The Limits of Process Improvement: A Lesson from Kroger, a Major Grocer

My second lean transformation experience came shortly after joining LEI in 2013, but before I was introduced to the Lean Transformation Framework. I was assigned as a lean coach at The Kroger Company, headquartered in Cincinnati, Ohio. While the company and context had changed—from internal leader to external coach—the opportunity felt familiar, maybe too familiar.

Just like at Starbucks, Kroger’s transformation began with a model store. In this case, near Columbus, Ohio. However, since a grocery store is much larger than a coffee shop, the strategy focused on first creating a model store department — the deli. While other departments were considered (e.g., the produce department with fresh fruits and vegetables), the deli was chosen because it struggled to make money.

In the grocery industry, delis are seen as an essential part of the store experience, despite often being “loss leaders.” Kroger’s leadership was wondering if lean thinking and practice could enable the company to defy this industry norm.

Same Play/Same Problems

Rotisserie chicken was Kroger’s version of Starbuck’s brewed coffee. Once again, the focus was on the value-creating work and the people doing it. And again, the intertwined approach to process improvement through frontline capability development proved effective. The deli team learned a structured problem-solving process that helped them figure out how to cook better-tasting chicken, deliver it more freshly (shorter lead time between cooking and customer purchase), and reduce stockouts.

Sound familiar? There I was, essentially running the same play at Kroger that we had developed at Starbucks. Scaling took a similar path as well. We went from rotisserie chicken to other products and processes in the deli. Then from the deli to other departments in the store. And finally, from the model store to other stores around the state of Ohio.

With every transformation effort, managers and associates (team members) learned to solve problems experientially by improving their actual work to address real gaps in performance. But unfortunately, just like at Starbucks, the approach neglected some critical requirements for effective and sustainable transformation.

An Underlying Lack of Support 

Unfortunately, I hadn’t yet benefitted from using the Lean Transformation Framework (LTF) to reflect on my experience at Starbucks. While I could sense that something was clearly missing at Kroger, I didn’t yet have the language or structure to see the gap(s).

Looking back now, the LTF helps me see that Kroger had an underlying lack of support for the work. They didn’t have a management system for leveraging standardized work to drive performance and continuous improvement. In other words, Kroger (like Starbucks) didn’t have a daily management system.

As a result, the approach to process improvement and capability development on the frontlines was ad hoc and extracurricular. It wasn’t woven into the fabric of running the store day to day. Performance and process health weren’t monitored continuously, problems weren’t easily detectable, and responses weren’t triggered and organized. There weren’t management routines for ongoing PDCA in operations.

The strategy was problematic as well. Essentially, the business of Kroger was managed in segments: store operations, merchandising, supply chain, and IT. The model store activity was overseen by operations only. But the process changes that emerged had implications for the other three functions. And some of those led to conflict.

For example, an experiment to improve the freshness of produce items, such as apples and lettuce, revealed advantages to displaying less product on the sales floor. But that ran afoul of the entrenched merchandising mantra, “Stack ‘em high, watch ‘em fly.” (The presentation of abundance is believed to contribute to higher sales.)

Without a management process for dealing with such conflicts, much less preventing them in the first place with an aligned strategy, the transformation stalled. It didn’t help that the company’s executive leaders had little to no experience with lean: value-focused, fact-based, structured problem solving in the work at the gemba (e.g., A3 problem solving). Consequently, they tended to view the changes only in terms of the impact on their function.

My experience at Starbucks led me to see the essential role of daily management. Kroger reinforced it. It also gave me an appreciation for the role of hoshin kanri — strategy development, alignment, and execution. Fortunately, my colleagues at LEI helped me go from appreciating these management systems to learning how to put them into practice.   

Reflection Prompt

For the latest change you made, was the strategy clear and were all key stakeholders aligned? Also importantly, was there a process in place for handling problems (and conflicts) that will emerge while executing the strategy?