Six Sigma at Target Corporation

Target Corporation began a unique Six Sigma initiative and rightly named it “6SIGMA@Target” to identify it as their own. Six Sigma is helping Target achieve their mantra “design, innovation, and continuous improvement” a philosophy aimed at delighting guests. In addition to Six Sigma, Target trains employees in a wide array of skills under the continuous improvement umbrella including change management, process improvement, problem solving, setting business goals and objectives, and teambuilding. The 2004 annual report outlines several areas of Target where Six Sigma is benefiting the company:

“Target has also adopted Six Sigma, a disciplined data-driven methodology for measuring performance and improving processes. During 2004, we utilized this approach to drive sales, generate cost savings, increase productivity and improve guest satisfaction. Reflecting our success to-date, we are committed to gaining further efficiencies and improvements in our processes and continue to integrate our Six Sigma approach across the company.”

Target has remained true to growing and integrating Six Sigma across the company. Six Sigma has made its way into many of their business operations including Finance and Accounting, Information Technology, Distribution/Logistics/Supply Chain, and Property Management. In fact, the 2004 Corporate Responsibility Report showcased an environmentally friendly Six Sigma project that identified factors influencing recycle rates, improved upon them, and rolled the project out to additional stores and distribution centers. Leverage is especially powerful in retail where projects at the store level can be rolled out and the savings/income has the potential to be multiplied by the number of stores in the chain.

During the Q & A of the Q3 2005 Target Corporation Earnings Conference Call, Bear Stearns analyst Christine Augustine asked executives for an update on where Target is with some of their supply chain initiatives and specifically mentioned Six Sigma. Gregg W. Steinhafel, President of Target, responded:

“As it relates to supply chain, we have been very focused and continue to be very focused on making supply chain improvements that will improve our overall in-stock rates and improve our speed to market by lowering our lead times…We have been focusing on other initiatives like transitions and rain checks all year. We’ve seen great improvements in both of those areas using Six Sigma tools and methodologies to more carefully analyze and measure our business and make sure that we’re making good sustainable process improvements. So in total it’s about speed to market, in-stocks, and looking at all the aspects of our supply chain to try and become more efficient and deliver better in-stocks on a consistent basis.”

Target is also making improvements that directly impact their guests experience at checkout:

“During 2004, we also implemented improvements in our checkout process to speed guest payment and complete transactions more quickly. In 2005, we will help guests quickly find what they are looking for and will continue to focus on improving our speed at checkout by reducing time spent waiting in line and by assigning every fourth cashier to open another express lane.”

2004 Annual Report