understandable since obviously they would not have been involved in the change process.
3. so much of empty space, less stocks,etc leads to think that something is wrong with the supermarket for the general public
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