Thanks for joining the Thrift Retailer blog, where we talk all things thrift. Welcome to today's episode about value stream mapping, or understanding the flow of goods through your facility.
The game is often won or lost in thrift, in the back room, working with all those random bags and boxes of stuff.
This is true no matter the size and scale of the business. I would argue that single-unit operators should be even more mindful of the cost and quality of production. Actually, there is so much uniqueness to each thrift store, one size doesn't fit all.
The first step in process improvement is visualizing and understanding how things are really being done now.
Powerful tools can be found in the book Learning to See, value stream mapping to create value by Mike Rother and John Shook. It is designed as a workbook of sorts for factory production management. In a factory, raw materials and components come in one end and finished products come out the other. That's an oversimplification, but you get the idea.
In thrift, it's raw donations. Raw materials and components become an asset and ongoing expense as soon as they are owned by the facility. Communication between departments helps or hurts productivity.
Having had the good fortune to visit numerous manufacturing facilities through the years, I noticed many parallels between their processes and thrift production. Finished goods that have not been sold, add capacity to sell but are essentially locked up money until they are sold and gone. They are nearly one-to-one parallels.
In both worlds, anything taking up space in a facility is an asset, and an expense. In thrift invariably some are just an expense.
Value stream mapping starts with a visual representation of how things are currently done. Diving deeply and honestly into current systems and processes sets the foundation for future improvements.
Even an undefined, Adhoc process is a process.
My favorite way to map the current state is to hold an event that involves everyone connected with a process. Especially those doing the work every day. We start with a long piece of butcher block paper taped on a wall in the workspace and a few sharpies.
The team doing work in the area under discussion help draw out the actual workflow for all of the various items that come through their area.
Having connected departments involved helps add detail to how different areas fit together.
When judgment is held at bay for a while, it’s amazing how detailed the map can become. Questions have to be restricted to understanding, not judging.
This has nothing to do with getting people to work harder.
One of the most challenging parts of an event like this is sacred cows. Everything from institutional to individual employees. They all have to be put out to pasture. If an outdated company policy or process comes to light, abolish it right there. If an employee can’t explain why the current system is better than a proposed new one, then the new one deserves a chance.
Common issues that are uncovered:
Intake processes not matched up with production departments
Production capacity not matched up with merchandising capacity
Unclear goals
Clutter
Travel paths crisscrossing
Goods moving past processing and then back
Staff not trained or empowered
Un-clear systems for one-offs and unusual items
Storing obvious salvage
Too many hands on one thing
Indecisiveness
How it’s “always been done” can look almost silly when drawn out on a wall.
Improvements can become self-evident even as the current state is drawn out and discussed.
Unique one-off processes or habits also come to light at these events.
A few examples from my experiences:
We had a policy in shoes against doing more than a superficial cleanup. One store had a special needs employee that was a master of bringing well-worn shoes back from the dead. He uniquely added value. At that store, we changed the rule.
Another had a flex production station. One day it might be shoes, then books, maybe seasonal or even overflow textiles. I hated it because I felt the changeover labor wasn’t accounted for. I’m generally a believer in each process having dedicated space. A sacred cow of mine.
After some hard questions on both sides, we focused on developing efficient changeover processes. We also instituted some rules behind changeovers with some guardrails. For example whatever the setup, that was the setup for at least a full day.
It worked so well we expanded the idea to other stores.
At another, we had a lot of issues with poor quality goods making it to the sales floor. At an event, a producer pointed out that their lighting was poor, compared to the sales floor. It was one of those “aha” moments as soon as an employee pointed it out. We added lighting that matched intensity and spectrum with the sales floor. We also painted the dingy grey walls bright white. Quality immediately improved, and sales jumped. It also became a more pleasant place to work.
I don’t even know the number of times a result was a new piece of equipment that saved time. Often they were as simple as a pallet jack or replacing worn-out rolling racks, upgraded pricing tools, new or better bins for the donation area, and so on. It’s also a way to signal that management is putting money where its mouth is.
Improving the work environment, and tools is key to long-term improvements.
Mapping will naturally lead to a lively discussion of different and better ways to do things. Then some real-life moving stuff around happens to test ideas about what a 2.0 version looks like develops. Then more discussion ensues.
I have spent an hour discussing and testing the best place for a trash can. I love that kind of passion, that means people care. Frankly, employees want control over their workspace and often know how to make their work processes easier. They just need a vehicle to express and test their ideas. They aren’t all viable, but more than enough will make a difference.
The key ingredient that makes or breaks this kind of event is humble, listening management that focuses on facilitating. Default to yes whenever possible.
The core question to the whole process is, who and what adds value?
Accepting a donation.
Preparing an item for the sales floor, and production.
Pricing an item so customers know what we are asking.
Merchandising on the sales floor in a way that is appealing and easy for a customer to shop.
Someone, or something, to complete a purchase.
Equipment that makes processes quicker and easier.
That’s all that adds value. Take any one of those out and the chain breaks.
Six things that subtract value.
1. Waiting is the biggest invisible value subtractor until you see it. That’s the essence of the book. Minimize material wait times. It is not about minimizing labor or equipment downtime.
2. Overproducing in thrift can be a net cost as well. It took me a long time to accept this idea, as I tend to side with the more is better crowd. One of my key mantras is keeping a sales floor fresh every day with a steady stream of goods. But more isn’t always better. In thrift, this often has to be fine-tuned.
In manufacturing, it’s tempting to keep a million-dollar machine operating. Well, because it cost a million dollars. But if it’s producing a component or item that is already in abundant supply, it’s essentially eating money rather than producing it.
Sometimes a thrift category is overstocked for available space and customer demand. In those cases continuing to produce generates expense rather than revenue. If dishes are full to overflowing and everything is current, and good quality, it’s time to stop producing dishes for a while.
3. Distance between operations can be a major cumulative factor in the cost of getting goods to the sales floor.
4. A percentage of most donations is not sellable. Storing without sorting it amounts to storing salvage.
5. The unique thrift challenge is that we can’t cut off the flow of most goods coming into donations. Dishes can be a good example. If there is a dependable stream coming in, there is no point clogging up a facility holding this kind of stuff to sell later. Make the tough call, pay it forward to another operation, or salvage.
We are able to work with another, not-for-profit that helps people specifically in need of furniture and household goods. We have honored the intent of the donor, and our ethos, and kept things out of landfills. They are a great partner when we need to pay things forward.
6. Merchandised, unsold goods that were cleaned, priced, and put on the sales floor that doesn't sell are also value subtractors. Labor and sales floor real estate was dedicated to these items that did not generate a sale. This is partly a cost of doing business. Trained knowledgeable production staff helps keep this to a reasonable level.
Sell the good stuff, and let the rest go.
Today’s Quote: