I’ve always been curious about the term “lean” as it pertains to lean manufacturing or lean production. The engineer Taiichi Ohno was credited with coming up with the idea as a means of improving production after World War II. His philosophy was one that focused on eliminating waste, reducing inventory and improving productivity. As the word “lean” would indicate, the concept emphasizes getting rid of redundant or needless processes, keeping in mind the consumer who will ultimately be the one that uses the end product or service.
Lean production has been an integral element of manufacturing throughout the world and has been behind innumerable improvements in both productivity and quality on a global basis. While visiting the World Floor Covering Association (WFCA) recently, I had the opportunity to meet Phil Zolan, who had just been named executive director of the Floor Covering Business to Business Association (FCB2B).
After talking to Phil, who has an extensive background in lean programs, I was able to not only get a better handle on what lean is actually about, but how it’s really a universal concept that applies to just about everything—even floor covering retailing.
As a result we invited Phil to appear on TalkFloor.com, and the following are some excerpts from that conversation. You can watch the three-part interview in its entirety by clicking on the archives.
TF: Define “lean” for us. What does “lean” mean?
Zolan: Lean is all about taking unnecessary steps and non-value-added steps out of the process. An example would be if I have something that has to get approved and it is routed around to collect five approval signatures, which is a common practice in our industry. One would look at the process and ask, Why five signatures? Do the fourth or the fifth or even the third really add any value to the process or is it just the way we’ve always done it?
One needs to look at the processes and ask, what are the value-added steps and what are the non-value-added steps? How do I take out the non-value-added ones to make things quicker and less expensive?
TF: I first heard about “lean” as it relates to manufacturing, but I understand the concept really applies to a great deal more than just manufacturing and production; it applies to virtually every part of a company and the functions it undertakes. Is that correct?
Zolan: Absolutely. It can take place in manufacturing wherever it involves physical steps of physical movement—where yarn is moved from point A to point B and you creel it up. Do I have to take it off one pallet and place it on a different one because one won’t fit down a certain aisle? Why not put it on the right-sized pallet to begin with? It’s looking at every step of the process and watching it carefully.
TF: So then it’s fair to say that lean has changed the inside of many manufacturing facilities operating in floor covering?
Zolan: If you think about where the industry has been over the last 50 years—even over the last 20 years—there have been so many improvements, so many areas that have been streamlined, and the bringing of plants together. Is it more efficient to make yarn in one building, twist and heat set it in another building, tuft it in a third building and perhaps dye and coat it in a fourth building? That really represents a number of non-value-added steps that are not adding value to the product.
The more that can be done without those additional steps—which are not adding any value but rather adding cost and unnecessary time to the process—the better it is for the consumer. We have seen the industry consolidating around this concept for a long time.
TF: The lean concept is certainly one that is tried and true and has been practiced widely by many companies on a global basis. I suspect it’s a concept that just about every business, including floor covering retailers, can adopt and as a result produce positive results.
Zolan: It’s the kind of function that requires a manager if they are going to do it deliberately, understanding how business is currently being done and how the people involved in the process have achieved a certain level of comfort with the process. But one really has to take themselves out of the process and be extremely independent, a fly on the wall and really watch the process from a very practical, impartial standpoint and say, “Is this process adding value in my business?”
TF: Lean got its start in the manufacturing process and is a natural for materials handling, but it seems that it would fit equally well in a back office environment where I suspect many non-productive processes take place. For a floor covering retailer, is FCB2B a step toward a leaner, more productive retail operation?
Zolan: FCB2B is all about doing work electronically and transmitting it electronically instead of picking up the phone, placing an order, hearing the answer back and making sure you placed it correctly; then sending a purchase order physically through the mail, taking it out of your system and printing it. Then once the material is received, an invoice on paper is received from the supplier, which has to be keyed into the retailer’s system. Then a check has to be spit back out, which has to be put in an envelope and mailed to the supplier.
Think about all of those steps. They have been with us for a very long time. But are they adding value to the process? Today we are in an electronic world. The flooring industry is catching up to that. It is behind and that’s what the whole FCB2B program is all about—catching up.
