History Of Argos Retailers Information Technology Essay

Introduction:

Home Retail Group is the UK’s leading home and general merchandise retailer with sales of over £6bn in the last financial year. They sell products under two distinctive and complementary brands – Argos and Homebase, with large customer bases across the UK and Ireland. Between them, their retail brands have more than 60 years of market heritage and consumer awareness. Argos was founded in 1973 and Homebase in 1981.  They have been shaping modern retailing ever since. Until September 2006 the two operations had collectively been known within GUS as Argos Retail Group, but a month ahead of the break up of GUS the name was changed to Home Retail Group

Argos, the UK’s largest general merchandise retailer, has an unrivalled blend of choice, value and convenience to meet customer needs. It sells more than 19,000 general merchandise products for the home, all of which are set out in its twice-yearly 1,800 page catalogue which is at the heart of its proposition. They serve more than hundred thirty million customers per year through its stores and take nearly six million customer orders online or over the phone. And, on average, seventeen million UK households, approximately two-thirds of the population, have a current Argos catalogue at home at any time. Its scale, supply chain and operating model efficiencies continue to deliver outstanding value for customers. And the integration of stores with website and telephone ordering, as well as the largest home delivery operation, make the Argos shopping experience a household favourite for convenience.

Homebase is the UK’s second largest home improvement retailer, with a customer offer that’s differentiated from the competition and is recognized for choice, style and customer service across the wider home enhancement market. It has around 350 large out-of-town stores, which sell over 35,000 products across a broad range of home enhancement products, services and traditional DIY items. It targets a wide range of customers with an inspirational selection of home merchandise and offers the convenience of home delivery for bulky, high-value items. Homebase serves around sixty million customers per year through its stores. However, with its product markets more exposed to consumer discretionary spending pressures and the housing market downturn, it is carrying out additional work to make sure it is best-placed for a return to longer-term market growth.

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The Argos brand is synonymous with choice, value and convenience and their internal processes ensure that Argos is well positioned to continue to deliver its customer proposition. Investment has been made to extend the choice available at all price levels, particularly the Argos Value range and non-catalogue lines on the website. Homebase has responded to customers’ needs by developing further ranges centred on environmental awareness, as well as expanding its initiatives in e-commerce development. They have many mitigating activities such as clear communication of choice and value-led product offering to customers, driving market share in targeted product categories, focused and relevant customer service training in Argos and Homebase, Store format development and technologies such as Check & Reserve and Quick Pay Kiosks, continued evolution of a broader home enhancement position at Homebase and Regular review of pension trustee activities and plans to mitigate any fund deficit.

Argos and Homebase are supported by an in-house financial services business, which provides a range of credit offers to customers. Home Retail Group Financial Services is the largest store card provider in the UK, with over one million active store card customers.

Lean Introduction:

The main objective of lean operations is to analyse the current production process followed by the companies and to improve the efficiency of the process to a higher competence level. The main principle of lean manufacturing is to reduce waste in an operation, such as long lead times, defects and material waste. In order to visually display where waste occurs in the process, a value stream map (VSM) is drawn. VSMs are often used to assess current manufacturing processes as well as create ideal, future state processes. With the manufacturing field escalating and spreading more widely across the globe, it is important for companies to adapt to the increasing and evolving business strategies. Management of manufacturing sectors consistently focusing on the lean operation activities. They are mainly determined to reduce the waste time and increase the value added concept to achieve their goals. This system is very much useful to identify every operation of the system and help the management to satisfy the customer demands and increases the productive of the plant with lesser time period.

Lean Aim

Main aim of the Lean is to reduce the waste. Lean helps the organisation to manufacture the products in accurate ways, to reduce the cost, to reduce the customer’s lead time, to reduce the waste within an optimum time frame, to reduce time to launch new product, to increase market share and to increase product diversity.

Lean Thinking – Principles

Specify value: value can only be defined by the ultimate customer.

Identify the value stream: all the definite tasks required to bring a product to delivery.

Flow: eliminate waste to design systems to allow value creating steps to flow.

Pull the product: only make what the customer requires.

Perfection: continue to look forward and eliminate waste.

From the principle the first think is to find the target customer who expecting their product so that they must be specific in their process and then they has to find the proper way to attain their objective. The process which will never add value must be eliminated so as to be efficient. Along the flow of process there will be several losses that must be reduced. Over production must be avoided so as to minimize the cost of inventories. Depends on the need of the customer only the production must have to vary. When the process keep continuing the final think is the perfection which will give added value to the production process. Similarly perfection is nothing but cut out of waste. Lean implementation is mainly focused on getting the right things, to the right place, at the right time, in the right quantity and minimizing waste.

