Aspire2bLean Blog

Lean Consulting for Corporates and SME's.

-- MOVE AWAY FROM THE GREY --

Humans & Machines in Harmony

 

We know technology is advancing at a rate, but I have become aware of a great example. There was a recent article in The Economist around how a German online retailer OTTO, who are utilising AI effectively to improve the performance of their business and customer service. OTTO used technology developed by Blue Yonder and a deep learning algorithm originally developed at CERN for particle physics experiments, to analyse 3bn previous transactions with 200 variables. These included previous site searches. Armed with this capability they were able to purchase over 200,000 items, predicting what will be sold in  30 days with a 90% accuracy.

OTTO are clear that they see this as performance enhancement, not human job reduction. Interestingly Juergen Maier ,UK CEO of Siemens when asked  a similar  question on AI on last weeks Question Time, stated the same. Commerce and Industry needs to up-skill in order to programme the robots and develop systems. We need to invest in the right skills to have the right economic growth. I have written about AI in a previous post, it can be a very powerful tool, but in the race performance there will need to be checks and balances on efficacy. It raises an interesting question about how far AI can really go, but we do know that global companies that are managing their data effectively, are becoming the economic super elite. Companies that are close to point of use are certainly getting “leaner” in terms of workforce, but we must not forget the service / IT jobs that are created behind it. Furthermore, if there is better order accuracy and less physical waste we are moving to a more sustainable planet. OTTO have won awards for Corporate Social Responsibility.

 

 

 

Lean in Retail

 

I stumbled across a great article about Aldi and their continued pursuit of Lean. The article makes it very clear that Lean is not just for manufacturing, and although Lean may have lost some profile over the last few years it still very much has resonance today. Some say that Aldi’s current success is down to its models and market positioning. That is true, but how did they get to that position ? Lean thinking and principles which are referenced in the article allow businesses to get to a competitive market position. All too often Lean is just perceived about removing unnecessary waste and cost, but effective Lean drives flexibility, adaptability and agility. These are the key elements that allow businesses to have a strong market position. The article also references how Aldi have engaged their workforce, to increase their Lean bandwidth and achieve even more. Aldi also multi-skill their workforce to allow maximum flexibility, alleviate boredom and improve overall effectiveness. This is exactly what the manufacturing sector have been doing for a couple of decades. With the pressure on the retail sector, and the relentless competition, one may think that the staff remuneration would be low. However, Aldi also pay above the average sector pay. These savings  allow Aldi to pay above market rates, and entice the most capable staff. They have an empowered and a motivated workforce to deliver on future improvements, and cost savings. The improvement cycle repeats itself. They will also be taking waste out of the all their administrative processes . A Lean mindset drives the removal of waste everywhere.

Aldi know their customers, and what drives them to there stores, which is both quality and value. They keep their product range / variants to what the customers will buy. This is analogous to a manufacturing operation optimising their SKU’s to reduce unnecessary processing and raw material costs. Again this is classic Lean. Aldi use this practice to gain procurement leverage with their suppliers and pass the savings on to their customers. This creates loyalty with their customers. Some of their competitors open for long hours. As they know their customers well, and there is no need for them to be open for the hours that some of their competitors are. This saves time, salaries, energy cost and even wear and tear on assets.

Aldi  are also connected to the community and fund local events. This is yet another side benefit that builds further brand equity. Aldi are reaping the huge benefits of Lean, and the self-fulfilling circular improvements that Lean creates.