Continuous Improvement Strategies

In times of high competition, rapid development of technology and increasing dynamics of business environments, organizations no longer compete on processes but rather on the ability to continually improve processes. In order to cope with such challenges, a growing number of manufacturing and service organizations is successfully implement­ing lean management systems to achieve continuous improvement of their performance, while terms such as kanban, kaizen, just-in-time (JIT) inventory and performance-based logistics (PBL) have become broadly accepted methods to reduce cost of operations and increase their efficiencies.

The purpose of this research is to provide new insights into how Japanese firms cope with individual change challenges, regain employee motiva­tion, redefine their organizational goal and sustainably strengthen their organizational structure. These insights, based on a clinical study, may be used for future strategy formulation, especially for western firms which enter an evolutionary stage of maturity, surrounded by high competi­tion, market saturation, diverging customer demand and other structural changes in the business environment.

In an attempt to construct a conceptual model of retail innovation, Yahagi (1997: 18) used two analytical frameworks when analysing the historical development of CS: the determination of marketing channel structure and the concept of technological innovation. He introduced the term ‘convenience store system’ to explain the store concepts success with system innovations. It stands for a lean management system that controls the interaction between highly efficient store operation, prod­uct/service development, joint distribution and integrated information system. This term is generally used by other researchers and industry professionals as well, making the business concept of Japanese CS a prime example of achieving a leading position through epoch-making innovations and advanced management styles.

At first glance, the constantly increasing number of convenience stores in Japan suggests a never-ending success story. In 2003, Seven–Eleven Japan had crossed the 10,000 mark making it the first retailer in the world to have 10,000 outlets in one country.¹ Furthermore, data provided by the Japan Franchise Association shows that the industry’s overall sales reached an all-time high sales of 7.9 trillion Yen in 2009.

In an attempt to investigate the market dynamics and productivity of the Japanese Retail Industry, Matsuura and Motohashi (2005) compiled a comparative overview of market entry and exit of establishments by sales form in a five-year period presented in Table 5.1.

The previous chapters examined the business model of Japanese conve­nience stores developed in the past decades and modifications observable increasingly after the turn of the millennium. Although from an evolu­tionary point of view, convenience stores are relatively young partici­pants in the Japanese retail industry compared with traditional formats such as department stores and supermarkets, recent problems of high competition, saturated markets, more complex business environments and increased difficulties in meeting diverse customer demands reflect typical characteristics of the current stage of maturity. The fact that the three largest operators have a market share of over 70 per cent suggests a major shakeout, where many firms were unable to develop and sus­tain sufficient dynamic capabilities to meet the change challenge that became necessary for survival.

A major problem of western companies implementing lean thinking into their operations is often the‘backsliding to old ways of doing’after initial progress, insufficient implementation of know-how or getting stuck at a certain point of progress without providing the basis for sustainability.1 This issue is the subject of much debate in a variety of operations manage-ment literature which proposes different frameworks for how a company can improve and sustain its competitive position through exercising continuous improvement tools. An important challenge for sustain-ing a culture of ongoing change through lean management is not only the development and implementation of problem-solving activities but also to overcome the risk of getting trapped in changing environments. Dynamic capabilities and ambidextrous systems are the result of the con-tinued infusion of tacit knowledge and stable patterns of innovation routines. However, replicating and stabilizing a pattern of certain activ-ities can also lead to inherent structural inertia causing the same set of problems reappearing on a higher level (Schreyögg and Kliesch-Eberl, 2007).