Homebase has implemented SAP for Retail and the mySAP Enterprise Portal with a primary focus on integrating and improving its supply chain management, merchandise management, inventory management and order processes solutions. Homebase selected SAP for its ability to integrate the company’s supply chain and realign its disparate technical infrastructure. As retail businesses increasingly expand their business models to include multiple channels of customer contact, they will require the flexibility offered by solutions such as SAP for Retail to manage and administer all the information from one central database.

Traditional Push system

In olden day most of the company uses the push system which is producing the large product without knowing the demand of the product. Without knowing the requirement of the product they will produce the product and finally they will find a way to push the product in the customer. Until that the produced product will be stagnated as a stoke. Finally a large amount money will be wasted for selling the product by means of increasing the advertising promotions, discount etc. By this also there is no assurance of the product to be sold. This method will increase the inventories products and stokes. Similarly homebased also produced a lot of product in olden method and keep it as a stoke and they found that there is a huge loss in maintaining the strokes so from that they intend to study the customers demand and from that they started to produce it. This they attain by means of online ordering and whole retail selling.

Modern Pull System

Now a days most of the company following the pull system which is producing the product depends upon the customers demand. Here the manufacturer will produce the product only there is a bulk need otherwise they won’t produce it. By this method they can able to minimize the overproduction and decrease the waste in cost and time. Homebase companies now following this model in production, when the demands come they will produce the product. Depends upon the retailers need they will produce the product. This method gives them a very high flexibility and no waste. Customers requirements are mailnly depends upon the manufacturing system of the organisation and home based understand it’s the source of market dynamics.

Tools and Techniques of Lean Manufacturing

Several methods are followed for improving the organizational process. For that different methods are used which they called as tools for the work. There are several techniques used for the improvement of the manufacturing. They are explained below,

Value Mapping: In the beginning of lean Value stream mapping is normal tool which shows the process of material flow and explain the product or service make its way from first to last of value stream. A value stream map is mainly concern with the future development and the method to minimize or purge the non value added activities, cycle time and cost.

The 5S System- A Key Prerequisite to Lean

The 5S system which is Japanese concept is designed for organization and standardization of work place. 5S is a prerequisite to the implementation of any other improvement method. 5S system consists of five activities:

Sort

Set in Order

Shine

Standardize

Sustain

The 5S system can be designed as a good housekeeping practise. It will definitely have a high impact on the following assembly. (Tapping. D, 2002, P.45)

Reduced Lead Time

As per the proposals the total lead time of homebased plc is to be reduced. Implementing the 5S activities mentioned above the lead time of can be reduced.

Reduced Changeover Times

As per the future plans in Homebase the changeover times of all processes has to be reduced to a efficient time. The implementation of 5S activities can reduce the waste like extra motion, and can help to achieve the above.

Elimination of Accidents

Implementation of 5S can reduce the accidents in the shop floor.

Poka-yoke is otherwise known as mistake proofing concept. The important view of this concept is to stop the process whenever a defect occurs, and explain the cause as well as prevent it from reoccurring and also provides source of the defect. Alternatively ‘on-line’ adjustment can be made to the product or process, which enables the continuous process improvement. As production lot sizes are constantly reduced which results in defect free parts. This system avoids the defects to happen in manufacturing work flow. Although this concept developed for manufacturing systems (Shingo, .S. 1986, Zero Quality Control)

SMED Single Minute Exchange of Dies, a concept by Shigeo Shingo at Toyota, objective is to reduce all factory setups by 59/60ths. In other words, a setup of one hour should take one minute. The adoption of SMED to the traditional mass production system is a tough job. This method also used to reduce waste the main objective is to reduce the changeover time. Two elements for set up time is Internal (machine need to stop) and external (machine need not to stop). Improvement can be made in simplified methods: jigs, clamps, and quick-release. (Shingo, .S. 1986, Zero Quality Control)

Kan Ban: Kan Ban is otherwise defined as the two bin system. It is material control system which only calls for materials when required. Inventories are not maintained up at line side or in part of finished goods.

Central Activities represents the cost of central corporate functions and the investment costs of new development opportunities. Corporate functions costs for the year were approximately ten percentages lower reflecting ongoing cost management, while the investment costs of new development opportunities were also at a lower level than the prior year.

