Kmart’s 25,000 team members serve an average of 2.5 million customers each week in more than 190 stores throughout Australia and New Zealand. It’s one of Australia’s leading discount department stores, selling merchandise from home entertainment goods to kitchenware, cosmetics and clothing. The company has a huge and complex distribution network in Australia, with distribution centres in Melbourne (head office) Perth, Brisbane and Sydney.

Project statistics

Project challenge

The company wanted to achieve system and operational improvements in its national network including new methods of packing and distributions as well as improving inventory management.

Location

Australia & New Zealand

Requirements

Kmart required several initiatives based on visualisation and standardisation to improve logistics, staff efficiencies and eliminate waste. Key areas of focus involved picking and packing areas, utilising equipment and managing changeover and cluster lines.

Approach

Vative’s certified Lean training programs were used extensively, along with internationally certified Six-Sigma Green Belt training. A number of formal project teams then implemented major Lean projects to reduce internal process waste, improve utilisation of resources and enhance key metrics around quality, cost and delivery. The goal of every project was to make the entire workforce more aware of its responsibility in achieving business gains, rather than relying on specialists to bring about operational and business improvements.

Result

Using Lean and Six-Sigma programs, Kmart was able to transition to a more modern system with a best practice distribution network to manage growing demand. Combined with Vative’s supply chain and logistics expertise, Kmart’s Lean project teams and their entire distribution workforce who took part in the continuous improvement programs, Kmart achieved more than $3 million in savings. Their achievements included:

  • Lost sales were cut by 80 per cent due to earlier stock availability in the system
  • Email traffic enquiries from head office dropped by 90 per cent
  • Inventory holdings in distribution centres dropped by 30 per cent due to greater stock turn
  • A $55,000 investment delivered savings of approximately $480,000

Completion

It was the power of number at work which accomplished extraordinary results for this huge Australian retailer. While there were many tangible qualitative and quantitative changes, the intangible changes in the workforce were just as critical in bringing everyone together with the mindset of continuous improvement. Kmart continues on its Lean journey with a workforce that is integrated, mobilised and in alignment with the company’s overall business plan.