The Growth of E-Commerce

One of the most popular activities on the Web is shopping. It has much allure in it — you can shop at your leisure, anytime, and in your pajamas. The history of E-commerce dates back to the invention of the very old notion of “sell and buy”, electricity, cables, computers, modems, and the Internet. E-commerce became possible in 1991 when the Internet was opened to commercial use, and since that date, thousands of businesses have taken up residence on web sites.

Forrester’s research states that, e-commerce, which already accounts for 8 percent of all retail states in the U.S., is expected to outpace sales growth at brick-and-mortar stores over the next 5 years, reaching an incredible $370 billion by 2017. Social media seems to be a driving factor as the use of social media has been forecasted to increase and projected to account for $14 billion in sales by 2015. Additional research indicates that the driving force behind e-commerce growth is the proliferation of smartphones, tablets, and retailers’ increased investments in their online marketing channels and digital marketing budgets.

William Johnson states that 81% of the Smartphone users access the Internet on their mobile devices and the emergence of digital services is gradually proving to be the leading driver for E-commerce growth. The rise of portable mobile devices and advanced videos is increasing the desire of the consumer to spend more time researching online for price matching and ultimately on their buying decision. With the discovery of different innovative apps every day, E-commerce has matured extensively.

The E-commerce industry will continue to evolve and progress with the passage of time. Of all the upcoming trends, the only thing that will remain consistent is the need to build loyal customers through competing on value and by providing quality customer service.

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Diamonds in the Rough: URBN’s Reno Fulfillment Center Employees

banner-diversityI was combing through news articles, regarding the booming sector known as e-commerce, and ran into an article titled, “Reno poised for growth with Internet fulfillment Centers” from the Reno Gazette-Journal. This struck a chord with me because I could relate to the industry, company, as well as the location. It is no secret I work for the fulfillment center the article discusses and I concur with primary point of the article. I took a big risk settling in the Reno area even knowing it had one of the highest unemployment rates in the nation. The article gave me tremendous hope for the economic development of Northern Nevada as well as employment opportunities for the people of Reno; however, I disagreed greatly with an implied statement regarding people who obtain jobs in fulfillment centers.

The article states, “One concern about targeting fulfillment centers is the type of jobs they usually provide outside of management. They’re blue-collar jobs, so these are not computer scientists…these are not going to be the most lucrative jobs, but when you’re situated in places (like Northern Nevada), where the economy is really challenged, some jobs are better than no jobs.” When read at face value, the interpretation could be lost and become a common statement. Being immersed in the industry and with people who hold fulfillment jobs, I took the context in an offensive manner. The jobs may be blue collar, but these people are not simple people. Although the article is correct in stating they are not computer scientists, it would have been accurate to state that some employees had previously held professions as doctors and lawyers. To think less of them because they’re not credentialed to practice their former profession in the United States is an insult to their intelligence. These people are diamonds in the rough and I’m fortunate to have them on my team.

It is cliché to say, “People are our greatest asset.” For the most part, everybody says it, but never does anything about it. In an environment where I am continuously looking to improve processes to optimize performance, it has been an incredible blessing to have people within my team who display significant aptitude in identifying root causes of defects. Not only are they able to identify them, they provide valuable feedback during the implementation phase of a solution.

It must be said that not everyone one of them are doctors and lawyers, but I will still defend their body of work as a whole. While they may not have the most “lucrative” job, the people who work at URBN’s Reno Fulfillment center make the company better. Their efforts will undoubtedly elevate the company’s posture in e-commerce because they are technically skilled, highly innovative, and incredibly motivated.

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Are Different Process Improvement Techniques just a Fad?

The drive toward process improvement has become a way of life in corporations today. Companies’ have continued the pursuit to attain capabilities equivalent to Toyota’s manufacturing capability, world-class six-sigma quality programs, and streamlined supply chain operations. However, despite their unrelenting efforts, few companies have managed to implement programs that actually produce significant results. Companies have used process improvement methods, like Total Quality Management (TQM), but abandoned those methods as newer innovations, such as re-engineering, became introduced. Further analysis of “newer innovations” reveals that they’re nothing more than old ideas with fancier titles. For example, the core disciplines associated with statistical process control and variance reduction became Six-Sigma.

An article written by Nelson P. Repennin and John D. Sterman titled, “Nobody Ever Gets Credit for Fixing Problems that Never Happened: Creating and Sustaining Process Improvement” argues that companies that make a serious commitment to the disciplines and methods of process improvement outperform their competitors. Although these techniques get rebranded with a new name, they aren’t just the “flavor of the month,” but have tremendously useful content. Repennin and Sterman’s research strongly suggests that the inability of most organizations to reap the full benefit of process improvement innovations has little to do with the specific improvement tool they select. Instead, the problem has its roots in how the introduction of a new improvement program interacts with the physical, economic, social, and psychological structures in which the implementation takes place.

I strongly concur with the research findings and agree that the ability to identify and learn about new improvement methods no longer presents itself as a significant barrier. The biggest challenge becomes successfully implementing the new innovations. After all, “you can’t buy a turnkey six-sigma quality program. It must be developed from within.”

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Leadership Discipline purpose of lean management is to allow for the sustainability of a lean production system. Without a lean management system, lean implementation often falters, sometimes fails, and virtually never delivers up to its long-run promises. The final, and most important, element in the lean management system is leadership discipline.

As a leader in your lean environment, you are the force that can motivate and sustain lean management. That applies no matter what your position — whether you are responsible for a team or department, a value stream or plant, a business unit or the organization as a whole. Defining expectations and holding people accountable to them is the key to a successful lean implementation. According to Derrick Wright, leadership discipline forces lean managers to rely on their leader standard work, maintain their visual controls, and conduct regular Gemba walks. By conducting the Gemba walks, you demonstrate the importance of going to the place, looking at the process, and talking with the people as a key in assessing process performance. For departmental managers, supervisors and team leaders, this approach is a set of leadership practices, tools, and behaviors that creates a closed loop system for focusing on process and driving process improvement.

