2016 baldrige fithabits case study - the partnership for ... · fithabits is a fictitious baldrige...

2016FitHabits Case Study2016

FitHabits Case Study

Baldrige Performance Excellence ProgramNational Institute of Standards and Technology (NIST) • United States Department of Commerce

July 2016

To obtain Baldrige Program products and services, contact

Baldrige Performance Excellence Program Administration Building, Room A600 100 Bureau Drive, Stop 1020 Gaithersburg, MD 20899-1020

Telephone: (301) 975-2036 Fax: (301) 948-3716 E-mail: [email protected] Web: http://www.nist.gov/baldrige

FitHabits is a fictitious Baldrige Award application prepared for use in the 2016 Malcolm Baldrige National Quality Award Examiner Preparation Course. The fictitious case study organization is an online distributor of unique and high-end activewear clothing and athletic shoes that promotes a customized, high-touch shopping experience for its customers. The case study illustrates the format and general content of an award application. However, since the case study serves primarily as a tool for training examiners to evaluate organizations against the 2015–2016 Baldrige Excellence Framework and its Criteria for Performance Excellence, it may not address all Criteria requirements or demonstrate role-model responses in all Criteria areas. Please refer to the FitHabits Feedback Report to learn how the organization scored and to see its strengths and opportunities for improvement.

This case study is a work of fiction, created and produced for the sole purpose of training regarding the use of the Baldrige Excellence Framework. There is no connection between the fictitious FitHabits and any other organization, named either FitHabits or otherwise. Any resemblance to any specific organization is purely coincidental. The names of several national and government organizations are included to promote the realism of the case study as a training tool, but all data and content about them have been fictionalized, as appropriate; all other organizations cited in the case study are fictitious or have been fictionalized.

The Baldrige Program welcomes your comments on this case study and other Baldrige products and services. Please direct your com-ments to the address above.

BALDRIGE CRITERIA FOR PERFORMANCE EXCELLENCE®, BALDRIGE PERFORMANCE EXCELLENCE PROGRAM®, CRITERIA FOR PERFORMANCE EXCELLENCE®, MALCOLM BALDRIGE NATIONAL QUALITY AWARD®, and PERFORMANCE EXCELLENCE® are federally registered trademarks and service marks of the U.S. Department of Commerce, National Institute of Standards and Technol-ogy. The unauthorized use of these trademarks and service marks is prohibited.

NIST, an agency of the U.S. Department of Commerce, manages the Baldrige Program. NIST has a 100-plus-year track record of serving U.S. industry, science, and the public with the mission to promote U.S. innovation and industrial competitiveness by advancing measurement science, standards, and technology in ways that enhance economic security and improve our quality of life. NIST carries out its mission in three cooperative programs, including the Baldrige Program. The other two are the NIST laboratories, conducting research that advances the nation’s technology infrastructure and is needed by U.S. industry to continually improve products and services; and the Hollings Manufacturing Extension Partnership, a nationwide network of local centers offering technical and business assistance to small manufacturers.

Suggested citation: Baldrige Performance Excellence Program. 2016. 2016 Baldrige Case Study: FitHabits. Gaithersburg, MD: U.S. Department of Commerce, National Institute of Standards and Technology. http://www.nist.gov/baldrige.

Images of athletic and business men © 2015 Clipart.com, a division of Vital Imagery Ltd.

CONTENTS 2016EligibilityCertificationForm . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . E1 OrganizationChart . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . O1 2016AwardApplicationForm,pageA-1 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A1 GlossaryofTermsandAbbreviations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . G1

Preface: Organizational Profile P.1 OrganizationalDescription . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . i P.2 OrganizationalSituation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . iii

Category 1: Leadership 1.1 SeniorLeadership . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1 1.2 GovernanceandSocietalResponsibilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .3

Category 2: Strategy 2.1 StrategyDevelopment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .6 2.2 StrategyImplementation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .8

Category 3: Customers 3.1 VoiceoftheCustomer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11 3.2 CustomerEngagement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13

Category 4: Measurement, Analysis, and Knowledge Management 4.1 Measurement,Analysis,andImprovementof OrganizationalPerformance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16 4.2 KnowledgeManagement,Information,and InformationTechnology . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18

Category 5: Workforce 5.1 WorkforceEnvironment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21 5.2 WorkforceEngagement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23

Category 6: Operations 6.1 WorkProcesses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25 6.2 OperationalEffectiveness . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28

Category 7: Results 7.1 ProductandProcessResults . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30 7.2 Customer-FocusedResults . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36 7.3 Workforce-FocusedResults . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38 7.4 LeadershipandGovernanceResults . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44 7.5 FinancialandMarketResults . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48

2016 ELIGIBILITY CERTIFICATION

FORM

Eligibility package due February 22, 2016 Award package due May 3, 2016 (April 26 on CD only)

1. Your Organization

Official name FitHabits Headquarters address

12501 R&D BoulevardBldg. 101Richmond, VA 23223Other name

Prior name (if changed within the past 5 years)

2. Highest-Ranking Officialh Mr. h Mrs. Ms. h Dr.

Name Stacy Brubaker Address Same as above

Job title CEO/President

E-mail [email protected]

Telephone 804-555-4800

Fax 804-555-4001

3. Eligibility Contact PointDesignate a person who can answer inquiries about your organization. Questions from your organization and requests from the Baldrige Program will be limited to this person and the alternate identified below.

h Mr. h Mrs. Ms. h Dr.

Name Grace Lee Address Same as above

Job title Director, Performance Excellence


Telephone 804-555-5102 Overnight mailing address

Same as above (Do not use a P.O. Box number.)

Fax

4. Alternate Eligibility Contact Point Mr. h Mrs. h Ms. h Dr.

Name Alex Fixx Telephone 804-555-5112

E-mail [email protected] Fax

2016 Eligibility Certification FormMalcolm Baldrige National Quality Award

OMB Control No. 0693-0006Expiration Date: 05/31/2016

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5. Application Historya. Has your organization previously submitted an eligibility certification package?

h Yes. Indicate the year(s). Also indicate the organization’s name at that time, if different.

Year(s)

Name(s)

No

h Don’t know

b. Has your organization ever received the Malcolm Baldrige National Quality Award®?

h Yes. Did your organization receive the award in 2010 or earlier?

h Yes. Your organization is eligible to apply for the award.

h No. If your organization received an award during 2011 and 2015, it is eligible to apply for feedback only. Contact the Baldrige Program at (877) 237-9064, option 3, if you have questions.

No

c. Has your organization participated in a regional/state/local or sector-specific Baldrige-based award process?

Yes. Years: 2009–2014 h No

d. Is your organization submitting additional materials (i.e., a completed Organizational Profile and two results measures for each of the five Criteria results items) as a means of establishing eligibility?

No. Proceed to question 6.

h Yes. In the box below, briefly explain the reason your organization chose this eligibility option. (This information will be shared with the Alliance leadership, without revealing your organization’s identity.)

6. Eligibility Determination See also Is Your Organization Eligible? (http://www.nist.gov/baldrige/enter/eligible.cfm).

a. Is your organization a distinct organization or business unit headquartered in the United States?

Yes h No. Briefly explain.

b. Has your organization officially or legally existed for at least one year, or since April 1, 2015?

Yes h No




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c. Can your organization respond to all seven Baldrige Criteria categories? Specifically, does your organization have processesand related results for its unique operations, products, and/or services? For example, does it have an independent leadershipsystem to set and deploy its vision, values, strategy, and action plans? Does it have approaches for engaging customers and theworkforce, as well as for tracking and using data on the effectiveness of these approaches?

Yes h No

d. If some of your organization’s activities are performed outside the United States or its territories and your organizationreceives a site visit, will you make available sufficient personnel, documentation, and facilities in the United States to allow afull examination of your worldwide organization?

h Yes h No Not applicable

e. If your organization receives an award, can it make sufficient personnel and documentation available to share its practices atthe Quest for Excellence® Conference and at your organization’s U.S. facilities?

Yes h No

If you checked “No” for 6a, 6b, 6c, 6d, or 6e, call the Baldrige Program at (877) 237-9064, option 3.

