Tuesday, July 16, 2013

I see batches: CVS Delivery

There's a CVS on my block that gets deliveries in a big batch once a week on Mondays. Here's today's. A fifty-five foot truck parks on the street and the trailer's lift loader drops pallet after pallet onto the sidewalk. It blocks the street for hours as people and hi-los wait for each other to pass and the crew sort the boxes to check them in.

Every other shop in my neighborhood gets these kinds of deliveries multiple times a week, some multiple times a day. The small batch deleveries take minutes, not hours, since they can be tossed off the back of a truck onto a hand cart and wheeled directly into the store to be checked in immediately by the regular crew, not a special Mondays-only check-in team.

These are CVS's operational problems, which are painful enough to contemplate. The deeper problem, to me, happens inside the shop with the customers. CVS's shelves always look half empty. That's because 50% of the time I visit the week is half done and the shelves are picked over, waiting till next Monday's delivery.

Bigger batches lead to more out of stocks. This is one of Lean's counter-intuitive learnings. Its remedy: order less. They key is to order less more frequently, so you can respond to demand. Do that and you'll be in stock more often.

Don't frequent deliveries cost more? Maybe, in some cases. (With all the extra equipment and check in time I see down the street each week at CVS I'm pretty sure the answer is "No" for them.) But ignore cost for a moment. More frequent deliveries mean items are in stock more often. That means you make more sales. In other words, more frequent deliveries increase sales. This lean thing is not just powerful for improving process and the bottom line, but for improving sales and the top line, too.

No comments: