Significant potentials in the 8 – 10% level were identified in optimised man loading processes. Standardised and optimised processes in all goods receive areas would reduce wages with 10 – 20% and improved sales efficiency and optimised customer flows could add up to a 10% revenue increase.
Background
Due to several years of deficit, the biggest department store in Denmark was in financial difficulties. Shops were closed down as a result and finally the company was bought by a huge British department chain store. The Group employs approx. 1,000 full-time employees and re-ports revenue in 2011/12 of 2.2 billion DKK.
As a part of the business plan, the management decided to look into the man loading and supply chain processes, because the management believed, that there was a significant improvement potential in all department stores. Mantec was assigned to conduct an analysis of the man loading processes and sup-ply chain from the ramps to the shelves – in all department stores – to identify the improvement potential. The analysis identified several areas, where business could be improved.
Analysis
The analysis was based on the following main areas:
- Man loading – man loading levels in line with actual customer flows?
- Goods receive processes – ramp to shelves
- Availability of goods – sold out situations and stock levels
- Mapping of management systems and the use of these
- Additional sales opportunities – basket sizes
Results
Many interesting improvement possibilities were discovered during the analysis phase;
- Man loading levels didn’t correspond to number of guests in all department stores due to lack of capacity planning.
- Lack of effective operational KPIs – very difficult to link actual man loading with traffics system wise
- Floor studies showed that 40 % of the sales assistants’ times in the shops were used for selling and for till activities, and another 10 – 15 % of shop hours were observed as not work-ing – also at peak studies. The remaining time was primarily used on restocking.
- Floor studies showed limited active selling – customers were coming forward to the sales assistants
- Huge variations in number of transactions per sales assistant resulted in lost sales and lack of knowledge by the staff about high performers as well as contribution margins
- Lost sales due to incorrect stock levels and availability percent-age at approx. 92 % on high performers
- Activities at goods reception were often interrupted and not performed in an effective non-stop sequence
- Poor supplier delivery performance resulted in lost sales – 50 % of all staple commodity were actually received on planned delivery date
Based on the successful analysis phase the customer went directly into an improvement project together with Mantec with the purpose to realise the identified potentials.
Implementation of improvement initiatives and sharing of best practice could be improved considerably.