Questions for Subunits Onlyf. Is your organization a subunit in education or health care?

h Yes. Check your eligibility by reading Is Your Organization Eligible? (http://www.nist.gov/baldrige/enter/eligible.cfm).Then proceed to item 6k.

h No. Continue with 6g.

g. Does your subunit function independently and as a discrete entity, with substantial authority to make key administrative andoperational decisions? (It may receive policy direction and oversight from the parent organization.)

h Yes. Continue with 6h.

h No. Your subunit probably is not eligible to apply for the award. Call the Baldrige Program at (877) 237-9064, option 3.

h. Does your subunit have a clear definition of “organization” reflected in its literature? Does it function as a business oroperational entity, not as activities assembled to write an award application?

h Yes. Continue with 6i.

h No. Your subunit probably is not eligible to apply for the award. Call the Baldrige Program at (877) 237-9064, option 3.

i. Is your subunit in manufacturing or service?

h Yes. Does it have 500 or fewer employees? Is it separately incorporated and distinct from the parent organization’s othersubunits? Or was it independent before being acquired by the parent, and does it continue to operate independently under its own identity?

h Yes. Your subunit is eligible in the small business category. Attach relevant portions of a supporting official document (e.g., articles of incorporation) to this form. Proceed to item 6k.

h No. Continue with 6j.




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j. Is your subunit self-sufficient enough to be examined in all seven categories of the Criteria?

• Does it have its own senior leaders?

• Does it plan and implement its own strategy?

• Does it serve identifiable customers either inside or outside the organization?

• Is it responsible for measuring its performance and managing knowledge and information?

• Does it manage its own workforce?

• Does it manage its own work processes and other aspects of its operations?

• Can it report results related to these areas?

h Yes. Proceed to 6k (table below).

h No. Your organization probably is not eligible to apply for the award. Call the Baldrige Program at (877) 237-9064, option 3.

k. Does your organization meet one of the following conditions?

1. My organization has won the Baldrige Award (prior to 2011).

Yesh

Your organization is eligible.

No Continue with statement 2.

2. Between 2011 and 2015, my organization applied for the national Baldrige Award, and the total of the process and results band numbers assigned in the feedback report was 8 or higher.

Yesh


Year:

Total of band scores:


3. Between 2011 and 2015, my organization applied for the national Baldrige Award and received a site visit.

Yesh


Year of site visit:


4. Between 2011 and 2015, my organization received the top award from an award program that is a member of the Alliance for Performance Excellence.

Yes


Award program: State Performance Excellence Program

Year of top award: 2014


5. More than 25% of my organization’s workforce is located outside the organization’s home state.

Yesh



6. There is no Alliance for Performance Excellence award program available for my organization.

Yesh



7. Your organization will submit additional eligibility screening materials (i.e., a complete Organizational Profile and two results measures for each of the five Criteria results items). The Baldrige Program will use the materials to determine if your organization is eligible to apply for the award this year (as described in the Baldrige Eligibility FAQs [MS-Word]).

Yesh

The Baldrige Program will review the materials and contact your ECP after determining your eligibility.

No Call 877-237-9064, option 3, if you have questions.




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7. Award Categorya. Award category (Check one.)

Your education or health care organization may use the Business/Nonprofit Criteria and apply in the service, small business, or nonprofit category. However, you probably will find the sector-specific (Education or Health Care) Criteria more appropriate.

For-Profit Nonprofit

h Manufacturing

Serviceh Small business (# 500 employees) h Educationh Health Care

h Nonprofit h Educationh Health Care

b. Industrial classifications. List up to three of the most descriptive NAICS codes for your organization (see NAICS list included at the end of this document). These are used to identify your organizational functions and to assign applications to examiners.

454 448

8. Organizational Structurea. For the preceding fiscal year, the organization had in

h up to $1 million h $1.1 million–$10 million

h $10.1 million–$100 million $100.1 million–$500 million

h $500.1 million–$1 billion h more than $1 billion

sales

h revenue

h budget

b. Attach a line-and-box organization chart that includes divisions or unit levels. In each box, include the name of the unit or division and the name of its leader. Do not use shading or color in the boxes.

The chart is attached.

c. The organization is _____ a larger parent or system. (Check all that apply.)

not a subunit of (See item 6 above.)

h a subsidiary of h controlled by h administered by h owned by

h a division of h a unit of h a school of h other _____________________

Parent organization

Address

Total number of paid employees*

Highest-ranking official

Job title

Telephone

*Paid employees include permanent, part-time, temporary, and telecommuting employees, as well as contract employees supervised by the organization. Include employees of subunits but not those of joint ventures.




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Attach a line-and-box organization chart(s) showing your organization’s relationship to the parent’s highest management level, including all intervening levels. In each box, include the name of the unit or division and its leader. Do not use shading or color in the boxes.

h The chart is attached.

d. Considering the organization chart, briefly describe below how your organization relates to the parent and its other subunits in terms of products, services, and management structure.

e. Provide the title and date of an official document (e.g., an annual report, organizational literature, a press release) that clearly defines your organization as a discrete entity.

Title Date

Attach a copy of relevant portions of the document. If you name a website as documentation, print and attach the relevant pages, providing the name only (not the URL) of the website.

h Relevant portions of the document are attached.

f. Briefly describe the major functions your parent or its other subunits provide to your organization, if appropriate. Examples are strategic planning, business acquisition, research and development, facilities management, data gathering and analysis, human resource services, legal services, finance or accounting, sales/marketing, supply chain management, global expansion, infor-mation and knowledge management, education/training programs, information systems and technology services, curriculum and instruction, and academic program coordination/development.

9. Supplemental Sections The organization has (a) a single performance system that supports all of its product and/or service lines and (b) products or services that are essentially similar in terms of customers/users, technology, workforce or employee types, and planning.

Yes. Proceed to item 10.

h No. Your organization may need to submit one or more supplemental sections with its application. Call the Baldrige Program at (877) 237-9064, option 3.

10. Application FormatIf your organization applies for the 2016 award, in which format will you submit your application?

25 paper copies and a CD (must be postmarked on or before May 3, 2016)

h CD only (must be postmarked on or before April 26, 2016)




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11. Use of Cell Phones, Cordless Phones, and Voice-over-Internet Protocol (VoIP)Do you authorize Baldrige examiners to use cell phones, cordless phones, and VoIP to discuss your application? Your answer will not affect your organization’s eligibility. Examiners will hold all your information in strict confidence and will discuss your application only with other assigned examiners and with Baldrige Program representatives as needed.

Yes h No

12. Site ListingYou may attach or continue your site listing on a separate page as long as you include all the information requested here. You may group sites by function or location (city, state), as appropriate. Please include the total for each column (sites, employees/faculty/staff, volunteers, and products/services). See the ABC HealthCare example below.

Please include a detailed listing showing all your sites. If your organization receives a site visit, an examiner team will use this information for planning and conducting its visit. Although site visits are not conducted at facilities outside the United States or its territories, these facilities may be contacted by teleconference or videoconference.

Example

Sites (U.S. and Foreign) List the city and the state or country.

Workforce* List the numbers at each site.

List the % at each site, or

use “N/A” (not applicable).

Check one or more.

Employees h Faculty h Staff

Volunteers (no. or N/A)

Check one.

% of

h Sales Revenue h Budget

Relevant Products, Services, and/or Technologies

ABC Medical Center, Anytown, NY 1,232 147 77% Admin. offices, inpatient care, ED, imaging services, lab

ABC Hospital West, West Anytown, NY 255 78 14% Inpatient services, ED, labABC Medical Group, Anytown, NY 236 N/A 6% Primary & specialty physician

careABC Imaging Center, West Anytown, NY 11 N/A 1% Imaging servicesABC Hospice Services, West Anytown,

NY94 89 1% On- and off-site hospice

servicesABC Urgent Care, West Anytown, NY 8 N/A 1% Outpatient emergency and

urgent care servicesTotal 6 1,836 314 100%

*“Workforce” refers to all people actively involved in accomplishing the work of your organization, including paid employees (e.g., permanent, part-time, temporary, and telecommuting employees, as well as contract employees supervised by the organization) and volunteers, as appropri-ate. The workforce includes team leaders, supervisors, and managers at all levels.




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Your Organization

Sites (U.S. and Foreign) List the city and the state or country.

Workforce* List the numbers at each site.

List the % at each site, or

use “N/A” (not applicable).

Check one or more.

Employees h Faculty h Staff

Volunteers (no. or N/A)

Check one.% of

Sales h Revenue h Budget

Relevant Products, Services, and/or Technologies

FitHabits Corporate HeadquartersRichmond, VA

701 N/A 70% Corporate administrative, marketing/sales, purchasing, Call Center, information technology, training, team member wellness, operations support, warehouse and fulfillment

FitHabits WarehouseIrving, TX

70 N/A 10% Warehouse and fulfillment

FitHabits WarehousePortland, OR

118 N/A 20% Warehouse and fulfillment

Total 6 889 100%

*The term workforce refers to all people actively involved in accomplishing the work of an organization. The workforce includes paid employees (e.g., permanent, part-time, temporary, telecommuting, and contract employees supervised by the organization) and volunteers, as appropriate; it also includes team leaders, supervisors, and managers at all levels.