David Mann states that Lean is more than just a kit of tools to improve flow and quality. It is a business philosophy, and to be effective over the long run, discipline is essential. Every leader must spend some of his or her time focusing on the adherence to the Lean process, and noting the improvement opportunities such focus reveals. Discipline is the essential element in sustained Lean performance.

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The Principal Elements of a Lean Management System

The lean management system only consists of a few principal elements with each element in the system being interdependent of the other. For the system to work, each element must be present and cannot be too complex or complicated. The principal elements of the Lean Management System are as follows: Leader Standard Work, Visual Controls, Daily Accountability Process, and Leadership Discipline.

Leader Standard Work
Leader standard work provides structure and routine that helps leaders shift from a sole focus on results to a dual focus on process plus results. Standard work provides a foundation for continuity, capturing basic practices across changes in incumbents, which decreases the variability that might destabilize the production process. When the leader follows their standard work effectively, the rest of the lean management system has a good chance of operating effectively.

Visual Controls
Visual controls translate performance of every process into expected versus actual, throughout the production and management systems. Lots of people can whip up a bunch of visual tracking charts in Excel, but they must be used effectively. They must be displayed in highly visual, widely accessible, and readily reviewed formats. The visuals indicating true performance convert the driving force of leader standard work into traction. These visuals give leaders the ability to quickly spot and move to action where actual performance has not met what was expected.

Daily Accountability Process
Through daily accountability the leader can steer and set direction for improvement activity in the area. In the daily accountability process, leaders assess the meaning in the visuals, assign appropriate responses, and hold people accountable for completing their assigned tasks. This follow-up process occurs largely in the structure of daily tiered meetings.

Leadership Discipline
Leadership discipline is the fourth element in the Lean Management System and is the fuel that powers the entire system. Establishing leader standard work, visual controls, and a daily accountability session will not amount to anything without the discipline to execute those elements as designed and intended. If the lean management system is left unattended, the system will quickly deteriorate. Lean management that is well and consistently implemented helps bring the foundation of stability to lean production conversions, a foundation on which ongoing improvements can be built.

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The Missing Link in Lean: The Management System core idea behind lean is to maximize customer value while minimizing waste. Simply, lean means creating more value for customers with fewer resources. A lean organization understands customer value and focuses its key processes to continuously increase it. The ultimate goal is to provide perfect value to the customer through a perfect value creation process that has zero waste. To accomplish this, lean thinking changes the focus of management from optimizing separate technologies, assets, and vertical departments to optimizing the flow of products and services through entire value streams that flow horizontally across technologies, assets, and departments to customers; however, most prescriptions to lean production are missing a critical ingredient: a lean management system to sustain it.

Lean management practices are like many other aspects of lean: easy to grasp, but difficult to execute consistently. To create a lean management system, you should focus on targets you see such as leaders’ behaviors, specific expectations, tools, and routine practices. An organization may implement a lean project and install new layouts to establish flow, begin pull signaling, and develop ways to pace production, but this may only get you a 20 percent improvement. To identify sustainable implementations of lean you must focus on the remaining 80 percent. This remaining portion of required time and effort is made up of tasks that are less obvious and much more demanding.

A lean management system focuses on processes and consists of the discipline, daily practices, and tools you need to establish and maintain a persistent, intensive focus on process. It is the process focus that sustains and extends lean implementations. It is also important to remember that in lean systems results do matter; however, the approach to achieving them differs sharply from conventional management methods. The premise is this: Start by designing a process to produce specific results.

In my proceeding blogs, I will discuss different methodologies to establish a lean management system.

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What is Six Sigma?

At its core, Six Sigma seeks to improve the quality of process outputs, identifies and removes the causes of defects, and minimizes the variability in manufacturing and business processes.  Six Sigma was originally developed by Motorola in 1985, but has evolved and has been utilized in different sectors of industry.  In a nutshell, six sigma can be used at three different levels: the management system, as a methodology, and as a metric.

The Management System:

Breakthrough Six Sigma performance can only occur when Six Sigma is aligned with an organization’s overall business strategy.  The more closely an individual project is tied to organizational goals, the better its chances for producing far-reaching and lasting results.

The Methodology:

DMAIC is the five-step approach that makes up the Six Sigma tool kit, and its sole objective is to drive costly variation from manufacturing and business processes.  The five steps in DMAIC are   Define, Measure, Analyze, Improve, and Control.   As the backbone of the Six Sigma methodology, DMAIC delivers sustained defect-free performance and highly competitive quality costs over the long run.

As a Metric:

The third level, 6-sigma as a metric, is the source of the name 6- sigma. 6-sigma refers to 3.4 defects per one million opportunities (DPMO). 6-sigma started as a defect reduction effort (as in zero defects) in manufacturing and was then applied to other processes for the same purpose–quality improvement. A 6-sigma project will use management, methods and metrics at the same time.

There are few if any processes that cannot be improved. 6-sigma is one approach which has been shown to work, but which is not without its critics. A Fortune article stated that, “of 58 large companies that have announced 6-sigma programs, 91 percent have trailed the S&P 500 since.” The reason for this is perhaps that 6-sigma is effective at what it is intended to do, but that it is “narrowly designed to fix an existing process” and does not help in “coming up with new products or disruptive technologies.”

The Six Sigma System drives clarity around the business strategy and the metrics that most reflect success with that strategy. It provides the framework to prioritize resources for projects that will improve the metrics, and it leverages leaders who will manage the efforts for rapid, sustainable, and improved business results.

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