LeanProcessImporovement

Process Improvement at Indian Market

Abstract

Every supermarket faces several issues and struggles to satisfy their customer. To improve the customer experience and to help clients in resolving their issues, the team has decided to work on the "Indian Market" located in Milpitas. The primary focus of this project is to increase the customer satisfaction by reducing the time for the checkout process using different Lean Six Sigma techniques. The team focused on optimizing the store layout by arranging and displaying the items in an efficient manner. This will help customers to get hold of the required items instead of wandering in the store. The supermarket faces issues regarding the stockouts and excess inventory because of unpredictable customer demand. So, the team used a forecasting method that will help client to maintain an appropriate stock in the supermarket- to avoid stockouts and excess inventory. The team improved the process implementation and reduced the checkout time by almost 18% which further increased customer satisfaction and helped the client to gain more profits.

Keywords: supermarket, checkout time, lean, techniques, process implementation

Introduction

"Indian Market" is a supermarket located in Milpitas. All essential food items are available at the store. They also have a food counter which is an attraction for many people. As they sell a variety of items, it becomes difficult for the customers to find the items they need from the store. Also, due to unpredictable demand and many other external factors, stockouts and excess of items need to be managed. The customers are thus not satisfied, as they need to wait for a long time in the checkout line. To increase the efficiency of the supermarket and gain more profits, the team decided to improve the overall process and make changes in the management with the help of Lean techniques.

Problem Statement:

For any business, it is necessary to have good management of people, processes and technology to gain profit and satisfy customers. Supermarkets across the globe are facing several issues because customer expectations are changing due to the advent of new technologies. According to one survey in 2019, 51% of the consumers responded that if supermarkets do not find modern ways to serve them, they will find other options to buy groceries and food. When questioned about how technology should be used for improving customer experience, 89% customers want the checkout process to be faster while 83% want their shopping to be quick, without much waste of time (Redman, 2019). This survey shows that reducing checkout time and displaying items in an appropriate way can help the customers get hold of items easily which is very much necessary for supermarkets. Also, to increase their profits, inventory management is one of the major aspects which requires attention. Thus, it is important to solve all the three issues by using various Lean techniques.

Problem solution using DMAIC approach:

For solving complex issues, one of the best methods that can be implemented is the DMAIC approach. This method can help in successful completion of a project as it provides a continuous improvement platform. This figure (Swan, n.d.) below shows the stages involved in DMAIC, also some of the steps can be skipped based on the complexity of the problem.

Steps involved in DMAIC approach

Phase 1 - Define

As per DMAIC, the first and the most important step is the Define phase which is important for knowing areas of improvement. Project charter was created for understanding the client requirements and to make sure that everyone is on the same page throughout this improvement process.

Objective

The main objective of this project is to reduce the checkout time for customers by easing the checkout process. The current checkout process is tedious and time consuming as customers need to wait in line for a long time before reaching the cashier. Some of the customers who are already ready for checkout are trapped between customer's still shopping in between aisles. This is because there is no escape route in between and so the customer spends more time even before he reaches the checkout line. Also, more time is spent by the customer in searching the required items because of inappropriate arrangement of items. Hence, reducing this time is another objective of this project. The last goal is to manage the inventory by avoiding stockout or excess inventory.

Deliverables

The deliverables for this project will be:

• Reducing overall checkout time by reducing time in individual steps like time to reach checkout line, unloading items from cart, billing time, packing time and again loading it to cart.
• Reducing time to search items by using Visual Management techniques such as 5s. Also, making sure that all items are in the most appropriate place by checking aisles after a regular time interval.
• Manage inventory by using appropriate forecasting methods based on customer demands.

Project Plan

A Gantt chart is a type of bar chart used to represent a project schedule. It represents the tasks on the vertical axis and timeline on the horizontal axis. The team prepared a Gantt chart to demonstrate the schedule of the project to meet the deadlines. It helped the team to determine each activity and any interdependencies between the tasks throughout the project duration.This chart shows the progress and deadlines for efficient completion of the project. Figure below shows the Gantt chart for the project.

Gantt chart for process improvement plan

Voice of Customer

Voice customer is important for understanding customer requirements and needs. Feedback from customers will help supermarkets to take action for process improvement. The team visited the supermarket in early February to take customer feedback by talking to them and collecting information about their usual takeaways from the supermarket and time spent once they entered the store. Table 1 below shows the observations for checkout time.