13. Key Business/Organization FactorsList or briefly describe the following key business/organization factors. Please be concise, but be as specific as possible. Provide full names of organizations (i.e., do not use acronyms). The Baldrige Program uses this information to avoid conflicts of interest when assigning examiners to your application. Examiners also use this information in their evaluations.

a. Main products and/or services and major markets served (local, regional, national, and international)

FitHabits is a boutique distributor, selling unique and high-end activewear clothing and athletic shoes, from running to yoga to baseball, for both men and women. Women’s clothing is the largest product line, followed by men’s clothing. FitHabits sells exclusively on the Internet, which allows it to ship products to both domestic and international customers (the only limit the organization has in terms of market is whether a shipper can accommodate the customer’s location).

b. Key competitors (those that constitute 5 percent or more of your competitors)

Other activewear/athletic shoes boutique distributors: Tip the Scales, Lean Out, Lean Muscle, and DazzzleMeFitNote: FitHabits does not consider large Internet retailers and box stores as key competitors for the niche portion of the market.

c. Key customers/users (those that constitute 5 percent or more of your customers/users)

Domestic and international fitness customers who want a unique, customized, high-touch shopping experience (e.g., advice on products, ability to give input on future products) that they can’t get from large Internet retailers and box stores.




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d. Key suppliers/partners (those that constitute 5 percent or more of your suppliers/partners)

Manufacturers of activewear clothing and athletic shoes: Ahihas, Celjer, Fast Bonce, Nawrk Partners, Olympian, Luminous, local and regional M&Ps (mom and pop manufacturers), and T2Bs (thread-to-body suppliers)Shipping (domestic and international): SendPIxWorkforce Surveys: GuppolMarket Research: Sratsa.com; Market Analyzer, LLC.Software and Application Technologies: DrmQuilter, PIII, RBR, Sauvegarder, SimblLogic, Cloud Provider, Internet ProviderCyber Security: Cyber Vendor, Inc; Cyber Company, LLCHousekeeping Services: AFM

e. Financial auditor Fiscal year (e.g., October 1–September 30)

Three Sisters Finance July–June

f. Parent organization (if your organization is a subunit).

N/A N/A

14. Nomination to the Board of ExaminersIf your organization is eligible to apply for the Baldrige Award in 2016, you may nominate one senior member from your organiza-tion to the 2016 Board of Examiners.

Nominees are appointed for one year only. Nominees

■ must not have served previously on the Board of Examiners and

■ must be citizens of the United States, be located in the United States or its territories, and be employees of the applicant organization.

The program limits the number of examiners from any one organization. If your organization already has representatives on the board, nominating an additional person may affect their reappointment.

Board appointments provide a significant opportunity for your organization to learn about the Criteria and the evaluation pro-cess. The time commitment is also substantial: examiners commit to a minimum of 200 hours from April to December, includ-ing approximately 40 hours in April/May to complete self-study, three to four days in May to attend Examiner Preparation, and 50–70 hours from June through August to complete an Independent and Consensus Review. If requested by the program, examiners also participate in a Site Visit Review of approximately nine days. The nominee or the organization must cover travel and housing expenses incurred for Examiner Preparation.


Angelica Diaz from our organization will serve on the 2016 Board of Examiners.

[email protected] E-mail address

I understand that the nominee or the organization will cover travel and hotel costs associated with participation in Examiner Preparation. I also understand that if my organization is determined to be ineligible to apply for the Baldrige Award in 2016, this examiner nomination will not be considered for the 2016 Board of Examiners.




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15. Fee Indicate your method of payment for the $360 eligibility certification fee.

Check (enclosed) h Money order (enclosed) Make payable to the Malcolm Baldrige National Quality Award.

h ACH payment h Wire transfer Checking ABA routing number: 075-000-022 Checking account number: 182322730397

Before sending an ACH payment or wire transfer, notify the American Society for Quality (ASQ; [414] 298-8789, ext. 7205, or [email protected]). Reference the Baldrige Award with your payment.

h Visa h MasterCard h American Express

Card number Authorized signature

Expiration date Printed name

Card billing address

Today’s date

W-9 Request: If you require an IRS Form W-9 (Request for Taxpayer Identification Number and Certification), contact ASQ at (414) 298-8789, ext. 7205.

16. Self-Certification and Signature I state and attest the following:

(1) I have reviewed the information provided in this eligibility certification package.

(2) To the best of my knowledge,

■ this package includes no untrue statement of a material fact, and

■ no material fact has been omitted.

(3) Based on the information herein and the current eligibility requirements for the Malcolm Baldrige National Quality Award, my organization is eligible to apply.

(4) I understand that if the information is found not to support eligibility at any time during the 2016 award process, my organization will no longer receive consideration for the award and will receive only a feedback report.

Stacy Brubaker 2/21/16

Signature of highest-ranking official Printed name Date




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17. Submission To be considered for the 2016 award, send your complete eligibility certification package postmarked no later than February 22, 2016, to

Malcolm Baldrige National Quality Award c/o ASQ—Baldrige Award Administration 600 North Plankinton Avenue Milwaukee, WI 53203 (414) 298-8789, ext. 7205

Include proof of the mailing date. Send the package via

■ a delivery service (e.g., Airborne Express, Federal Express, United Parcel Service, or the United States Postal Service [USPS] Express Mail) that automatically records the mailing date or

■ the USPS (other than Express Mail), with a dated receipt from the post office.


2016 Eligibility Certification Form ChecklistMalcolm Baldrige National Quality Award


1. Eligibility Certification Form* I have answered all questions completely.

I have included a line-and-box organization chart showing all components of the organization and the name of each unit or division and its leader.

The highest-ranking official has signed the form.

For Companies Submitting Additional Eligibility Screening Materials (to meet the new alternative eligibility condition no. 7 for question 6k; see the table on page E-4)

h I have enclosed a complete Organizational Profile.

h I have enclosed data for two results measures for each of the five Criteria results items.

For Subunits Only

h I have included a line-and-box organization chart(s) showing the subunit’s relationship to the parent’s highest management level, including all intervening levels.

h I have enclosed copies of relevant portions of an official document clearly defining the subunit as a discrete entity.

*Please do not staple the pages of this form.

2. Fee I have indicated my method of payment for the nonrefundable $360 eligibility certification fee.

If paying by check or money order, I have made it payable to the Malcolm Baldrige National Quality Award and included it in the eligibility certification package.

3. Submission and Examiner Nomination I am nominating a senior member of my organization to the 2016 Board of Examiners.

h I am not nominating a senior member of my organization to the 2016 Board of Examiners.

I am sending the complete eligibility certification package to

Malcolm Baldrige National Quality Award c/o ASQ—Baldrige Award Administration 600 North Plankinton Avenue Milwaukee, WI 53203 (414) 298-8789, ext. 7205

I have included proof of the mailing date. (See Application Form and Content instructions at http://www.nist.gov/baldrige/enter/format.cfm/.)

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O1

PAGE A-1 OF THE

2016 AWARD APPLICATION FORM

1. Your Organization

Official name FitHabits

Mailing address 12501 R&D BoulevardBldg. 101Richmond, VA 23223

2. Award Category and Criteria Used a. Award category (Check one.)

h Manufacturing h Education Service h Health care h Small business. The h Nonprofit

larger percentage of sales is in (check one)

h Manufacturing h Service

b. Criteria used (Check one.) Business/Nonprofit h Education h Health Care

3. Official Contact Point Designate a person with in-depth knowledge of the organiza-tion, a good understanding of the application, and the author-ity to answer inquiries and arrange a site visit, if necessary. Contact between the Baldrige Program and your organization is limited to this individual and the alternate official contact point. If the official contact point changes during the application process, please inform the program.


Name Grace Lee

Title Director, Performance Excellence

Mailing address Same as above

Overnight mailing address

Same as above (Do not use a P.O. box number.)


Fax


2016 Award Application FormMalcolm Baldrige National Quality Award

OMB Clearance #0693-0006Expiration Date: 05/31/2016

Page A-1 of 2

4. Alternate Official Contact Point Mr. h Mrs. h Ms. h Dr.

Name Alex Fixx


Fax


5. Release and Ethics StatementsRelease StatementI understand that this application will be reviewed by members of the Board of Examiners.If my organization is selected for a site visit, I agree that the organization will

■ host the site visit, ■ facilitate an open and unbiased examination, and■ pay reasonable costs associated with the site visit

(see Award Process Fees on our website [http:// www.nist.gov/baldrige/enter/award_fees.cfm]).

