What if UPS misplaced 100,000 parcels every year? Could you imagine if the book you’re reading had 20 spelling errors on every page? High rates of failure are simply unacceptable, and that is the premise of Six Sigma—to improve effectiveness and efficiency by minimizing waste. Applying Six Sigma in retail can increase customer satisfaction, but to do so, it is the methodologies and elements that are important, not the target itself.
The goal of Six Sigma is to minimize defects organization-wide and strive for an accuracy rate of 99.9997%. When picking orders, it makes sense to aim for 3.4 mis-picks per million. Similarly, targeting 3.4 price errors per million is an achievable and measurable goal. When measuring out-of-stocks (OOS), 3.4 OOS per million lines would certainly help drive sales. Applying Six Sigma targets to stock record accuracy or on-time delivery also makes sense, but when we look at delivering on customer service, we should not simply set the target to 3.4 errors per million customers.
Instead, we should focus on the elements of Six Sigma. We should define a defect as anything outside the customer’s expectations. Let’s take checking out as an example; a customer could enjoy 30 minutes of blissful shopping in your stores, and only one minute of frustration at the register. Unfortunately, that last minute is what the customer will remember. As we seek to deliver a frictionless retail experience, there are many moving parts. In our checkout example, were enough registers open to avoid long waits? Were employees trained and empowered to process the customer transactions? What were the issues that led to the defect?
— Six Sigma.us (@6sigmaus) July 3, 2019
The Benefits of Applying Six Sigma in Retail
Improve Customer Satisfaction and Increase Sales – What do customers expect when they enter your stores? Six Sigma is all about improving your processes, structuring activities around delivering on customer expectations. This will lead to better service and happier customers.
Drive Consumer Loyalty – Six Sigma helps reduce or eliminate variability. An unhappy customer should be treated as a defect in your quality control. By consistently delivering on customer expectations, you drive repeat business.
Elevate Associate Performance – Six Sigma focuses on raising the commitment level of your staff. The first step is delivering associates the intricate product knowledge required for your staff to deliver impeccable service to shoppers. Improving the way your frontline works will increase sales and improve retention.
Data-Driven Decision Making – Collect and analyze data to support your decision-making processes, instead of relying on gut instinct. Establish a baseline, apply changes, and measure the improvement in performance.
Nextenture is exclusively focused on helping retailers achieve more. We develop solutions that improve productivity, and our staff has specialized expertise in process improvement techniques including Six Sigma. Stop by Booth 1 at Reflexions 2019 to learn how efficient process discipline will reduce costs and increase customer satisfaction.
A version of this post can be found on the Reflexis website.
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