The markets in apparel retail are getting wider day by day and with the advent of e-commerce, the competition has become even fiercer. Garment retailers need to manage their operations efficiently by coordinating the backend supply chain and providing better products and enhancing customer satisfaction. Hence brick and mortar apparel stores need an effective way to survive in the changing times of e-tailing.
The pioneering concept of lean manufacturing that focuses on dealing with bottlenecks in the inventory is used in developing a tool that translates well into the apparel retail industry. Lean retailing fulfills what the customer wants, when the customer wants it, where the customer wants it, and in what quantity does the customer want it. This ideology was adopted by Wal-Mart, and subsequently used by large retailers like J.C. Penny, Bloomingdale's, Macy's, The Gap, and Zara. These apparel companies use technologies such as RFID (Radio Frequency Identification) and barcodes to determine the appropriate movement of inventory and manage the merchandise inside the store as per customer requirements.
The philosophy of lean retailing works on identifying and minimizing wastages to simplify and make the operations smooth. In lean retailing, waste is measured in consumption of time and capital and not in physical material. Hence over-production, inefficient transportation, unnecessary motions, inappropriate processing, rejects & defects, time wasted in waiting, and over stocking are some wastages in a typical apparel retail set-up that need to be worked upon.
The ever-changing demand and desires of customers, the availability of plenty of options, and competitive prices are key areas every garment retailer needs to consider. In case of apparels, the fashion and styles are changing fast and so the manufacturers need to keep pace with the changing trends. Due to such problems apparel retailers require a system like lean retailing to streamline all its operations and have an uninterrupted work-flow designed every single time.
lean retailing follows certain principles that are described by James Womack
and Daniel Jones in their book titled Lean Thinking as follows:
- If your customers expect products to be delivered on trend, then eliminate obstacles such as extra handling and improve processes that are inhibited by poor workflow design.
- Plot the value stream. Identify and map all the steps involved in moving goods through the system, all the way to the customer. Activities that add no value must be eliminated.
- Make the process flow. Redesign processes that prevent the free flow of products to the customer.
- Pull from the customer. Lean execution requires a clear understanding of demand and current inventory, pulling merchandise to stores and to the shelf based on what customers want.
- Pursue perfection. Root out any remaining waste. Then do it again. And again, and again.
Using RFID at item-level considering the value of case and pallet tagging helps in identifying a particular carton or item in automated walk-through checkout processes, preventing loss of items, in item visibility, and item location in a store inventory. Many apparel retailers like Marks & Spencer's, American Apparel, and Jones Apparel Group have shifted from the use of outdated and manual processes to more real-time, up to date, and reliable RFID enabled processes.
With the help of a RFID facilitated process, a retailer can control the supply chain from the source to the customer Point of Sale. This ensures smooth implementations, quicker business evaluations, better ways to compare and execute. The RFID technology uses a well architected application software system. This helps in sharing data in real time with the suppliers.
Another important aspect of lean retailing is getting rid of all the bottlenecks in the supply chain. It helps in designing a workflow plan in which work can be processed freely. With the continuous improvement concept of lean retailing, apparel retailers can prevent wasted effort, time, materials, and motion. Along with that, it also brings in a lot of innovations in the processes.
Lean retailing involves everyone from the bottom to the top level employees involved in supply chain operations. Applying the lean principles can improve the responsiveness of the retailers towards their customer's needs, can deliver products quickly, and meet their needs as per the changing trends. The tool provides better visibility across the supply chain and ultimately leads to reduction in inventory control costs and reducing shrinkages at the back-end. In the front or store-end by re-designing the work flow provides consistency and results in higher customer satisfaction.
Moreover, by connecting the complete workforce and providing adequate training, lean retail principles enhance the employee satisfaction without any kind of increase in the labor cost, which reflects in the profit of the organization. Retailers who have incorporated the lean retail system have witnessed a decrease in the labor cost of 10 to 20 percent, in the inventory cost by 10 to 30 percent, and in the cost related to stocks by 20 to 75 percent. Hence with less investment, lean retail is a tried and tested formula to improve in-store and back-end operations of brick and mortar stores.