Lean should be the next innovation in the retail sector

The retail industry is known for experimenting with new technology and practices to generate new revenue. In the 1980s, retailers across the United States began branding products with UPC codes that could be scanned at registers to expedite transactions. In the 1990s, the internet boom caused many to shift to the web to offer customers a new way to shop. In the past few years, mobile phones and tablets have continued to revolutionize the shopping experience, and retailers have paced this paradigm shift every step of the way.

It shouldn't come as any surprise that retailers are innovative in other ways as well. According to a report from IDC, many companies in the sector are now turning to Lean practices and methodologies to continue to improve return on investment. To aid the integration of Lean, a number of these businesses will also use new technologies that allow them to reduce waste and improve efficiency.

Lean in the retail setting

The switch to Lean is driven by the highly competitive retail environment. Companies are always looking to get ahead in the market space, which has led to innovative business practices. For example, apparel retailer Zara gained much ground in the sector through its unique supply chain model. Other companies in the industry are exploring different means to make their operations more competitive, and Lean may be that ace in the hole.

“Lean process execution principles and accurate inventory levels result in reduced OOS (out-of-stock)  and improved labor productivity, which leads to higher revenues and improved profitability,” explains the IDC report.

One of the most challenging aspects of running a retail business is the management of inventory. Being able to get product from a supply truck, to backroom storage, to store shelves and finally to the customer is a difficult task, and companies frequently lose track of inventory. In fact, it isn't unheard of to have teams devoted entirely to keeping tabs on inventory.

Lean is one of the approaches businesses can take to manage this challenge. Lean retail execution can improve the way that retailers manage inventory to reduce costs and shrink while simultaneously improving customer satisfaction.

By leveraging Lean as a way of achieving continuous improvement, retailers may be able to generate more revenue and better compete in the industry.