No	Metric	Current Time taken (mins.)
1	Waiting time in checkout line	6
2	Time to unload items from cart	5
3	Time taken for scanning items	4
4	Payment	1
5	Time to pack items in bag	3
6	Time to load bags in cart	0.5

Table 1: Current checkout time at the client organization

Pareto chart

Figure below, highlights the important factors that impact the customer checkout time. It shows that customer wait time increases because of the various processes carried out before the customer leaves the supermarket.

Pareto chart for current checkout time

SIPOC

It stands for Suppliers, Inputs, Process, Outputs and Customers. It provides a high-level view of how different processes work in any organization. It starts from Suppliers who provide inputs to the system, which is then processed, and final output is provided to customers. Thus, it focuses on identifying the aspects for which process improvement is needed ("SIPOC", n.d.). For the Indian Market, the SIPOC was designed as shown in below figure.

SIPOC constitutes of the following elements:

Suppliers : Identifying the third party or the local vendors from whom the supply is taken for required products/ items for the supermarket.

Inputs: Identifying the resources needed for the process to be carried out.

Process: Identifying the necessary steps for the process.

Output: Specific outcomes from the process

Customer: Identifying the customers

SIPOC for client organization

Phase 2 - Measure

This phase is important in defining the initial point of comparison. It will allow the team to compare the existing system with the new system after implementing the lean solutions. Process flows, data collected from customers, value stream diagram for the current process is shown below.

Before State Data Collection

A customer survey was done in February to take a note of the waiting time at the supermarket. It was found that most of the customers had to wait for a long time in the checkout line. Some of the customers also faced issues in finding all the items they needed as the items were not organized properly.

Value Stream Mapping (Before implementation)

Value stream mapping is used to improve the entire workflow. This means it takes into consideration everything starting from raw materials to the final product/service. The goal here is to optimize the entire process. It is represented in the form of a flowchart that takes all the people, processes and inventories. This will help to analyze different areas of process. Value stream map will help in maximizing value, support clear communications and encourage continuous improvement which is one of the core principles of lean six sigma. Thus, value streams will be advantageous in reducing the cycle time and increasing the efficiency of the system. The current process contains different stages like shopping for items, waiting in check-out line, customer reaches check-out counter, unloading items, scanning items, payment, pack items in bags and load bags in cart ("Value Stream Mapping,", 2019). Figure below shows the value stream map before improvement techniques were applied for the supermarket.

Value Stream Mapping (Before Implementation)

Phase 3 – Analyze

The analyze phase will be useful in determining the root cause of the problems that we came across during the define and measure phase. This phase will help in determining the reasons behind large checkout time and unmanaged inventories. The techniques used for determining problems are 5 Why, Ishikawa Diagram and Data validation using Hypothesis Testing.

5 Whys

5 Why technique helps in determining the root cause of the problem. It is also beneficial for finding the relation between different problems.

Problem statement 1: Customers are unhappy because several items remain out of stock.

1. Why are customers unhappy?

• Because they are not getting the required items when they visit the store.

2. Why are they not getting required items?

• Because inventory management is not appropriate.

3. Why is inventory not managed properly?

• Because there is not enough information about customer demands.

4. Why is there no information about customer needs?

• Because customer demands are unpredictable and so the store is not able to estimate the exact requirements.

5. Why is the store not able to predict exact requirements?

• Because there is no appropriate forecasting model that can satisfy the customer demands.

Problem Statement 2: Customers have to spend more time in the checkout process.

1. Why is customer checkout time longer?

• There are a smaller number of checkout counters and so wait time

is more, mainly during the rush hours.

2. Why is wait time more during rush hours?

• There is no appropriate checkout process.

3. Why is there no proper checkout process?

• The store does not have self-checkout counters and so customers who wish to do self-checkout, need to stay in line doing nothing.

4. Why there are no self-checkout counters?

• The store is not using any advanced technologies that support the self-checkout process.

5. Why is the store not using any new technologies?

• There is not enough space in store to include any new counters as layout is cluttered.

Normality test:

It is essential to check for the normality of the data before proceeding for hypothesis testing. Figure below shows the histogram and probability plot before implementing the Lean techniques. The data is approximately normal with 95% level of confidence.

Hypothesis Testing

For hypothesis testing, the team collected the 20 data points before and and after implementing Lean techniques. As the sample size was less than 30, it was necessary to conduct a normality test for hypothesis. As there were two sets of data, one before implementation and one after implementing lean techniques, a paired t-test was performed on them to determine the mean difference between the two sets.