A review of the trial to develop the Argos format in India was completed in January 2009. A decision to discontinue the trial following the initial two year development period was taken mutually by Home Retail Group and its Indian partners Shoppers’ Stop and Hyper CITY. The trial had not met the planned performance levels to support the investment required in the current Indian economic climate. The retail operations are being wound down at minimal cost to Home Retail Group. At some point in the future, the Indian retail market may still present an attractive long-term growth opportunity for the Argos multi-channel model.

Kaizen (Continuous Improvement):

Kaizen is a Japanese term that is typically referred to as continuous improvement of a system. It is based on the quality, technology, processes, culture, productivity, safety, and leadership. Within a lean environment, Kaizen is based on making small changes on a regular basis. The deployment of continuous improvement effort with Kaizen can be coordinated using a PDCA (plan, do, check, and act) cycle.

Simultaneous development and continuous improvement processes that:

Design the product right the first time.

Use continuous improvement processes to identify the non-value-added problems.

Drive commitment to eliminating problems (controlling them is not enough).

Advocate just-in-time material control systems.

Promote constant improvement throughout the supply chain.

Leverage the knowledge of the organization with the knowledge bases of suppliers and customers.

Continually train and develop highly skilled workers.

Use scoreboards or measurement systems to monitor progress

As Homebase’s business evolves and expands, they want to provide their staff with the best technology resources to serve their customers. Technology is at the heart of Homebase’s drive to increase efficiencies in the supply chain and in customer service. The SAP software is empowering Homebase to take this drive forward, in addition to delivering more extensive functionality to our staff and providing them with visibility across the entire supply chain.

Homebase made it a priority in this ultra-competitive market to closely tie the store to the needs of the customers and manage stocks through the supply chain.Homebase turned to SAP to meet this challenge.

(Sourcing and Supply Chain)

They behave ethically and with integrity when sourcing products and dealing with their suppliers. This year they have stepped up their audit programmed significantly and have met their target of ensuring that, over the last two years, hundred percentage of their direct source factories and fifty percentage of their direct import factories have been audited – a total of eight fifty six factories.

The Seven Deadly Wastes

Before going further analyse the current state it is important to know what are the waste we need to identify in the process over the years seven deadly waste have identified as

Figure 1

Waste of over producing means producing goods /components that are not require immediately for sale or for next downstream process. Waiting means idling of operators between operations this could be due improper housekeeping practise bad scheduling and unbalanced line etc. The waste of transport occurs when material is moved unnecessary, this usually happens when the layout of the factory is poor. Next waste is the waste of over processing this means to do more to a product than it is necessary. This is the most difficult type of waste to identify and eliminate from the process line. An example of this is inspection which is always confusion whether we should eliminate it or not. Another important waste is the waste in form of excess inventory and this could be any form of raw material, work in progress and finished goods. Next is the waste of motion any motions that not add valuing to work is considered under. This can be due to missing tools work instructions etc. Any time when a worker stretches, bends or twists, it is a waste of motion. Wastes of defects are simply scrap or rework of any kind. This could be due lack of operator training, machine tuning etc.

They have joined the Supplier Ethical Data Exchange (Sedex) which allows them to share ethical data with global suppliers as well as other businesses, enabling them to work together to achieve continuous improvement.

They have engaged separately with selected groups of suppliers to define and implement their policies on timber sourcing, peat, quarried materials, jewellery and chemicals. For example, their Group policy is to source timber and wood-based products from verified, known and legal, non-controversial forest sources. In 2008, eighty one percentage of timber based products are either Forest Stewardship Council (FSC) certified (35%) or from other certified or known and legal sources (46%).

They are members of the Responsible Jewellery Council. This year they have focused on encouraging their jewellery suppliers to join – therefore influencing practices further up the supply chain.

They have significantly increased the volume of catalogue paper which is either recycled or certified. Across all publications, this total has reached 67%, of which 19% is recycled. By making recognised certification a pre-requisite of supply in 2009/10, they are confident that by the end of the year they will have achieved either fully certified or recycled content for all publications, including, for the first time, the main UK catalogue. All their paper publications are hundred percentage recyclable.

Their product and supply chain group meets quarterly to focus on sourcing from a social, ethical and environmental perspective. This group reports into the waste, energy, products and supply chain management group, which is chaired by the Group commercial director.

The Group has achieved a good outcome in a challenging year, delivered by their appropriate approach on an operational, financial and strategic basis. Going forward, they will be increasing their investment in the businesses, and given the Group’s strong cash generation, they will also be returning capital to our shareholders by way of a share buy-back programme.

