Jim Martin : CEO, Goodwill
Eugene, Oregon Goodwill Adopts a Unique KAIZEN Approach
Jim Martin, CEO of Goodwill Industries headquartered in Eugene, Oregon, is the kind of visionary who brings something very special to KAIZEN. Goodwill organizations are not-for-profits that provide employment for the disabled by collecting recyclable clothing and other household items and re-selling them in a chain of thrift stores.
Using KAIZEN Institute course materials, Martin created a phenomenal KAIZEN system that not only has yielded dramatic improvements in productivity, but has allowed dozens of developmentally disabled individuals to have valuable and meaningful work. In this interview with KAIZEN News, Martin describes this remarkable KAIZEN journey.
How did you get started with KAIZEN at Goodwill?
I had been visiting the more successful Goodwills, and one of the things that I noticed very quickly was that the production areas in the less successful stores were very messy, whereas in the more successful stores they looked like Marine Corps barracks. So we all put our heads together to figure out the best way to improve these rooms, and KAIZEN was clearly the preferred method.
We went about the process – doing one store a week to start off. We took everything out of the back room, washed everything out, washed all the tables, washed all the racks, everything. We weren’t able to make a big capital investment at this point because we were struggling to keep our heads above water, but what we had was clean, and that was probably the first morale booster. When people walked into the back room they could actually see from one side of the room to the other.
How did you know you were on the right track?
There was almost an immediate bump in sales as we “KAIZEN-ed” each production area because we were able to get more products on the floor at a faster rate. We cut down on the time that it took to get merchandise from the donation door to the sales floor.
However, there was a very special area where KAIZEN provided top value. In 2002 we didn’t have any individuals with developmental disabilities working in our retail system. They were working more in contracts and production facilities. Now a majority of the 130 individuals we serve with developmental disabilities work in our mission integrated retail operation.
How was that accomplished?
Well, the KAIZEN model helped us create opportunities where we could utilize the skills of these individuals. For example, we now keep track of how long a piece of clothing has been on the floor by sinking a different colored barb into the seam every week. After four weeks an article is 50% off, and after five we remove it altogether. It’s an important job, and it’s one that we have our developmentally disabled folks, our “referred employees,” doing. You see, we don’t believe in irrelevant “busy work.” If you work for Goodwill, you’re adding value.
We also have referred employees sorting donations in the back room. Thanks to KAIZEN principles, everything is labeled with not only a word, but a picture as well. So if you’re working with somebody who doesn’t have the ability to read, they can sort shoes and books because there’s a picture.
How do these employees fit into your working environment?
They’re Goodwill employees just like everyone else. They play an integral role in our success and it’s worth noting that their punctuality is terrific, their attendance is near perfect, and if we get the rare three inches of snow here in Eugene, I can guarantee you I will have 130 employees show up to work that day.
Has this transformation affected the way you handle donations?
We completely changed the way we handled and processed our donations through the KAIZEN process, and as a result went from a company that received too many donations to one that doesn’t receive enough. We used to have piles of donations in every back room. I remember one day being at our largest store (a former grocery store), and upstairs were a bunch of offices, all of which were filled with donations. That was in 2002 when our store sales were $5.9 million. And now our store sales are, this year they’ll be well over $12 million.
That sounds like a significant improvement in productivity.
Absolutely. What we discovered through KAIZEN was that there’s a direct correlation between sales and how quickly we get the stuff out on the floor. The folks are in your stores because they want to purchase merchandise; you’ve just got to get it out there. Anyway, we experienced an immediate increase in sales and productivity, and then all of a sudden all of the catacombs of our system that had donations packed in the walls and piles and everywhere else, they were all gone. We had no more donations. We were processing what we had coming in the back door, and we were done by 1:00.
As a result of all this, we started opening up donation centers. Now we have nine stores and nine donation centers.
And you’re able to employ more people as well.
Our staff has almost doubled.
How would you summarize the overall impact of KAIZEN?
We took a system that had lots of room for improvement, and we maximized many aspects of that system. For instance, if you walk into our production facility right now and ask somebody, “What’s your goal today?” they can tell you how many racks they have to hang, and the price of certain merchandise. Everybody in our production area has a goal, and their goal is reported, and their performance is measured on that goal.
Using KAIZEN we broke everything down into simple steps, we were able to properly integrate developmentally disabled employees, more than double our sales, and significantly increase our margins. Now our back rooms are really clean facilities, we have new fixtures, and the instruments that we use to maintain that efficiency are a direct result of being able to afford them because we’re more productive. That’s true KAIZEN.
KAIZEN is a process that has really improved our operations, and provided more opportunities for individuals with barriers to employment. We’re grateful to implement it as successfully as we have, but we know we’re not done yet. We continue to “re-KAIZEN,” to look to improve our system every day.
What’s next?
We’re helping to spread the KAIZEN method throughout the Goodwill movement. I continue to provide retail consultations with Goodwills that have opportunities for growth and the principals of KAIZEN are a big part of jump-starting a stagnant retail program. In addition, we have leaders from other Goodwill organizations visit to learn from our methods; and, of course, the teacher always learns as much as the student. We learn lots of valuable lessons from how they implement KAIZEN in their operations.