WHERE
The Kontti Recycling Department Stores of the Finnish Red Cross sell only goods donated to the Red Cross, such as clothes, furniture and household items. The decision to establish the chain in its present form was made in autumn 2000 and the operations were started in 2001. In 2006, there were Kontti stores in eight towns throughout Finland and two more stores were to be set up by the end of year 2007. The chain administration is located in Jyväskylä, central Finland.
Peer auditing is a method of learning through comparison and benchmarking
Each store is led by a Kontti manager responsible for its financial result. The store managers report to Director of the Kontti Chain who in turn reports to the Secretary General of the Finnish Red Cross and the Kontti Board.
The Kontti chain employs on average 600 long-term unemployed persons on a part-time basis and 25 permanent staff, in addition to a varying number of trainees and volunteers. The total volume of operations is expected to be approximately 3,500,000 € in 2007.
The Kontti chain was a partner in the EQUAL Development Partnership Response.
WHY
The operating conditions of the Kontti Recycling Department Stores vary around the country, and the general look of the store and operating models are easily deviating into separate directions. There is a need to ensure a uniform model of operations in conformity to the Kontti concept in each unit.
HOW
Peer auditing of operations is a means for the chain administration to maintain uniform practice in different locations, but also to identify good operating models and to spread them within the chain.
The audit of a Kontti store is carried out as a peer audit by three management-level persons from different Kontti units. It is important to have an expert from the chain administration as part of the team. The audit is performed once a year. During the audit, the auditors concentrate on certain parts of operations that have been jointly agreed with the chain administration. For example, in 2006 the audit was focused on presales functions, including warehousing, sorting, pricing, preparing goods for sale and international disaster relief.
The process begins by a discussion between the auditors to ensure that they share a common understanding of the objects of audit. The operating guidelines of the Kontti chain form the basis of the audit. The team makes a list of questions about the objects of audit, such as: “According to which criteria do you select the goods for sales in the store? If in doubt, where does the employee get information to make the choice of saleable items?” Special attention is paid to the requirements set on the processes and how their efficiency has been ensured.
Next, the work management is interviewed to learn how the processes have been organised in the unit. After that, the auditors go round the store, interview employees and make observations. The findings of the shop visit are compared with the conclusions of the management interview. Finally, the audit results and the recommendations for improvement are presented in a written report.
Experiences and improvements
When processes with a lot of local variables are concerned, the auditing can be carried out from the viewpoint of the unit, not that of the chain. For these processes common principles exist, but their application is always unit specific. This is why the Kontti chain has decided to shift the focus of audits from finding errors to identifying good practice examples and to spreading them within the chain. The interview with the work management is a way of recognising the unit’s process models, after which their efficiency is verified during the visit in the store. The audit report presents an evaluation of how well the processes work and what is their applicability in real life, viewed against the basic mission of the Kontti chain. However, learning from mistakes and identifying the deviations from the chain concept are still an important target in auditing.
Peer auditing has been carried out in years 2005 and 2006 in five Kontti stores. The original target of auditing one Kontti unit every second months has not been fulfilled. As yet, auditing has not become an established practice. The chain management makes the decision on where, when, how and by whom the audit will be applied next.
The time required for the auditing is a challenge, because it is away from the basic operative work. Since the distances in Finland are long, travelling is strenuous and expensive. The constant growth of the Kontti chain is another challenge for continuing the auditing practice. A standardised unit structure would be more appropriate for continuous auditing. The audit reports have not included a lot of remarks leading to improvements and learning, so their benefit has been limited in relation to the resources used for auditing. Another challenges are the expertise and attitudes of the auditors, since areas of improvement are often interpreted as negative feedback. There has also been discussion about the overlapping of the different assessment tools, such as self-assessment and external auditing.
To make sure the peer auditors have enough competence, it has been found important to have one permanent member of the audit team present in each audit, authorised by the chain management. Also, it would be best if the objects of audit are such that are in order in the auditors’ own units. However, this is not obligatory, since the audit is also a learning opportunity for the auditors themselves.
Transferability
The method is applicable to an organisation with several branch offices or to a network which aims to establish uniform practice in several locations. It is a prerequisite that the operating guidelines are described and/or laid down with enough detail.
Auditing is suitable to clear, standardised processes, like the department store chain concept, (management of flow of donated goods, price tags, info lighting in stores, etc.). It is not equally well suited to processes with a lot of local variables, such as warehousing and store space, availability of workforce, local co-operation partners, etc.
It is important to get the necessary training and skills for auditing, although the auditors are also learning by doing. In the Kontti chain, an external consultant (Excellence Finland) was used when adopting the method. This was appropriate and can be recommended.
For more information: Finnish Red Cross, Kontti Recycling Department Store Chain, Director Maija Haaranen, maija.haaranen(at)redcross.fi