If selected to receive an award, my organization will share nonproprietary information on its successful performance excellence strategies with other U.S. organizations.

Ethics Statement and Signature of Highest-Ranking OfficialI state and attest that

(1) I have reviewed the information provided by my organiza-tion in this award application package.

(2) To the best of my knowledge,■ this package contains no untrue statement of a material

fact and■ omits no material fact that I am legally permitted to

disclose and that affects my organization’s ethical and legal practices. This includes but is not limited to sanctions and ethical breaches.

4/25/16

Signature Date


Printed name Stacy Brubaker

Job title CEO/President

Applicant name FitHabits

Mailing address Same as above


Fax 804-555-4001

GLOSSARY OF TERMS AND

ABBREVIATIONS

Glossary of Terms and Abbreviations

AB ��AccountabilityBoardADA ��AmericanswithDisabilitiesActAFPM ��AgencyforPeopleManagementAOS ��availableon-siteAP ��actionplanAPR ��annualperformancereviewAR ��accountsreceivableATE ��AssociationforTrainingEmployeesBOD ��BoardofDirectorsBSC ��balancedscorecardchallenged ��peoplewithphysicalchallengeswhopursueathletes activelifestylesthroughphysicalfitness

andcompetitiveathleticsCOI ��conflictofinterestDZMT ��DazzzleMeFitEEOC ��U.S.EqualEmploymentOpportunity

CommissionEMS ��EmergencyManagementSystemEOP��EmergencyOperationsPlanEPA ��U.S.EnvironmentalProtectionAgencyFHLS ��FitHabits’LeadershipSystemFIT ��FuturisticInnovativeTechnodataFitKM ��FitHabits’knowledgemanagementFitMeasures ��BSCmeasuresFITTESS ��Focus,Innovate,Test,Train,Execute,Share,

SustainFMEA ��failuremodeandeffectsanalysisFTC��U.S.FederalTradeCommissionFTE ��full-timeequivalentHazCom ��hazardcommunicationsHEALTH ��Health,Exercise,Attitude,Training,

andHealingHVA ��hazardvulnerabilityanalysisIEC ��InternationalElectrotechnicalCommissionIP ��InternetprotocolIR/BS ��InternetretailersandboxstoresIRS ��U.S.InternalRevenueServiceIS ��informationsystems

ISO ��InternationalOrganizationforStandardization;ISO27001:2013isaninformationsecuritystandardpublishedin2013byISOandIECunderajointsubcommittee

IT ��informationtechnologyKSP ��keysupportprocessKWP ��keyworkprocessKWS ��keyworksystemL&D ��learninganddevelopmentLMS ��LearningManagementSystemLT ��LeadershipTeamM&Ps ��mom-and-popsuppliersMSP ��MeasurementSelectionProcessMVV ��mission,vision,andvaluesNYRs ��NewYearresolutionersOFIs ��opportunitiesforimprovementOSHA ��U.S.OccupationalSafetyandHealth

AdministrationP2P ��person2personPAPs ��proposedactionplansPCI DSS ��PaymentCreditIndustryDataSecurityStandardPE ��performanceexcellencePES ��PerformanceExcellenceSystemPI��performanceimprovementQCPs ��QuarterlyCoachingPlansRAW ��revisedactionworkplanRCA ��rootcauseanalysisRNA ��resourceneedsassessmentROI ��returnoninvestmentRRF ��resourcerequestfunnelSKU ��stock-keepingunitSO ��strategicobjectiveSOPPs �� standardoperatingproceduresandpoliciesSPP ��StrategicPlanningProcessSWOT ��strengths,weaknesses,opportunities,andthreatsT2Bs ��thread-to-bodysuppliersVOC ��voiceofthecustomerYTD ��yeartodate

G1

ORGANIZATIONAL PROFILE

i

Organizational Profile

P.1 Organizational DescriptionFitHabitswasstartedin1996byStacyBrubakerandJillNassauoutoftheirgaragesinRichmond,VA.Tobeginarecentweightlossandfitnessregimen,Stacyhadusedanexercisevideoathome.Onceshelostsomeweight,shewantedtogotothegymwithherbestfriendJill,atriathloncoach,butfeltasifherathleticclotheswerewornandscruffy,notgym-ready.Whenshehadtroublefindingattractiveexerciseclothesthatfit,hersisterinLosAngelessentanoutfitthatwasjustwhatshewaslookingfor.Shefeltgreatandsoonbecamea“gymrat.”Friendsandotherwomenatthegymwereinterestedinpurchasingsomethingsimilarintheirsizes.Withinweeks,StacyandJillsignedadistributorshipwiththemanufacturerofStacy’soutfitandstoredallthemerchan-diseintheirgarages.Beforelong,tomeettheircustomers’needs,theyweresellingshoesandotherbrandsofathleticclothingfromsmallandregionalmanufacturersthatdesignedandcreateduniqueathleticclothinglines.

Withinayear,StacyandJillhadasmallboutiquebusinesssupplyingathleticwearfortheirfriendsandthroughgymsacrosstheircity.Theyrentedastoragelockerandhiredtwoteenagerstohelpstorethestockandfillorders.Theysawthepotentialtoreachouttoothercities,andoneoftheteenagerstalkedtothemaboutsurfingtheInternetforathleticclothingandshoes.Fast-forward20years,andwehaveFitHabits,thepremierInternet-basedathleticclothesandfootwearboutiquedistributorintheUnitedStates.

P.1a(1) Tomeetcustomerneeds,FitHabitsisproudofthewideportfolioofboutiqueproductsitoffers:(1)activewearclothingand(2)athleticshoes,fromrunningtoyogatobaseball,forbothmenandwomen.Women’sclothingisthelargestproductline,fol-lowedbymen’sclothing.Athleticshoesforbothwomenandmenaremuchsmallerproductlinesbutprovetobeadifferentiatorformanycustomers.FitHabitsbrieflyconsideredmanufacturingorbrandingclothingin2000butrejectedthoseapproachestoremainaboutiquedistributor,sellinguniqueandhigh-endactivewearandshoes.FitHabits’ teammembersaremostproudthatafterinitialface-to-facesalesintheearlyyearsofthecompany,theynowsellcompletelyonline,directtocustomers,andwithgreatservice!FitHabitshasanexcellentrelationshipwithSendPIxandshipsover90%ofitsproductsthroughthisdeliverysystemdirectlytobothdomesticandinternationalcustomers.

P.1a(2) Themission,vision,andvalues(MVV;FigureP.1-1)establishthefoundationofFitHabits’cultureofexcellenceandfocusthecompanyondeliveringthehighestlevelsofcustomerservice.Themissionputsitconcisely:Clothingourcustomersforafitlifeanddelightingthem,always.Thevisiontobethe#1Internet-preferredactivewearandshoeresourceinthenationhelpsinspiretheworkforcetohigherlevelsofperformance.Thevaluesarebothinternally—Fun,Innovative,Team-based—andexternallyfocused—Healthy,Agile,Balanced,Integrity,Timely,andService—tocreateFitHabits.

Forthecompanytoliveitsmissionandachieveitsvision,FitHabitshasacultureofperformanceexcellence.FitHabitsusesanintegratedsystemofperformanceexcellence(FigureP.2-4)toprovideever-increasingvaluetocustomerswhileimprovingorganizationaleffectivenessandprovidinglearningfortheworkforceandcompany.

FitHabitshasidentifiedthreecorecompetencies:

■ relationships(CC1)■ innovation(CC2)■ fitness(CC3)

Acorecompetencyinrelationships(CC1)helpsthecompanyfulfillitsmission.Evidenceofthiscorecompetencycanbefoundinthepoweroftheserelationships,developedandsustainedbyFitHabits’excellentteammembers,withcustomerswhoneedproductadviceorhelpwithtransactionsorresolvingproblems.Itisthefeedbackgeneratedbytherelationshipswithsuppliersandcollaboratorsthatleadstohavinggreatproductsininventory.Itistherelationshipsbuiltwithcolleaguesthatleadtoimprovementsinprocessesandservices.

