Learn how leading retailers are applying Lean Six Sigma to improve the customer experience. The webinar will cover “Five Points of Transition” a consumer goes through in a retail environment and how those five transition points can be optimized for efficiency and improved customer experience. How does your company rate when it comes to the customer experience? Find out how well your company is performing and benchmark with other retailers.

1. Leveraging Lean Store Operations to Improve the Customer Experience July 23, 2009

2. Agenda Introduction What is Lean Retail The Current Store Experience The 5 Transition Points Improving Store Experience Case Studies Getting Started Questions 2 © 2008 Guidon Performance Solutions, LLC. All rights reserved. Guidon Performance Solutions is a licensee of LeanSigma®, a service mark of TBM Consulting Group © 2009 Guidon Performance Solutions, LLC. All rights reserved. Guidon Performance Solutions is a licensee of LeanSigma®, a service mark of TBM Consulting Group.

4. Co-founder of Guidon Performance Solutions – the pioneer in applying LeanSigma® in non-industrial and non-traditional companies

5. Client experience in retail, healthcare, financial services, telecommunications and government

7. Why Lean Retail? Consumers are more demanding than ever More choice… lower cost… better quality Higher Expectations Newness… innovation… product interrelationships Globalization Brand migration… accelerating trend lifecycles Brand & SKU Proliferation Private label… generics… multi-brand… segmentation The pace of change requires new thinking 5 © 2009 Guidon Performance Solutions, LLC. All rights reserved. Guidon Performance Solutions is a licensee of LeanSigma®, a service mark of TBM Consulting Group.

8. What does the customer value? The key is to reduce processes and effort to “core value” 6 Tesco found that it took 319 days to perform 2 hours of value creating effort for the end to end process of manufacturing and selling a cola product. © 2009 Guidon Performance Solutions, LLC. All rights reserved. Guidon Performance Solutions is a licensee of LeanSigma®, a service mark of TBM Consulting Group.

10. Review & sign paperwork

11. Credit card imprint

12. Receive rental contract

13. Receive car assignmentLocate car Drive to exit From gate to bus Take bus to car Drive to exit Traditional Car Rental Process Hertz Gold 7 © 2009 Guidon Performance Solutions, LLC. All rights reserved. Guidon Performance Solutions is a licensee of LeanSigma®, a service mark of TBM Consulting Group.

14. LEAN is all about identifying and eliminating waste Over Producing Waste is seen differently in LEAN… One of the stumbling blocks to LEAN is understanding the concept of waste. Traditionally waste has been viewed as an object. It is very easy to envision a barrel of scrap and identify it as waste. In LEAN thinking the term waste actually refers not to the physical material but rather the relationship of the resource to the end customer. Over Processing Work In Process Errors & Rework Transport Waiting Excess Motion In LEAN, waste is measured in consumption of resources – time and capital 8 © 2009 Guidon Performance Solutions, LLC. All rights reserved. Guidon Performance Solutions is a licensee of LeanSigma®, a service mark of TBM Consulting Group.

15. Waste in Retail Stores 9 Over Producing Over Processing Work In Process Wrong price Planograms incorrect Category optimization Packaging Repack Backroom PUSH Backroom storage Left over seasonal stock Errors & Rework Transport Waiting Excess Motion It’s all about core value…. © 2009 Guidon Performance Solutions, LLC. All rights reserved. Guidon Performance Solutions is a licensee of LeanSigma®, a service mark of TBM Consulting Group.

16. Current Store Experience What’s the problem with the retail shopping experience? Product proliferation and duplication Product complexity and change Confusing promotions Ineffective signage and excessive clutter Products hard to find or out of stock Poor service Long lines What are the effects? High levels of consumer stress Procrastination Reduced shopping frequency and duration Low purchase conversion rates 10 © 2009 Guidon Performance Solutions, LLC. All rights reserved. Guidon Performance Solutions is a licensee of LeanSigma®, a service mark of TBM Consulting Group.

17. Five Transition Points of the Customer Experience © 2009 Guidon Performance Solutions, LLC. All rights reserved. Guidon Performance Solutions is a licensee of LeanSigma®, a service mark of TBM Consulting Group. 11 Enter Seek Find Select Transact

19. Waiting

21. Excess Inventory

22. Motion

24. Excess Motion

25. Waiting

27. Defects

28. Transportation

30. Waiting

31. Motion

32. Over-processingTransact

33. Improving the Store Experience “The secret is in the dirt.” -Ben Hogan Your most powerful competitive advantages are where the work gets done 13 © 2009 Guidon Performance Solutions, LLC. All rights reserved. Guidon Performance Solutions is a licensee of LeanSigma®, a service mark of TBM Consulting Group.

34. Results for Early Adopters Inventory Turns 5-7 Lead Time 30%+ Net Margin 20%+ Comparable Store Sales 10%+ Full Price Sell Through 65%+ © 2009 Guidon Performance Solutions, LLC. All rights reserved. Guidon Performance Solutions is a licensee of LeanSigma®, a service mark of TBM Consulting Group. 14

35. Case Study – A Breakthrough for Car Buyers 15 © 2009 Guidon Performance Solutions, LLC. All rights reserved. Guidon Performance Solutions is a licensee of LeanSigma®, a service mark of TBM Consulting Group.