Argos and Homebase have distinctive brand appeal and clear customer propositions. They both gain significant leverage from a shared infrastructure, delivering cost efficiency and multiple channels to market. Their market leading scale gives them tremendous sourcing and supply chain advantages, allowing them to offer their customers value for money across a broad range of products.

They continue investing to expand their customer reach and to develop new product ranges and services that meet changing customer requirements. And in these particularly challenging economic times, their strong financing position makes them particularly well placed to come through the cycle for significant longer-term benefit.

They help their customers to be responsible consumers by giving them relevant information and choices. Their customers judge them primarily on their product range, shopping experience and value proposition. They offer their customers clear information and products that will help them to make responsible choices. Customers have responded particularly well to products which help them to conserve their resources and therefore save money. This includes insulating their homes, using more energy-efficient electrical, growing their own produce and even repairing their clothes. However they also have an expectation that they will do the right thing on their behalf in respect of social and environmental issues.

Homebase conduct regular research which is dedicated to understanding and responding to customers’ views. This includes mystery shopper visits, exit surveys and customer listening groups. One key customer satisfaction measure for Argos is ‘trustworthiness’ (based on choice, value and convenience) and this year seventy five percentage of customers associated Argos with this description (vs 76% last year). For Homebase an online survey across 10 product categories each month measures customer satisfaction and the average score for the year was 77% (vs 74% last year).

The efficiency benefits they have achieved as a result of their CR activities are helping to keep costs as low as possible across the business.

In their Financial Services business, they remain committed to adhering to their responsible lending policy, and continue their focus on treating their customers fairly, including refining the tools they use to measure this. Their Credit Union Schools project gives them an exciting opportunity to support the development of financial capability amongst young people.

The Group had 33,966 ordinary shareholders at 28 February 2009, comprising a mix of corporations and individuals.

Home Retail Group, as the UK’s leading home and general merchandise retailer will continue to demonstrate clearly its competitive advantage and its strong financial position.

Product Development Process

New product development process (PDP) is the process by which a new product is launched into the market which involves its complete development from its design to market analysis. The processes involved in product development process are idea generation, product design, engineering, market research and market analysis. Usually new product development process is the first stage in generating and commercializing new products within the overall strategic process of product life cycle management used to maintain its market share.

Lean in Product Development

Applying lean in product development process requires optimizing the growth of knowledge about the product, its customer and its manufacturing process. The process of developing process is the integration of knowledge growth and flow. Many companies like Toyota and others have developed a product development process that maximizes the knowledge growth at reduced lead-times. Lean product development consist of a lot of connected techniques and tools like supplier involvement, cross-functional teams, concurrent engineering, integration of various functional aspects of each project, the use of a heavyweight team structure, and strategic management of each development project. But a company cannot simply achieve lean product development by implementing some of these techniques. A successful move toward lean product development needs approaching these connected techniques as elements of a coherent whole A capable product development process is better equipped to handle redirection and interrupts from its market, customer, company and technical issues. It is important for every company to see how rapid cycles of learning with concurrent development can develop a product with greater flexibility and market potential while reducing risk. Every company has to apply this knowledge of product and process. Applying lean techniques like value stream mapping in the product development process identifies the waste in the process and create lean product development value stream. This value stream mapping specifically deals with complexities inherent in product development process. This enables easy mapping of flow of knowledge as it moves through independent work streams. It can track the progress of design that resides in multiple locations simultaneously. It can capture knowledge work and map projects over long lead times. Because of these complexities value stream mapping is a more powerful tool in product development process than it has been in manufacturing. (http://www.design-for-lean.com/leanproddevel.html )

Application of Lean in Product Development Cycle

The lean initiatives were initially applied to manufacturing the manufacturing shop floor side and not to planning. But if we can drive the lean concepts to product development process it is coming to production planning and comes to product design. When lean is applied to product development process the benefits are more when compared to manufacturing shop floor. For example a mistake in design can lead to more loss than we make a mistake in manufacturing environment. This is because if there is a mistake in design and if it is manufactured continuously it can make consistent loss to the company. . The further up the product lifecycle, the bigger the benefits you get. So there is no surprise that companies are looking to take a lean step forward that is into product development. But product development is different from supply chain and production process and both involves standardized work this does not happen in product development process. The product development process goes in hand with the product life cycle management this is because product – development, lean requires data management. This means understanding of data is very important to get a better handle on data, to ensure it is the right data etc. Therefore we can link the product cycle management to IT system for managing data to an IT system to help manage the processes that are sitting on top of those data. (http://www3.interscience.wiley.com/journal/119217128/abstract?CRETRY=1&SRETRY=0 )