TF: FCB2B has been with us for 11 years, but it doesn’t seem to have been accepted as much as it might.
Zolan: It’s interesting. It’s like anchovies: some people really like it and some people really don’t. From what I have been able to see, most of the retailers that don’t like it don’t understand it. To many it sounds too techie, it sounds computery. They say, “I’m not a computer guy; my business isn’t computer-oriented.”
The ones that implement FCB2B and do it successfully find it’s not that difficult, and it makes their lives a lot easier. You can process and invoice which would normally get handled at a rate of three to five per hour if you use the phone, but would require only a few minutes using B2B. Also with B2B things don’t get lost, transposition errors don’t happen, you don’t order gray and get blue. It takes a great deal of the guesswork and a lot of unnecessary, non-valued-added elements out of the process.
TF: I also understand there are many retailers that use industry-specific software from one provider or another but do not take advantage of the B2B option. Is that correct?
Zolan: That surprised me as well, and as a result working with those retailers has become one of our main focuses. Many retailers had a bad experience five or six years ago, they installed industry-specific software, but perhaps many suppliers didn’t have their act together and the information they received wasn’t the best and the clearest, and it left them with a bad taste in their mouths. They use their software to do scheduling and payroll and possibly inventory control, but not B2B.
TF: Many retailers today appear to be in a growth mode. They appear to be anxious to learn best practices and improve their operations. It would appear that adopting industry-specific software and using its full array of tools including FCB2B would be an early step these growth-mode retailers might consider.
Zolan: Absolutely. If you think of industry-specific software, it does virtually everything for your business. Everything from job scheduling, inventory control, payroll and pricing—it can price product and price the entire sales floor. From those tasks all the way to receiving invoices, paying bills, submitting purchase orders and receiving advance shipping notices, which can be matched upon receiving the shipment, helping to assure the retailer that they got what they ordered and it’s all in the same system.
TF: What is it going to take to achieve critical mass for FCB2B in this industry?
Zolan: What we are focusing on today is what we are calling “the significant few.” Our efforts are aimed at getting the top 200 to 250 dealers in the floor covering industry onboard with FCB2B. That would represent a great majority of sales in the flooring industry. The suppliers are onboard, their computer systems can talk to retailers’ industry-specific software and the industry-specific software is very keen on making sure that transaction goes smoothly, because it makes the software look better. Our focus is on getting the top 250 to implement it in a very clean and very efficient way.
TF: Of the top 250 dealers, how many would you say have not yet made the switch to FCB2B?
Zolan: I would say at this point definitely more than half have not made the switch. They have industry-specific software, but they are not doing B2B. The numbers I have seen in the last few weeks indicate that amount of business going through is still very small.
TF: Discussing the elimination of waste and non-value-added steps from a retailer’s everyday transactions, on average what would you estimate a retailer could save by adopting FCB2B?
Zolan: If you look at a manual transaction and follow it all the way through the process we have seen numbers anywhere from $6 to $7 per purchase order. If a retailer processes the same transactions via B2B, we are looking at somewhere between $0.25 to $0.50 per purchase order. That represents a huge payback. So a retailer can take $6, multiply that by the number of invoices they process, and find that it represents extremely sizable savings. It could be hard cost or soft savings, which means producing more time for the retailer to accomplish other value-added factors for the company. Any way you look at it, it’s a huge number.
Editor’s Note: To watch the full three-part interview with Phil Zolan, visit www.floortrendsmag.com/videos, and search his name under the “Search for Videos” section. Alternatively, scroll down to the Most Recent Videos and click back by pressing “Load More” until the videos posted under the title “FCB2B’s Phil Zolan on Lean Retailing” appear.
We’d love to hear your feedback on this and other conversations you’ve watched or listened to on the site, along with any ideas you have for people and companies you’d like to see interviewed. You can contact either Dave Foster at email@example.com or Matthew Spieler at firstname.lastname@example.org.