36. A new car buying experience A national chain of Auto Retailers Innovators in the Car Buying Process Car Selection Pricing Financing Customer Experience Continuing to improve their process to better serve their customers using Lean Retail © 2009 Guidon Performance Solutions, LLC. All rights reserved. Guidon Performance Solutions is a licensee of LeanSigma®, a service mark of TBM Consulting Group. 16

37. The Customer Buying Experience This company created a value stream to understand the customer buying experience from beginning to end Team wanted to understand what was occurring from the time a customer came to a store until they left the location with the car – both customer facing and “back room” Their current process was effective and had good feedback from customers – but could be better © 2009 Guidon Performance Solutions, LLC. All rights reserved. Guidon Performance Solutions is a licensee of LeanSigma®, a service mark of TBM Consulting Group. 17

38. Lean Retail – Areas of Focus Inventory Selection and Management Improved car transfer process Dealer setup and appraisal process Alignment of Detailing, transfer, and Business Office Activities Store Operations Sales Manager Effectiveness Improved the Sales process across the stores Reduced the time necessary for appraisals Technology improvements Improved Business Office Process © 2009 Guidon Performance Solutions, LLC. All rights reserved. Guidon Performance Solutions is a licensee of LeanSigma®, a service mark of TBM Consulting Group. 18

39. Car Buying Results Customer Service Improved time to move inventory to selling point by 50%, which has the potential savings of $7.8 million in increased profits Reduction in Customer Sales process in store to as fast as fast as 60 minutes Cost Savings Reduction in inventory handling costs – reduced cost to move car resulting in conservative estimate of $1 million dollars Consolidation in some Business Office Functions resulting in cycle time improvement of 35% and lead time reduction of 65% Associate Satisfaction Clear linkage to customer for each process Resources freed from non-value process to focus on customer – previously 35% of Sales Managers time was customer focused; this was changed to over 75% of the time is with their Customers © 2009 Guidon Performance Solutions, LLC. All rights reserved. Guidon Performance Solutions is a licensee of LeanSigma®, a service mark of TBM Consulting Group. 19

40. Case Study – Retail Pharmacy © 2009 Guidon Performance Solutions, LLC. All rights reserved. Guidon Performance Solutions is a licensee of LeanSigma®, a service mark of TBM Consulting Group. 20

41. Background The retailer recognized their customer feedback about the transaction process was poor – lagging competitors by a significant amount They chartered an initiative using Lean and Six Sigma tools to study the check-out process and find waste and defects in the process that hindered the customer The data was compelling and the team is now working on implementing solutions © 2009 Guidon Performance Solutions, LLC. All rights reserved. Guidon Performance Solutions is a licensee of LeanSigma®, a service mark of TBM Consulting Group. 21

43. How long can I actually shop if I need to leave in 5 minutes?

44. Why did the person who got in line after me get helped first?

47. Customer searches for Loyalty Card

48. Must lookup Loyalty Card by phone number

49. Items cannot all be staged at the same time

50. Customer searching for payment method/exact change

51. Cashier or system delays in processing credit/debit

53. Customer returning or exchanging merchandise

54. Customer cannot find Loyalty Card (phone lookup is not successful)

55. Customer inquires about price of item requiring validation

56. Call to Management for assistance (issue resolution) or authorization

57. Customer leaves mid-transaction to gather an additional item

58. Management called for change

59. Customer is issued a Rain Check after substitution offers are not accepted

61. Lawn Chair Larry "If you think you can, or think you can't, you're right." --Henry Ford “Lawn Chair” Larry Walker, 1982 © 2008 Guidon Performance Solutions, LLC. All rights reserved. Guidon Performance Solutions is a licensee of LeanSigma®, a service mark of TBM Consulting Group. 26 © 2009 Guidon Performance Solutions, LLC. All rights reserved. Guidon Performance Solutions is a licensee of LeanSigma®, a service mark of TBM Consulting Group.

62. Questions? © 2008 Guidon Performance Solutions, LLC. All rights reserved. Guidon Performance Solutions is a licensee of LeanSigma®, a service mark of TBM Consulting Group. 27 © 2009 Guidon Performance Solutions, LLC. All rights reserved. Guidon Performance Solutions is a licensee of LeanSigma®, a service mark of TBM Consulting Group.

63. Thank You Guidon Performance Solutions 866-986-4414 or 480-986-4414 contact@guidonps.com www.guidonps.com © 2008 Guidon Performance Solutions, LLC. All rights reserved. Guidon Performance Solutions is a licensee of LeanSigma®, a service mark of TBM Consulting Group. 28 © 2009 Guidon Performance Solutions, LLC. All rights reserved. Guidon Performance Solutions is a licensee of LeanSigma®, a service mark of TBM Consulting Group.