|
|
|
07/20/2011 10:47 AM
|
|
|
I have come across several debates on whether big box stores such as Home Depot and Costco provide lean consumption solutions for the consumer or not. One might argue that 30 day no questions asked returns policies are a good thing since some consumers deem that as value added. But doesn't that also directly cause waste ? is the backward flow not pure rework ?
Look around your neighborhood. How many small limited stock, all sales final, grocery and hardware stores are still open for business in your neighborhood ? How does one explain this ?
I'd be interested in all viewpoints and comments on this.
Kishore
|
|
|
|
|
07/21/2011 03:54 PM
|
|
|
Lets not lose sight of the objective in our focus on the tools.
Lean is NOT about "eliminating wasteful activities."
It is about eliminating the reasons those wasteful activities exist.
It is easy for beginners to confuse those two because, in the early stages, there are so many wasteful wasteful activities that have "no reason" as their reason that we can just eliminate them.
The beauty of the open marketplace is that customers have choices.
Some customers value the flexibility provided by stores with more generous terms.
From the customer's perspective (and remember, EVERYTHING in lean is about the customer), if everything else was equal (price, convenience, service, advice available, etc) then this would likely be a no-brainer for them. Lower risk to me, I'll go shop where I can take it back.
If all else is NOT equal, then the customer makes a decision based on HIS perception of value. Remember, value is defined by the customer.
In the store, we want to deliver the MOST value with the LEAST consumption of resources.
As you point out, offering the return policy consumes resources.
Why?
Because customers return things.
Why?
It ISN'T because "we offer the policy."
It is because they buy things they ultimately decide don't meet their needs for some reason.
Why?
Ah... that would be an interesting line to pursue, because if we can work to systematically eliminate the REASONS for returns, then we can continue to offer the generous policy while systematically reducing the resources needed to do so.
Lean is NOT about "eliminating waste."
It is about problem solving and eliminating the reasons wasteful activities are required in order to offer the value our customers want.
|
|
|
|
|
07/22/2011 10:08 AM
|
|
|
I think the "leanness" of shopping at big box stores is mostly dependent on how the customer uses them.
And as a guy who grabbed lunch at Costco today (fast cycle time, convenient location along a standard transit route, extremely low cost, high quality product) I have to say that big box stores are an important component of my personal lean supply chain.
Big box retailers generally do an excellent job of providing commodity products. So as long as that's what the consumer needs they're a viable "lean" option.
When the consumer needs specialized products or products requiring high levels of service and expertise the pendulum swings back toward the specialty retailer.
Most consumers have a mix of needs, some commodity and some specialty. As long as a consumer clearly understands their own needs both types of retailers can serve their supply chain in lean fashion.
I definitely wouldn't say that a generous return policy directly causes waste. I'd call it a way of responding to waste, a countermeasure. Primarily, it transfers the monetary risk of waste from the customer to the vendor.
Is the backward flow rework? Maybe it is. So what? Eliminating the return policy wouldn't eliminate the waste. It only transfers then entire cost to the customer. And if the waste is caused by some deficiency of the product, sticking the customer with the cost isn't a very good business model.
pc2
|
|
|
|
|
08/22/2011 03:05 PM
|
|
|
Hi Kishore
Most major retailers with 30 day no questions asked return policies, limit those returns on perishables like grocery items (Costco included though if the steak you bought is spoiled when you get it home and it is their fault they will make it up, that happening is not very likely), thus the majority of those items returned just go back on the shelf and they get resold. If they had a defect the supplier gets to deal with it, while if you bought from an, all sales are final store, you lose. The number of returns that these retailers do not resell at full price are few in reality, so keeping happy loyal customers is the bonus, something which adds more dollars to their bottom line than an occasional return adds cost. Believe me these guys know the cost benefit numbers of their policies inside out, that policy makes them millions in the end.
In my area we still have a lot of little stores, but guess what I can return anything to them just as easy as at the big stores, it is called good long-term relationship building business.
At least if I shop at those big warehouse stores, I know I am not funding some interior decorator from making the place look pretty. I am not funding courier services for delivering items a few at a time (they get skid lots at minimum) and stores get truck loads at a time either from a warehouse or direct from a producer. Additionally all those little store deal with wholesalers, the big boxes buy direct and either ship to directly to the store, or bring it in and out of their cross dock warehouse within hours; I have never considered wholesalers as value added. So in my opinion they may not be as Lean as possible, but they are closer than many of their smaller competitors, retail has a long way to go to in the implementation of Lean.
Robert Drescher
ELSE Inc.
|
|
|
|
>
Community >
Forums
Send to a Friend
