Reducing Shrinkage and Stockouts in a Food Retail Store

A Portuguese Case Study

Authors

  • Pedro Alexandre Marques EIGeS – Research Centre in Industrial Engineering, Management and Sustainability
  • André Mendes de Carvalho EIGeS – Research Centre in Industrial Engineering, Management and Sustainability

Keywords:

Lean thinking, Out-of-stocks, Retail, Shrinkage rate, Structured problem-solvng

Abstract

Lean thinking is transforming the traditional way of a retail business operates to new and more effective practices. In particular, the food retail business is facing previously unseen challenges which require daily operational excellence to meet them with success. Low productivity, high variability in task completion, lack of work planning should be faced with daily relentless improvement actions. Kaizen, the continuous improvement pillar of Lean, needs to be seen not only as a methodology but also as a philosophy, a vision that needs to be written on everyday actions and personified by each individual. This paper describes an improvement event in the fresh food markets, specifically in the cold meat section, meant to decrease the shrinkage rate as well as the number of out-of-stock (OOS) situations. The methodology adopted followed the seven-step problem-solving procedure provided by the A3 thinking tool.

Author Biographies

Pedro Alexandre Marques, EIGeS – Research Centre in Industrial Engineering, Management and Sustainability

EIGeS – Research Centre in Industrial Engineering, Management
and Sustainability, Lusófona University. Campo Grande 376,
1749-024 Lisbon. Portugal.

André Mendes de Carvalho, EIGeS – Research Centre in Industrial Engineering, Management and Sustainability

EIGeS – Research Centre in Industrial Engineering, Management
and Sustainability, Lusófona University. Campo Grande 376,
1749-024 Lisbon. Portugal

References

Arnheiter, E. D., and Maleyeff, J., The Integration of Lean Management and Six Sigma, The TQM Magazine, 17(1), 2005, pp. 5-18.

Oakland, J. S., Total Quality Management and Operational Excellemce: Text with Cases, 4th Edition, Routledge, New York, 2014.

Flor Vallejo, V., Antony, J., Douglas, J. A., Alexander, P., and Sony, M., Development of a Road Map for Lean Six Sigma Implementation and Sustainability in a Scottish Packaging Company, The TQM Journal, 32(6), 2020, pp. 1263-1284.

Gutpa, S., and Jain, S.K., A Literature Review on Lean Manufacturing, International Journal of Management Science and Engineering Mana¬ge-ment, 8(4), 2013, pp. 241-249.

Goetsch,D. L., and Davis S., Quality Management for Organizational Excellence: Introduction to Total Quality, 9th Edition, Pearson, Boston, 2020.

Manos, A., Hoshin Promotion, Six Sigma Forum Magazine, 9(4), 2014, pp. 7-14.

Snee, R., and Hoerl, R., Time for Lean Six Sigma 2.0?, Quality Progress, 50(5), 2017, pp. 50-53.

Worley, J. M., and Doolen, T. L., Organizational Structure, Employee Problem Solving, and Lean Implementation, International Journal of Lean Six Sigma, 6(1), 2015, pp. 39 - 58.

Shook, J., Managing to Learn: Using the A3 Management Process to Solve Problems, Gain Agreement, Mentor, and Lead, Lean Enterprise Institute, Boston, MA, 2008.

Amos, A., Taylor, K., Johnson, K., Comitz, E., Adams, R., Tracton, G., Chera, B., Marks, L., and Mazur, L., Assessing the Quality of the A3 Thinking Tool for Problem-Solving, in: Ahram, T., and Karwowski, W. (Eds.), Advances in The Human Side of Service Engineering. Advances in Intelligent Systems and Computing,494,Springer, Cham, 2017, pp. 49-61.

Myerson, P., Lean Retail, in: Netland, T. H., and Powell, D. J. (Eds.), The Routledge Companion to Lean Management, Routledge, New York, NY, 2017, pp. 413-421.

Morcillo-Bellido, J., and Duran, A., Supply Chain Sustainability in Spanish Major Retailer Through Strategic Alliances and Lean Practices, in: Viles, E., Ormazábal, M., and Lleo, A. (Eds.), Closing the Gap Between Practice and Research in Industrial Engineering, Springer, 2018, pp. 11-18.

Naruo, S., and Toma, S., From Toyota Production System to Lean Retailing: Lessons from Seven- Eleven Japan. In: Olhager, J., and Perrson, F. (Eds.), Advances in Production Management System, Springer, Boston, MA, 2007, pp. 387-395.

Smith, L., and Sparks, L., Tesco’s Supply Chain Management, in: Fernie, J., and Sparks, L. (Eds,), Logistics & Retail Management: Emerging Issues and New Challenges in the Retail Supply Chain, Kogan Page, Philadelphia, PE, 2009, pp. 143-171.

Womack, J. P., and Jones, D. T., Lean Solutions: How Companies and Customers can Create Value and Wealth Together, Free Press, New York, NY, 2005.

Imai, M., Gemba Kaizen: A Commonsense Approach to a Continuous Improvement Strategy, McGraw-Hill, 2nd Edition, New York, NY, 2012.

Domingo, T. M., The Adoption of Lean Techniques to Optimize the On-Shelf Availability of Products and Drive Business Performance in the Food Industry: A South African Manufacturing and Retail Case Study, M.Sc. thesis, Cape Town Univ., Cape Town, South Africa, 2013.

Ali, D. H., Assessment of the Effect of Out-of-Stock on Customers Purchasing Behavior, International Journal of Transportation Engineering and Technology, 5(2), 2019, pp. 25-29.

Chuang, H., Oliva, R., and Liu, S., Examining the Link Between Retailer Inventory Leanness and Operational Efficiency: Moderating Roles of Firm Size and Demand Uncertainty, Production and Operations Management, 28(9), 2018, pp. 2338-2364.

Bertolini, M., Ferretti, G., Vignali, G., and Volpi, A., Reducing Out of Stock, Shrinkage and Over-stock through RFID in the fresh food supply chain: Evidence from an Italian Retail Pilot, International Journal of RF Technologies, 4(2), 2013, pp. 107-125, 2013.

Saucede, F., Fenneteau, H. and Codron, J. M., Department Upkeep and Shrinkage Control: Two Key Variables in Optimizing the Performance of Fruit and Vegetables Departments, International Journal of Retail & Distribution Management, 42(8), 2014, pp. 733-758, 2014.

Evans, J. R. and Lindsay, W. M., An Introduction to Six Sigma & Process Improvement, 2nd Edition, CENGAGE Learning, Stamford, CT, 2015.

Jaca, C., Santos, J., Errasti, A., and Viles, E., Lean Thinking with Improvement Teams in Retail Distribution: A Case Study, Total Quality Management & Bsuiness Excellence, 23(3-4), 2012, pp. 449-465, 2012.

Noda, T., Integration of Lean Operation and Pricing Strategy in Retail, Journal of Marketing Development & Competitiveness, 9(1), 2015, pp. 50-60.

Downloads

Published

2021-10-24

Issue

Section

Articles