Hypothesis Statement:

Null hypothesis: The difference in average checkout time per customer is not statistically significant.

Ho: µ1 = µ2

Alternate statement: The difference in average checkout time per customer is statistically significant.

H1: µ1 ≠ µ2

Test statistic calculations for the dependent t-test:

T0 = (D - (µ1- µ2)) / (Std Dev/ sqrt(n))

T0 = 8.33219155

Here, T0 > Tcritical. So, the null hypothesis will be rejected. This means that the difference in average checkout time per customer is statistically significant.

The calculation for the hypothesis testing is shown in appendix.

Figures below shows the histogram and probability plot before and after implementing Lean techniques.

Histogram of average checkout time before implementation

Histogram of average checkout time after implementation

Probability plot of average checkout time before implementation

Probability plot of average checkout time after implementation

Forecasting

It is very essential to predict the exact customer demands and understand the trends so as to cope up with the fluctuating demands. Forecasting methods will predict the demands accurately which will help the client to avoid excessive inventory and frequent stockouts. It will give a clear idea about what to purchase and when to purchase by using appropriate forecasting methods. Currently, they are ordering the items based on approximation because of which sometimes there is excess inventory. The team provided a solution where they can study the historical data and predict the future demands using a method called Moving average. It is important to predict the correct demands for dairy products as excessive order for these items will result in wastage since customers will not buy expired products.

Phase 4 – Improve

The process improvement was suggested to the owner through Zoom meetings to implement in the supermarket.

5S

5S is a lean technique used in almost every workplace. It involves removing the unnecessary things, organizing the essentials, cleanliness and regularly performing the same tasks ("What is 5S", n.d.). It is very important to repeat this cycle on a regular basis. This can also be done at the storage inventory/warehouse where the items are stored. 5S was implemented in the supermarket as discussed below.

1. Seiri (Sort) - Removing all the unnecessary items from the store to make it easier for the management and the customer to get what they need. An easy way to sort things out is by analyzing the purpose of the item and the frequency of the usage. This can create room for other necessary items. The next step would be to deal with the unwanted items. An unwanted item should be either destroyed or may be replaced or moved out to some other place (warehouse). The expired food items need to be thrown away as waste and excess of any items like any vegetables or fruits can be moved to the warehouse.

2. Seiton (Set in order) - Arrange all the necessary items to be easily accessed by the customers. In the store, all the similar items should be grouped by type. For example, vegetables, fruits, bakery items, dry snacks, frozen items, desserts, etc. There should be a logical reasoning for arranging all items and thus, every item should be arranged so that it's more intuitive for the customers to find anything. For example, milk should be placed somewhere near yogurt, as there is a general tendency to pick both of them together.

3. Seiso (Shine) - Maintain regular cleanliness and hygiene in the store. It is very important to clean the work and storage area by regularly sweeping, mopping and sanitizing. Along with cleaning the work area, shopping baskets should also be cleaned on a regular basis and a timely maintenance of the shopping carts should be performed.

4. Seiketsu (Standardize) - Once the above three steps are completed, it's important to put it in a daily practice. It creates schedules for performing regular tasks daily. Once it becomes a habit, it becomes a part of regular work.

5. Shitsuke (Sustain) - The sustain refers to running the 5S technique and involving everyone to perform the tasks. 5S should be sustained for a long term as a clean and organized store will attract more customers and thus positive results can be obtained.

FMEA (Failure Mode Effect Analysis)

It is a six-sigma tool which helps to analyze the potential failures and its causes. This further helps in analyzing the actions required to be taken for particular failure and prevent the causes. FMEA provides a quantitative analysis that the effects have on the identified failures. It gives an understanding of the impact the systems will have to bear due to the failures. The quantitative analysis helps in identifying the priority of a high-risk failure ("Failure mode and effects analysis", n.d.).

Table 2 shows the FMEA implemented for the client. The key process steps are taken into consideration and the potential failure mode, effects and causes are identified. For each process, a score is computed for severity, occurrence and detection of the failure. RPN (Risk Priority Number) is the product of these computed numbers.

