Using Lean to Improve Operational Performance in a Retail Store and E-Commerce Service: A Portuguese Case Study

Abstract

Ensuring on-shelf availability is essential for retailers to maintain high service levels for both in-store and E-Commerce consumers. The performance of this indicator largely depends on reorder planning decisions, as well as on the effectiveness of the replenishment process. This paper presents a case study that involved two Lean initiatives, which together have contributed to a significantly reduction in the number of out-of-stock events incurred by a retail store and an increase in the order fulfilment rate accomplished by the online commerce service. In the first initiative, a value stream management (VSM) methodology was adopted to redesign the existing replenishment process in the most relevant fresh food market: fruits and vegetables. The second initiative involved the implementation of a simple, but effective visual inventory management system in the warehouse of the E-Commerce division, where a wide set of fast-moving consumer goods (FMCG) is stored using kanban cards. This paper hence demonstrates, through practical application, that Lean tools can be employed to improve operational processes with positive impacts on both the physical store performance and on results regarding the online commerce business.