Innovation(CC2)isfoundthroughoutFitHabits.Thewebsite, FitWeb,isdesignedtomeetcustomerneedsforeaseofnaviga-tion,toprovideanamazingproductdisplay,andtoofferuserprofilesforsmoothtransactions(3.2b[1]).Inaddition,tofinduniqueandcustomizedclothing,FitHabitshasdevelopedaninno-vativeapproachtoworkingwithlocalandregionaldesignersandmanufacturersofvariousathleticproductlines(6.2b)todesignandmanufacturecustomizedproducts.Toprovideforinformationsecurity,FitHabitsisproudofbeingoneofthefirstwebretailerstobecertifiedISO9001andIEC27001.Tomaintainitsmarketleadership,FitHabitshasdevelopedaninnovationprocess(6.1c)touseinbothnewproductpromotions(3.2a)andimprovementefforts.TheseeffortsaresupportedbyamultidisciplinaryInnova-tionCounciltoensureaconsistentandsystematicapproachtomanagingandsustaininginnovationacrosstheorganization.

Fitnesstouchestheheartofthecompany—it’spartoftheworkforceandwhatthecompanyisabout.Fitness(CC3)isthethirdcorecompetencyandunderscoresthemission.AlloftheteammembersintheCallCenterarefitnessenthusiastswhocanspeakknowledgablytocustomersabouttheirfitnessregimens.TheCallCenterteammembersholdavarietyoffitnesscertifica-tionsincludingpersonaltraining(58teammembers),yoga(33),Pilates(16),indoorcycling(8),wateraerobics(6),andtriathlontraining(3).

ii

P.1a(3) The FitHabitsworkforceincludes889highlyengagedandcompetentteammembers.TheyworkinaculturedefinedbythevaluestobeFun,Innovative,andTeam-based.Theyaremoti-vatedtomeetthemissionanddelightcustomers.IntheFitHabits’culture,employeesarecalledteammembersandmanagersarecoaches.Seniorleadersarereferredtoasseniorcoaches.Therehavebeennorecentchangesinworkforcecompositionorneeds.FitHabitshasnobargainingunits.Theteammemberprofile,showingsegmentsandeducationalrequirementsbyjobcategory,tenure,andethnicdiversity,isshowninFigureP.1-2.

Besidesthebasichealthandsafetyrequirementsofanofficeenvironment,nospecialsafetyrequirementsareneeded.Inthewarehouseandfulfillmentareas,allteammembersarerequiredtocompletetraininginhazardcommunications(HazCom),lockout/tagout,lifting/handling,andportablefireextinguishers.Teammemberswhodriveforkliftsmustbecertifiedinforkliftsafety.

ThekeyelementsthatengageteammembersinachievingthemissionandvisionareshowninFigureP.1-3.

P.1a(4) Thecorporateheadquartersislocatedona24-acrecampuswithoffices,CallCenter,trainingfacility,teammemberwellnesscenter(includingFitCenter),andawarehouseoutsideRichmond.LeasedwarehousesarealsolocatedinIrving,TX,andPortland,OR.Aneedtoexpandwarehouseandstockcapaci-tiesledtoamajorShapeItUp(P.2c)LeaninterventioninthewarehousesinRichmondandPortland,whichledtoadoublingofcapacity.Inearly2017,asimilarinterventionisplannedfortheIrvingwarehouse.

Aspartoftheinnovationcorecompetency,FitHabitsutilizesleading-edgeandvalidatedsoftwareandapplicationtechnologiesfromleadersinthefieldsuchasRBR,DrmQuilter,PIII,and

SimblLogic.Anin-houseapplicationdevelopmentcapabilityalsoallowsthecompanytointegratemultipletechnologiestocreatevalue-addedinnovationforcustomers.Inthepastsixyears,FitHabitshasinvestedover$5milliontocompletelyrewriteFitWeb,thecorporatewebsite.Tofurthermaintainthetechnologyadvantage,theCallCenterreceiveda$2millionupgradein2014.Capitalinvestmentssuchasthesearetiedtothestrategicobjec-tives(SOs)andaredeterminedthroughtheSPP.Eachwarehouseusesstate-of-the-artbarcodetechnologytotrackproductsandshipments.

P.1a(5) FitHabitscomplieswithstateandnationalOccupationalSafetyandHealthAdministration(OSHA)requirementsandhasbeenrecognizedwiththeGREAT!Awardin2014forthedramaticdeclineinwarehouseinjuriesasaresultofimprovedforklifttraining.FitHabitsalsohasbeenrecognizedintheEnvironmentalProtectionAgency’s(EPA’s)WasteWiseProgramwithGoldAchievementin2013forRecyclingintheWorkplaceandin2015forIndustrialMaterialsRecycling.In2006,FitHabitswasoneofthefirstonlineretailerstobecertifiedtoISO9000andthenISO/IEC27001foritsinformationsecurityframework.

P.1b(1) FitHabitsisaprivatelyownedcompanywithastructureandgovernancesystemconsistingofaseven-memberBoardofDirectors(BOD)andtheLeadershipTeam(LT).TheLTiscomprisedoftheCEO/president(Stacy),COO(Jill),andthefiveotherCOs(ChiefOfficersofFinance,Strategy,MarketingandSales,People,andInformation).TheBODservesasthechiefpolicy-makingbodyandexercisesoverallcontrolandmanage-mentofthecompany’saffairs.TheCEO/president,anex-officiomemberoftheBOD,reportsdirectlytotheBODandsupervisessixunits,eachofwhichisledbyachiefofficer.

P.1b(2) Thekeycustomergroupsare(1)engagedcustomers,(2)lurkers(thosewhobrowsethewebsitebutneverpurchaseanything),and(3)NewYearresolutioners(NYRs;thosewhosetupprofiles,browse,andmaybepurchasesomethinginJanuarytokickstarttheirweight-lossgoalsbutarenotactivetherestoftheyear).

iii

Engagedcustomersaresegmentedfurther:

■ Frequentpurchasers—thosewhopurchaseproductsonanearlymonthlybasis

■ Persistentpurchasers—thosewhopurchaseproductsseasonally

■ Occasionalpurchasers—thosewhopurchaseproductsatleastannually

Keystakeholdergroupsincludecustomers,theAdvisoryBoard,collaborators,suppliers,andthecommunity.

P.1b(3) KeysuppliersandcollaboratorsareoutlinedinFigureP.1-6withtherolestheyplayinworksystems,inenhancingcompetitiveness,andincontributingtoinnovation,aswellasthemechanismstocommunicatewiththemandtheirkeysup-plychainrequirements.Withinnovationasacorecompetency,FitHabitsworkscloselywithitssuppliers.

CollaboratorsareanimportantfeedbackresourceforFitHabits.Whilethecompanydoesnotmanufactureproducts,itreliesontheadviceandcounselofthecollaboratorsonthelatestresearchand

trendsinthefitnesscommunity.Thisinformation,forexample,helpedFitHabitsbeaheadofthecurveinZumbaclothingin2008,beforethisfitnesstrendtookoff.

P.2 Organizational SituationP.2a(1) FitHabits’boutiquemarketspacerequiresittomeettheincreasingdemandsfromconsumersforbetterandmorepersonalizedcustomerservice,personalizedproductofferings,andincreasedofferingsthatare“MadeinAmerica.”FitHabitscontinuestostrivetomeetthatdemandasevidentinitsCC1ofrelationships,customerengagement(Figure7.2-9),andpercentageofproductsofferedandshippedthatare“MadeinAmerica”(Figure7.1-19).Inaddition,FitHabitshasprideditselfindevelopingkeyrelationshipswithnationalorganizationstooffertheirmembersspecializedproducts,asevidentinspecializedproductsforchallengedathletes(Figures7.1-6,7.5-7).

FitHabitshasfourkeycompetitorsinitsInternetmarketspaceforaboutiqueclothing/shoesretailer,withtheirmarketsharebynetannualsalesshowninFigureP.2-1.FitHabitscurrentlyenjoysan8%marketsharebasedonnetannualsalesand9%marketsharebasedonoverallnumberofproductssoldinitstwokeyportfoliogroups:activewearclothingandathleticshoes.

Theremaining“non-boutique”market(73%Internetnetannualsales)iscontrolledbynumerouslargeInternetretailersandboxstores(IR/BS)inFitHabits’twoportfoliogroups(activewearand

iv

shoes).ThesemajoronlineretailersincludeVoluminous,Yoxxo’s,andDistinguished,aswellas“big-box”retailerssuchasPaulie’sSportingGoods,LaneRunners,LolybirdSports,andActionAuthority.Overthepastfiveyears,FitHabitshasincreasedandsustainedasecuremarketpositionrelativetoitsdirectcompeti-torsinitsboutiqueclothing/shoesspace.Comparativestothefourdirectboutiqueathletemarketcompetitorsareprovidedthrough-outthisapplication.FitHabits’marketdataasofDecember2015areshowninFigureP.2-1.

