MBOE recap: Lean in the grocery aisle

Some processes in our daily lives we easily take for granted – grocery shopping, for example. Our Master of Business Operational Excellence students in a recent visit to the Dublin, Ohio, Giant Eagle location saw firsthand that the grocery business is serious business.

Giant Eagle
Giant Eagle has adjusted its inventory strategy to allow for a closer link between back-room supply and customer demand.

Pittsburgh-based Giant Eagle, a member of the Center for Operational Excellence, has implemented lean principles in its stores to improve cost, efficiency, and customer experience. They call this system the Giant Eagle Business System, or GEBS. The MBOE program is designed to provide students all possible perspectives and experiences for a holistic learning experience, thus we brought them to Giant Eagle to give them yet another example of how a non-manufacturing process has successfully adopted lean principles to its advantage. So what did Giant Eagle implement and what were their gains? Well, first of all, the chain looked at the eight wastes in its processes. They differentiated what is value-added and non-value-added from the customer standpoint. Then they attacked the wastes.

Giant Eagle also addressed the variation in how inventory is stocked and developed a standardized process for that. They looked at the amount of inventory they carry in their back room. Giant Eagle used to operate as a wholesaler who just so happened to sell groceries.  Being wholesalers, their tendency was to buy as much in bulk, so warehouses and back rooms were filled with too many products. To pick the right item, material handlers would need to move or lift a lot of products before they could get down to the one they needed to stock the shelf.

To become lean, Giant Eagle looked closely at the demand, and started ordering only how much was being used. They were also able to convince some of their suppliers to change their packaging to allow only enough quantities of products that can fit their shelves. They increased the frequency of deliveries from their warehouse and, as a result, drastically reduced how much inventory they hold in stores. One glance at the back room and it’s evident that inventory is minimal.

The students got a preview of how lean can be applied in a grocery store to ensure that customers can easily see and get the products they need as they walk around in the aisles.

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