Sr No	Key Process step/input	Potential Failure Mode	Potential Failure Effects	SEV	Potential causes	OCC	Current Controls	DET	RPN	Actions	Response
1	Inventory	Excess Inventory	Wastage of items	7	Lack of appropriate forecasting methods	4	Weekly order of items	7	196	Provide appropriate forecasting methods and check inventory before ordering	Manager
	Inventory	Stockout of items	Customer needs not satisfied	6	Lack of appropriate forecasting methods	3	Order when need arises	8	144	Checking inventory on regular basis and order based on forecasting methods	Manager
2	Materials	Quality issues	Get rid of damaged items	6	Damage in transportation	3	No control	3	54	Ensure proper packing of items to avoid damage at arrival	Management
3	Management	More waiting time in checkout line for customer with less than 10 items	More time in checkout line	8	Same checkout counters for all customers	5	No control	5	200	Separate checkout counter required for less than 10 items	Management
4	Manpower	Less knowledge to operate store management software	More time for customer checkout	7	Untrained employees	4	No control	8	224	Provide training to employees	Manager

Table 2 : FMEA for the client organization

After state data collection

Table 3 shows the improved waiting time and the percentage after implementing the Lean techniques. The team was able to reduce the time to unload the items by making sure that only small items are unloaded from the cart and big items are scanned in the cart itself. This in turn will reduce the time to scan the items as items in cart will be adjusted such that bar code is seen clearly for scanning purpose. Additionally, the time is reduced for packing the items in the bag as only a few small items are removed from the cart and so only those items require packing. In this way, the team was able to reduce the average checkout from 19.5 minutes to 16 minutes.

No	Metric	Current time taken (mins.)	Goal (mins.)	Improvement
1	Average Waiting time in checkout line	6	6	0
2	Time to unload items from cart	5	3.5	30%
3	Average Time taken for scanning items	4 (up to 20 items)	3.5	12.5%
4	Payment	1	1	0
5	Time to pack items in bag	3	1.5	50%
6	Time to load bags in cart	0.5	0.5	0
7	Total average checkout time	19.5	16	17.95%

Table 3: Reduced Checkout Time after implementing Lean techniques

Value Stream Mapping (After Implementation)

Figure below shows the value stream map after implementing lean techniques. It clearly shows how the team was able to reduce the average checkout time by reducing the time in individual process.

Value stream mapping after implementation

Phase 5 – Control

The control charts show the changes in the process over time by measuring the variability in the consecutive data points. Thus, these charts monitor the effects of the implemented process improvement. The team recorded the checkout time for 20 observations and used the MR chart to compute the average checkout time. The average checkout time before implementation is represented in figure 16 using MR chart and the average checkout time turned out to be 19.5 minutes and the moving average was 3.71 minutes. The average checkout time decreased to 16 minutes after implementation and the moving average was 3.27 as shown in figure 17.

Control chart for average checkout time before implementation

Control chart for average checkout time after implementation

Environmental effects of before and after implementation:

• Use of recycle bags in place of plastic bags
• Excess inventory

Conclusion and Recommendations

The team recorded sample data from the customers for process improvement in the supermarket and provided solutions to existing issues using Lean Six Sigma techniques considering the time, unseen circumstances and other constraints of the project. DMAIC approach was followed for the entire project to implement the process improvement in an acceptable manner. Hypothesis testing was carried out to verify the statistical significance of the recorded data and other lean techniques were implemented as a possible solution for all the problems faced by the supermarket. One of the difficulties was the increasing checkout time because of which customers were utterly disappointed. The customer checkout time consists of the time when he/she reaches the checkout line till, he/she leaves the supermarket. The team identified this issue using the root cause analysis and recommended the client to reduce the time for individual processes by keeping heavy items in the cart and complete their scanning process in the cart itself. This will reduce the time caused by movement of heavy items and in turn will help them to reduce the overall checkout time. After observation, it was also found that the employees were not properly trained to use the software used for checkout due to which the customers had to wait for the employee to scan and provide a receipt. The team suggested training the employees to lessen the waiting time. Second, clients faced inventory management issues because of which sometimes there were excess inventories while rest of the time there were stockouts of items. As a solution, the team came up with a moving average forecasting method of two weeks which gave a clear understanding of the inventory management. By using this method, the supermarket avoided

wastage and scarcity of items. Additionally, customers were not satisfied because the items in the store were not organized properly. The team suggested implementing 5S as a good practice for better organization and maintain a clean environment in the supermarket which can attract new customers and retain the existing ones.

Thus, the process improvement suggested by the team will aid in increasing the profitability of the supermarket. Also, the reduction of waste will help the supermarket to be environmentally friendly.