P.2a(2) DuringFitHabits’FY2015strategicplanningretreat,theLTidentifiedthreeemergingchangesthatwillaffectFitHabits’competitivesituation:

1. Inlate2014,FitHabitsbegantheexpansionofitsproductstomeetthespecialactivewearclothingandathleticfootwearneedsofchallengedathletes.IthassecuredsinglesourcecontractswithtwosuppliersprovidingproductsinFitHabits’twoportfoliogroupsandhasseensignificantgrowthwiththisadditionalfocusarea(Figures7.1-3,7.5-3).FitHabitsbelievesthisexpansionwillleadtothecreationofevenmoreopportunitiesforinnovationandcollaborationwithorganiza-tionssuchasExtraceptionalOlympics,USATriathlon/Cycling,andtrackandfieldorganizations,aswellaslocalcommunityandfitnesscenters.

2. By2017,FitHabitsplanstodoubleitswarehousecapacityto a. manageanincreasingnumberofSKUs(inventory)inboth

ofitsportfoliogroups,and b. cutorder-to-shiptimeinhalf(Figure7.1-20)tocompete

withthelargerIR/BSstores. Thiscompetitivechangewillenablethecompanytocontinue

toprovidea24-hour-or-less(ContinentalUnitedStates),product-to-door,on-timedeliveryguarantee(thefirstinthenationfortheboutiqueathleteindustry),outpacingeachofFitHabits’fourkeyboutiquecompetitors(7.1).

3. FitHabits’nearestcompetitorTiptheScalesiscurrentlyinnegotiationswithLeanMuscleforaconsolidationandmerger.Thiswouldchangethelandscapeoftheboutiqueathleticindustry,andFitHabitscouldlosemarketprominenceinitsportfoliosgroups.Seniorcoachesaremonitoringthisrelationshipcloselyandanticipatethesecompanieswillmakeadecisionbylatesummerorearlyfallonthesenegotiations.Inresponse,FitHabitsisconsideringseveralstrategicopportunitiestosecureitscompetitiveposition(see2.1b).

P.2a(3) ComparativedatasourcesaresegmentedinFigureP.2-2bytypesofdatarequiredforeffectivelyassessingFitHabits’marketpositionandthatofitskeycompetitors.

LikemanyotherInternetcompanies,FitHabitshastwokeychallengesinsecuringcompetitiveandcomparativedata.Thefirstisobtainingtimelycomparativedataasthemarketisinarapidgrowthmode,andthesecondissecuringvolumeandprocessdatafromtwoprivatelyowned(TiptheScalesandDZMT)andtwopubliclyowned(LeanOutandLeanMuscle)keycompetitors.In

addition,FitHabitshaschosennottopursuethecomparativedataofthemajorretailerssuchasVoluminousandPaulie’sSportingGoodsasthesearenotkeycompetitors,comparable,orreadilyavailablebysimilarsegmentationsthatarekeytoFitHabits’businessmodel.

P.2b TheFY2015strategicadvantagesandstrategicchallenges(FigureP.2-3)wereidentifiedandvalidatedduringthe2014stra-tegicplanningretreat(2.1a[1])andarereviewedmonthlytoassessFitHabits’abilitytocapitalizeonadvantagesandtomitigatechallengesasitdeploysSOsandactionplans(APs;Figure2.1-3).

P.2c FivefoundationalelementscomprisethePerformanceExcellenceSystem(PES;FigureP.2-4).Eachelementplaysapiv-otalroleinensuringthatFitHabitsstaysfocusedonsustainingitsorganizationalandbusinessfitnessandidentifyingopportunitiestosystematicallyimproveitsorganizationalandbusinessfitness.Thefirsttwoelementsprovideguidance(criteriaandstandards)fortheperformanceimprovement(PI)framework,themiddleistheculturalfocusonperformanceexcellence(P.1),andthelasttwoelementsprovidetoolsandmethodologiesforPI.

Figure P.2-3: Strategic Advantages and Strategic Challenges

I Strategic Advantages I

Strategic Challenges

Business SAl . Superior customer service SCl . Emerging competitors and mergers SA2 . Innovative Reverse Product Identification and SC2 . Cyber security

Capture Process SC3 . Maintaining an adequate profit margin

Operations SA3 . FIT (Futuristic Innovative Technodata) platform SC4 . Current warehouse space/inventory constraints SA4 . Focus on continuous improvements scs . Maintaining and securing robust inventory selection SAS . ISO 9001:2015 certification and ISO/IEC 27001

compliance

Societal SA6 . HEALTH (Health , Exercise , Attitude , Training , and SC6 . Changing customer demands and expectations Responsibilities Healing) comprehensive portfolio

Workforce SA7 . Highly engaged team members SC7 . Retaining skilled team members in competitive boutique athlete market

Figure P.2-4: Performance Excellence System ThefirstfoundationalPIelementistheBaldrige Excellence FrameworkanditsCriteriaforPerformanceExcellence,whichFitHabitshasusedforthepast10yearstocomprehensivelyalignandintegrateallelementsofitscompany.Inthefirstsevenyears(2004to2010),FitHabitsutilizedcategoryteamstodothisworkandaddresstheopportunitiesforimprovement(OFIs)identifiedinfourstateapplicationfeedbackreports.By2011,category-basedteamswerenolongernecessaryastheBaldrige-basedsystemsandprocesseswerehardwiredintoeveryaspectofthebusinessandculture.Suchintegrationwasvalidatedandrecognizedasabestpracticefromthe2014statesitevisitandStatePerformanceExcellenceAward.

ThesecondfoundationalelementistheadoptionandcertificationinISO9001:2015forprocessintegrity,ISO26000forsocietalresponsibility,andISO/IEC27001fortheinformationsecuritymanagementsystem(4.2b).UtilizingtheISOstandardsandsustainingcertificationsenableFitHabitstodemonstratetokeysuppliersandcustomersitsadherencestoquality,whileatthesametimeengagingtheminquarterlymanagementreviewsandimprovementefforts,asappropriate(6.2b).

ThethirdfoundationalPIelementisaculturalfocusonperfor-manceexcellence(PE).FitHabits’valuesandcommitmenttoPEareparamounttoitsorganizationalsuccess,anditsteammembersmakeitrealeverydaywitheverycustomer.Onanannualbasis,teammembersreaffirmtheircommitmenttoPEduringtheAllTeamRetreatandtheirindividualperformancereviews.Addition-ally,FitHabitsreceivesteammembers’assessmentsofthePEcultureandcommitmenttoitintheirteammemberengagementscores(Figures7.4-1–7.4-3and7.3-12).

Inkeepingwiththefitnesstheme,in2012,FitHabitsfocusedteammembers’effortsofitsPIsystemtotwokeyapproaches“ShapeItUp”and“SustainIt,”thefourthandfifthfoundationalPIefforts.

■ ShapeItUp:FitHabits’approachistouseLeanandFIT-TESS(Focus,Innovate,Test,Train,Execute,Share,Sus-tain)toolsandmethodsforprocessandPIefforts(6.1b[3]).Thecompany’sPItoolboxcontainsacomprehensivesetofLeanandFITTESStools;allteammembersareprovided

one–fivedaysofPItrainingbasedontheirengagementwithvariouscross-functionalteams.ShapeItUpinitiativesaddressOFIstoor(re)designofsystemsorprocessesengagingacross-functionalteam,consistingofone–twocoachesandfive–tenteammembersandutilizingLeanandFITTESStoolsandmethodstoaddressaparticularissue.Innovation(the“I”ofFITTESS)issupportedintheseeffortsthroughtheInnovationCouncilandsystematicstepstoensurethatinnovationisintegratedandeffectivelyidentifiedandmanagedacrossthecompany(6.1c).

■ SustainIt:ThefifthfoundationalPIelementistheuseofLeanmanagementtoensuredailyreviewofprogresstowardsmeetingorganizationalimprovementtargetswithineveryunitandshift.KeyelementsoftheSustainIteffortsincludedailyhuddles,theSustainItPortal,andstandardworkthroughtheuseoftoolssuchas5Sandprocessmapping.SinceincorporatingSustainItintocoaches’andteammembers’dailyworkin2012,FitHabitshasseenamarkedimprovementinteammembers’engagement(Figure7.3-14)andcustomerloyalty(Figure7.2-10)scores,aswellasareductioninreturn-on-orderedproducts(Figure7.1-13),whichisadirectcorrelationtogettingtherightproducttotherightcustomereverytime.

