Staples: Lean Six Sigma

Retail giant Staples Inc. is clearly a company that has mastered market focus and position. When Staples invented the office superstore concept in 1986, it reshaped an entire industry sector. Today, Staples is the world's largest office products company, with 95,000 associates, operations in 27 countries, and global sales of nearly $27 billion.

When Staples decided it needed to improve the quality of its processes and accelerate value through the introduction of Lean Six Sigma, it turned to Accenture.

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In a business environment marked by rapidly changing customer expectations, escalating costs, and emerging new markets, process improvement has never been more important. Staples understands this better than most. Years ago, Staples established a sophisticated Process Excellence Program responsible for driving sustainable process improvements across the company. The program’s formal and disciplined approach to process improvement drew from, among other things, principles of Lean Manufacturing and Kaizen. These process improvement efforts contributed significantly to Staples’ year-over-year ability to meet or exceed sales and earnings goals.

Building on its historical success at eliminating process inefficiencies, Staples set out in early 2006 to do even more to drive process excellence. Its competitive market, combined with the company’s ambitious sales goals, demanded even stronger performance.

Staples knew it needed to grow its top line while keeping its costs in check. This, in turn, called for eliminating non-value-adding steps in its processes, focusing on the right process improvement projects from the start, and realizing value from them more quickly. Staples believed that Lean Six Sigma, which combines principles of both Lean Manufacturing and Six Sigma, would offer the methodology needed to further improve the quality of its processes and accelerate value.

For help in introducing the Lean Six Sigma approach to its operations, Staples turned to Accenture. With deep skills and delivery capabilities in operational strategy, operational excellence and fast innovation and growth, Accenture is uniquely able to help Staples achieve high performance by developing breakthrough insights that unify strategy and execution and by creating lasting shareholder value.

The goal of Lean Six Sigma is straightforward: to reduce the variation in process quality and accelerate the value of process improvements. Lean Six Sigma accomplishes this through a methodology, commonly known by the acronym DMAIC, which guides organizations to Define the process quality issues, Measure current process performance, Analyze root causes of defects, Improve the target processes and Control the improvements to keep processes on the right course.

Within this road map, discreet improvement projects are directed and carried out by individuals—commonly referred to as “green belts” or “black belts,” based on their expertise. Black belts are full time and come from middle levels of the company and are usually assigned a stint of process improvement that lasts two to three years.

Green belts are not as thoroughly trained in the day-to-day mechanics and technical aspects of process improvement. They can come from any level of the company and are charged, primarily, with replication or smaller scoped improvement initiatives.

Resources from Accenture’s Management Consulting Process and Innovation Performance group teamed with Staples’ Process Excellence department to design and integrate Lean Six Sigma into Staples and guide the cultural transformation needed to ensure Lean Six Sigma’s success.

As a first step, Accenture helped Staples understand that identifying and training black and green belts was a necessary, but not sufficient, prerequisite for process improvement. Equally important was identifying and training project sponsors and champions—those leaders charged with shaping and supporting process improvement opportunities across the company. Accenture delivered a suite of training sessions for these process owners, modified to accommodate their busy schedules. This training prepared them for their roles as drivers of process change.

Next, the project team helped Staples identify and select potential projects that were aligned to the company’s business objectives. The goal of this effort was to choose process improvement projects that would be meaningful to sponsors and champions and drive fast and meaningful value.

The team then turned its attention to helping establish the criteria for black belt or green belt recruitment from across the organization, as well as the supporting infrastructure, change management practices, communications and HR policies that would optimally support these individuals in their tenure as process improvers.

With all these elements in place, Accenture launched the first wave of black belt training with 17 participants from Staples’ US operations. Within just a few months, this group had exceeded expectations for process improvements. Since that time, Accenture’s master black belts have completed four more black belt training sessions for more than 50 participants, including representatives from Staples’ Canadian and European operations.

In addition, Accenture has provided green belt training to 50 Staples’ associates and is currently offering its first training program for master black belt candidates within the Staples organization.

With Accenture’s support, Staples is successfully integrating Lean Six Sigma into its operations and culture. As a result, the company is reducing costs by streamlining processes, accelerating value creation and enabling employees to focus on activities that matter most to customers. Lean Six Sigma is also driving revenue by improving the quality of targeted processes and is helping the company achieve its aggressive growth targets, largely by controlling the growth rate of its general and administrative expenses.

Before the implementation of Lean Six Sigma, Staples improved approximately 60 processes per year. In 2008, the company is on track to improve more than 300 processes. Among the successes to date, the company has applied Lean Six Sigma to:

• Rebalance lease negotiations and improve architectural and construction processes—efforts that shaved four weeks off the time needed to open a new store, leading to increase in sales equivalent to eight new stores annual sales.
  
  
• Streamline the item-order cycle and have promotional items arrive at stores closer to sale dates—efforts that freed space (especially in smaller stores) and generated inventory savings of $3.3 million.
  
  
• Reconfigure the loading dock layout, eliminate extra handling of merchandise and establish a “receiving and put away team” within one fulfillment center—efforts that improved On-Time to Due Date performance by 21 percent.
  
  
• Consolidate freight moving from suppliers to Staples’ distribution and fulfillment centers, which achieved 50 percent of the budget reduction stretch goal for the year.

The Lean Six Sigma program has been the impetus for dozens of improvements that, together, have generated tens of millions of dollars in benefit for Staples and produced a 10-fold return on the company’s investment in the process improvement program.

Accenture’s ongoing research reveals that the building blocks of high performance are market focus and position, distinctive capabilities, and a performance anatomy that represents the common culture and mindsets that enable companies to out-execute their competitors. As Staples proves, Lean Six Sigma can make each of these building blocks stronger. A Lean Six Sigma program generates significant savings that allow companies to focus on building and retaining their competitive edge.

Lean Six Sigma enables companies to streamline processes and create capabilities that are hard to replicate. It infuses an organization’s culture with the tools and capability to achieve continual process improvement and high performance.

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