Product Development as a Lean System

This section actually starts with a question how to implement lean in product development. It should start with investigation of lean initiatives of supply chain and manufacturing in early product development process and don’t just develop a product in isolation and take it to production. It is also very important of include process like tool management, manufacturing process definitions, management, safety issues etc. But if we have quality problems and have a lot defects it is very difficult to run lean line. It is also very important to have do tools like DFM (design for manufacturability) before starting new product development it take cares all processes in manufacturing. During a new product development and DFM the following questions are always raised:

Is the new product part of an existing lean family or is it a new lean product family? And if it is an existing product does it requires new value streams?

Does the existing value streams need to be modified, divided or modified?

Does this product requires new tools and has quick changeovers is taken cared as part of the tooling selection or design process?

If new suppliers are needed? Are they qualified for lean deliveries?

Is Pokayoke or mistake proofing taken cared wherever possible in the product development process for upstreaming manufacturing processes?

A company trying to implement lean initiatives in their product development processes should ask the above questions. When lean is implemented properly in the factory the factory talks to u its self evident when there is a problem and in product development also we need the same.

(http://www3.interscience.wiley.com/journal/119217128/abstract?CRETRY=1&SRETRY=0 )

According to Aras Corp., an enterprise PLM system that supports lean initiatives includes:

Process Structure

System has to define product development phases, milestones and deliverables in formats that accommodate the many complications of the business. Processes that are template driven becomes the working version of a new product development program are important to both standardization and productivity.

Visual Management

System should have the ability to see the progress and status of product programs as they travel through product development process. Very clear visual monitoring and measurements are required in eliminating waste due to misinformation and duplicated tasks.

Knowledge Management

System should have the ability to gather, store, sort, and easily retrievable product information in a comprehensive context.

Process Flexibility

Ability to System should have the ability to smoothly alter the business processes and information relationships to quickly adapt to business conditions.

Internet-Based

Web enables easy communication, collaboration and coordination among the related systems without the limitations when compared to existing systems.

Conclusion to Lean Product Development Process

If lean product development is implemented it definitely promises to improve the competitive position of the company. If lean is practised and implemented properly it promises to give faster product development with fewer engineering hours, improved manufacturability of products, higher quality products, fewer production start-up problems, and faster time to market. And definitely it will win the market success.

Issues Associated with Lean

Employee Related Issues

Response of people will be different when we try to implement lean in the firm. Some may try resist it due reasons like operator balancing and takt time etc. Therefore subsequent training on lean both paid and unpaid has to be provided to all employees. People resisting the change has to be called separately and talked about the importance of lean.

Management Commitment

Management commitment is very important in implementation of lean. continuous improvement in improving lean methods is the organisations primary toll in pursuing its strategic objective. The senior management staff should have a good idea about lean and its benefits.

Supplier Related Issues

Supplier development in association with lean principles is key factor in the successful implementation of lean practises. If the supply chain is weak in developing suppliers it will surely affect the lean implementation and delivery commitments.

Lean software development is a translation of Lean manufacturing and Lean IT principles and practices to the software development domain. Adapted from the Toyota Production System, a pro-lean subculture is emerging from within the Agile community. The problems of the software development planet are responsible for most of the project failures that force managements worldwide to put more rigid processes in place to ensure compliance. More stringent processes at each stage are making the whole process a “Concrete-Life jacket”. By using Lean Production/Manufacturing principles not only quality concerns and other issues can be resolved, but also a continuous improvement cycle can be built in to the process. This can help in improving the quality of the software solutions/products each time a new software solution/product is built.

The problem with the conventional software development approach lies in the assumption that customer requirements are static and can be defined by a predetermined system. Because requirements do change, and change frequently, throughout the life of most systems, they cannot be adequately fulfilled by a rigid design. “Do It Right” has also been misinterpreted as “don’t allow changes”. If the changes are not allowed customers are not satisfied. If the changes are allowed the company will have problems in delivering the software in compliance with the project base line.

At large the Software development firms still follow the traditional “control and command” style in decision-making concerning the projects. Every time a decision has to be made it has to come all the way from the top of the project organization structure. This method actually increases the lead-time and makes the whole process rigid and slow.

Holding the project scope to exactly what was env