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RESPONSES ADDRESSING ALL CRITERIA ITEMS

1

Category 1 Leadership

1.1 Senior LeadershipAsFitHabitsquicklygrewbeyondthegarage,thefounders,StacyandJill,hadaclearvisionofthekindofcompanytheywantedtocreate.Theysawthereturnandrewardindelightingtheircustomersbyprovidinggreatcustomerservice.Theyrecognizedthatengagedteammembersatalllevelsofthecompanywerekeytodelightingcustomers.StacyandJill’sjobsweretobeservantleaders,providingprocessesandtoolstosupportteammembers.

Today,asthecompanycontinuestogrow,FitHabits’seniorcoaches,theLT,guidethecompanythroughtheFitHabitsLeader-shipSystem(FHLS;Figure1.1-1).Thissystemwasdesignedin2009toarticulateleadershipattributesandexpectationsandhasundergoneseveralcyclesofevaluationandimprovement.Forexample,whileFitHabitshasusedtheBaldrigeCriteriaasafoundation,in2011,theLTadded“Align”to“OrganizeandPlan”tobemoreintentionalabouthowimportantalignmentwasforthecompany.Additionally,in2013,theleadershipdevelopmentcurriculumwasrefinedtofullyaligntotheFHLS(5.2b[1]).TheFHLSleverageseachofthecorecompetencies:relationships,innovation,andfitness.It(1)beginswiththeSPPand(2)contin-uesthroughdeploymentoftheSOs,astheLTbuildscommitmentandalignmentacrossthecompany.FitHabits(3)executesitsstrategicplan,andtheresultsaremeasured.Developmentandrecognition(4)helpensureteammembersfeelacknowledgedandengaged.Asperformanceisreviewed,theLT,othercoaches,andteammembers(5)usetoolsinthePIsystemsuchasShapeItUp

andSustainIttoidentifyprocessestoimproveandtoinnovatenewopportunities.Thisraisesthebarasthenextcyclestarts.

1.1a(1) FitHabits’MVV(FigureP.1-1)werefirstcreatedin1997andhavebeenrefinedseveraltimes.Mostrecently,in2014,thevisionwasaudaciouslychangedto“bethe#1Internet-preferredactivewearandshoeresourceinthenation”;anindividualatateammemberrallyproposedthisstatement.ItwasreviewedbytheLTandvettedthroughvariousfocusgroupsofkeystakehold-ers(e.g.,customer,collaborators,andsuppliers)andadoptedthroughtheSPP.Thenewvisionwasthendeployedbackthroughtheteams,whoembraceditwholeheartedly.FitHabitsreviewsandaffirmstheMVVannuallyduringtheStrategicPlanningProcess(SPP).Valuesareusedashiringscreensforallpositions,presentedduringonboarding,andreinforcedinstaffmeetingsandthroughquarterlyperformancereviews.

TheLTdeploystheMVVtoteammembers,suppliers,andcollaboratorsthroughnewsletters,e-mails,teammeetings,newhireorientation(FitWelcome!),andnumerousothercom-municationsmechanisms(Figure1.1-2).TheLTdemonstratesapersonalcommitmenttothevaluesbyrolemodelingtheexpectedbehaviorswithallstakeholders;carryingatorchforthe“ValueoftheMonth”andweavingitintopresentationssuchasthequarterlyteammemberforums;andintegratingthevaluesintoquarterlybusinessreviewswithsuppliersandcollaborators.LTmembersareevaluatedagainsttheirpersonaldemonstrationofthevaluesaspartoftheirindividualQuarterlyCoachingPlans(QCPs).

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1.1a(2) TheLTiscommittedto“leadingbyexample.”Toaccom-plishthis,theLTsetsthetoneandcultureofwhatisexpectedandguidesbehaviorby(1)communicatingwithfulltransparencyinalllegalandethicalmatters;(2)annuallysigningtheCodeofConductandFitFulPledgeanddeployingthemtoallteammembersandsuppliers;and(3)ensuringaccountabilityforlegalandethicalbehaviorbyall(1.2b).TheLTpromotesthevalue“Integrity”(doingtherightthingatalltimes)duringFitWelcome!aswellasinothervenues,includingannualfinancialaudits(Figure7.4-6)andquarterlycyber-securityauditstotheorderingandpaymentprocess(4.2b).TheLTmemberssignannualConflictofInterest(COI)statements.In2016,theLTstartedannualteammembersurveystodetermineteammembers’perceptionsofethicalbehaviorandtheiropinionregardingtheethicalconductoftheLT(Figure7.4-5).

1.1a(3) Buildingasuccessful,enduringcompanyistheaspi-rationallegacyofthefoundersandtheLT.Havingavisionofbecomingthe#1Internet-preferredactivewearandshoeresourceinthenationinspiresteammembers,suppliers,andcollaboratorstostriveforever-improvingperformance.Theannualprocessofsettinggoalstolevelsofexceptionalperformance(4.1a[2])andthereinforcementoftheQCPProcess(5.2a[4])establishtheexpectationofachievingthevision.

ExecutingtheprocesseswiththeFHLS,theLTcommunicates,aligns,andkeepsasystemwidefocusonthemissionandvision.TheLTusesseveralmethodstoachievethis:

(1) cascadingSOstofosteralignmentandaccountabilityforallteammembers;

(2) holdingaseriesofperformancereviewsofalignedandcascadedmeasurestodriveorganizationallearningthroughthePIsystemimprovementeffortsdetailedontheAccount-abilityBoards(ABs)presentineachdepartment;

(3) usingthecommunicationsmechanisms(Figure1.1-2)toreinforceachievementoftheMVV,andhighlightingtheroleseachteammemberplaysinthecompany’ssuccess;and

(4) aligningthestrategicgoalswiththeQCPProcesssoteammembersarerewardedforhighperformance.

EachmemberoftheLTrecognizesthat“delightingcustomersalways,”buildingtheirengagementandloyalty,beginswithcreatingapositiveexperienceforeachteammember,whetherworkingintheCallCenter,awarehouse,accounting,oranypartofthecompany.Tobuildastrongculturetocreateandsustainthesepositiveexperiences,theLTfocuseson(1)listeningandrespondingtoteammembers’driversofengagement;(2)develop-ingandaligningsystemsandprocessestosupporttheirworkandexceedteammemberexpectations;(3)recognizingandrewardinghighperformance;(4)providingaculturewhereteammemberscanshareandactonideasforbothimprovementsandinnova-tions;and(5)communicatingchallenges,changes,andsuccessestokeepanopenandtransparentenvironment.

LTmembersrecognizedearlyinthehistoryofFitHabitsthattosucceedasanonlineboutiquedistributorintheathletemarket,theywouldhavetofindnewandinnovativewaystooperate.Thefocusonthevalue“Innovative”wassupportedbybenchmark-ingwithworld-classorganizations(4.1a[2]),accesstorobustdatawarehousesofbestpractices(4.2a[1]),thecreationofan

InnovationCounciltocreatesystemsandprocessestosupportinnovationandintelligentrisktaking(6.1c)andtoensureeffec-tivealignmenttoSOs,andsupportoftheInnovator-of-the-Quarteraward.Fosteringanenvironmentinwhichideasarevaluedandteammembersfeelcomfortablechallengingthestatusquoandtryingnewthings,theLTfoundthatinnovationhadbecomeembeddedinthewayFitHabitsoperated.Inacycleofrefinementin2008,theLTrecognizedthatinnovationwasnowoneofitscorecompetencies.

SuccessionplanningatFitHabitsisfocusedondevelopingtalentinthepipelinetobepreparedforplannedaswellasunplannedopportunities.ItisanongoingprocessofpreparationthatispartoftheTalentDevelopmentProgram.Leadershipcompetencieshavebeenidentifiedattheteammember,coach,andseniorcoachlevels.TheLTalsoidentifiedspecificcompetenciesrequiredforeachmission-criticalrole.Usingacustomizedsuccessionplanningtool,whichispartoftheTalentDevelopmentProgram,candidatesareidentified,andeachseniorcoachworkswithpotentialsuccessorstomentorthecandidate’sdevelopment.TheLTparticipatesintheleadershipdevelopmentcurriculum.Leadershipdevelopmenthasbeenevaluatedandimprovedseveraltimes;thelatestrefinementwasin2013,whenacomprehensivecurriculumwasalignedwiththeprocessesandattributesexpectedofleadersasdefinedintheFHLS.

1.1b(1) TheLTcreatesanopenandtransparentenvironmenttofacilitatecom-municationatalllevelsofthecompany.Avarietyoftwo-waymethodsareusedtoshareinformationandgatherinputs(Figure1.1-2).Inaninnovative,technology-drivencompany,communicationofferingshavegrownandimprovedbasedonneedsandtechnology.TheseincludetheweeklyFitHabitsBlog,startedin2009,thatcoversinformationonfitnessandhealthtrendsandhighlightsnewprod-ucts.ThemyFitHabitsportalwascreatedin2011andprovidesteammemberswithaccesstoonlinetoolsusefulintheirdailyjobs,aswellasinformationoncompanynews,teammemberrecognition,andhumanresourcesbenefitsandprograms.

TheLTtakesanactiveroleinrewardandrecognitionprogramstoreinforcehighperformanceandacustomerandbusinessfocus.LTmembershostandparticipateinmanyrecognitionevents;forexample,they

■ Providebudget-appreciationdollarsforcelebrations,including

○ Teammemberbirthdays ○ Teammemberworkanniversaries ○ Themeetingofquarterlydepartment/corporategoals■ Establishannualcustomer-andbusiness-focusedgoalsfor

theTeamMemberVariablePayProgram■ Recognizeteammemberscompletingcertifications

ordegreesatall-team-membersmeetingsandprovidecashbonuses

■ Provideabonusstructuretorecognizeexcellenceinpostcallsurveys

■ Recognizeteammemberswhosupportthevalueoffitnessinthecommunity

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■ RecognizetheInnovator-of-the-Quarter■ Sendthankyounotestothehomesofteammembers

1.1b(2) TheLTcreatesafocusonactionsthrough(1)consistentlyfocusingonMVVachievement;(2)settingandfullydeploy-ingcleardirectionandtargets(expectations)thatdrivehighperformanceacrossabalancedportfolioofobjectivesdevelopedthroughtheSPP;(3)engagingteammembersindesigning,managing,andimprovingkeysystemsandprocessesthroughShapeItUpandSustainIt;(4)sharingofperformancethroughtheFitHabitsscorecard(Figure2.1-3)andABs;(5)aligningperfor-mancewithincentivesthroughtheQCPProcess(5.2a[4]);and(6)nurturingacultureofexplorationtotakeintelligentrisksandtoimprovewiththesupportoftheInnovationCouncil(6.1c).

Thesemethodsprovidearobustprocesstoensurethatthecom-panyisalignedtotheSPP;thatacultureisfosteredwhereideas

aresoughtandnewapproachesaretested;andthatteammembersbecome“owners”throughintentionalinvolvementinprocessdesign,management,andimprovementefforts.Keydecisionsthatimpactteammembersaresharedthroughmultiplechannels(Figure1.1-2)includingsocialmedia,whicharealsousedtoshareFitHabits’eventsandknowledgebaseswithcustomers.

1.2 Governance and Societal Responsibilities1.2a(1) FitHabitsisacloselyheldcorporation,withstockowner-shipby22teammembersofthecompany.TheBODiscomprisedofsevenpeople,withtheCEO/presidentex-officio.AsacompanythatstartedinagarageinRichmond,FitHabitsselectsBODmembersprimarilyfromthecommunity.Inaddition,acollaboratororsupplierisrecruitedtositontheboard.Occasionally,expertsinspecificareasarealsobroughtintostrengthentheboard.Boardmemberscurrentlybringfinance,e-commerce,cybersecurity,and

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performanceexcellencebackgrounds,aswellasoverallbusinessknowledge,totheirdeliberations.

AccountabilityforLTactionsistransparentandcommunicatedthroughscorecardsandtheperformancereviewcycle.Thereportingofkeyresultsisreviewed,analyzed,andmanagedduringthemonthlyboardmeetings.Inacycleofrefinementin2012,informationwasmadeavailableviathewebsitefortheBODcontinuousaccesstoallowforgreaterandreal-timeanalysisandmonitoringforbalancedscorecard(BSC)andAPaccomplishments.InadditiontotheBODreviewofperformance,adeeperanalysisisdonebytheLTandduringStep1oftheSPP,whereperformanceandotherdataareusedtodetermineimprovementopportunities.BODmemberssignCOIstatements.Independentauditsareconductedbyanexternalaccountingfirm.AuditfindingsarereviewedwiththeLTandBOD.InternalauditsareconductedandresultsarereviewedthroughtheFitTrackingProcess(Figure4.1-1).

Figure1.2-1demonstrateshowFitHabitsachieveskeyaspectsofitsgovernancesystem.

1.2a(2) TheLTmembersareevaluatedusingmultiplemethods.TheBODevaluatestheCEO/president’sperformanceannu-allybasedonachievementoforganizationalgoals.In2014,theBODrefinedtheexecutivebonustobebasedonfinancialperformanceandkeyqualitymeasures.Atthesametime,theLTrefinedtheteammemberbonustobecalculatedbytheuseofadecisionmatrixbasedonorganizationalgoalsandexternalrecognition(ExpertBestPlacestoWork,Baldrigeachievement,andcommunityengagement).TheCEO/presidentevaluateseachLTmember’sperformance,basedonQCPsthatincludevalues,organizationalanddepartmentgoals,andindividualgoals.LTmembersusetheseevaluationresults,teammembersurveys,andinformalinputstofurtherdeveloptheirleadershipeffectiveness.EvaluationtoolsandtheFHLS(Figure1.1-1)arereviewedeachyearduringtheSPPandduringBaldrige-basedself-assessments.

TheeffectivenessoftheBODinfulfillingitsrolesandrespon-sibilitiesisassessedthroughasurveycompletedbyeachBODmember.Thesurveyaddressesboardmemberpreparationandknowledgeandtheeffectivenessoftheboardinmeetingitsobligations.TheboardchairmanandtheCEO/presidentreviewtheresultsandmakerecommendationstothefullBODforimprovements.TheCEO/presidentassignsresponsibilityforimplementingapprovedrecommendations.Improvementsin2012includedonlineaccesstoallboardlegaldocumentsandmonthlyboardpacketsand,in2014,aformalorientationfornewboardmembers.

1.2b(1) FitHabitsworkscloselywithitssuppliers,fromclothingmanufacturerstoSendPIx,toavoidanyadversesocietalimpactsofitsproducts.UsingtheListeningandLearningMechanisms(Figure3.1-2),theLTdefinespotentialimpactsandconcernsandincludesthemindiscussionsduringthemonthlyorquarterlysup-pliermeetings(6.2b).Asanexample,in2014,FitHabitslearnedthatitscustomersdidnotwantsemitransparentmaterialsusedintheiractivewear;thisrequirementwasthenwrittenintoapparelmanufacturers’contracts.

Duetothecustomerbaseandthetypesofproductssold,publicconcernsareminimalandhaveneverbeenanissue.Inthepast,customersexpressedconcernaboutproductscomingfromoverseasandthepotentialuseofslaveorchildlaborinfactories.FitHabits’resultingHumanRightsPolicyisutilizedtoselectandannuallyreviewTier1andTier2suppliers.

FitHabitshasbuilttheconservationofnaturalresourcesintoitsprocessesandoperations.First,suppliersmustshipproductsinrecyclableormade-of-recyclablematerials.FitHabitsthenshipsallordersinpackagingmadeofrecyclablematerials.AttheFitHabits’campusinRichmond,lightingandheating/coolinginofficesandthewarehousearetriggeredbymotiondetectors.Recyclinggoalsaresetforeachdepartmentforpaperandmetal.Acorporateprizeisavailableforanydepartmentexceedingitsgoal.

1.2b(2) EthicalbehaviorisexpectedatFitHabits.TheLTrolemodelsethicalbehaviorandsupportsaculturethatpromotesandensuresethicalbehaviorinallinteractions,startingwiththevalueof“Integrity.”TheLTdeployssystematicprocessesincludingStandardOperatingProceduresandPolicies(SOPPs)onethicalandlegalbehavior,leadsannualtraining,andtracksperformance.AllteammemberssignaFitFulpledgeinbusinessethicsduringFitWelcome!,newteammemberorientation,andthenannually

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duringrefresherethicstraining.TheLTandBODsignFitFulaswellasCOIstatements.AllsupplierssignaStandardsofBehavioraspartoftheircertificationprocess(6.2b).

KeyprocessesandmeasuresofethicalbehaviorareincludedinFigure1.2-2.TheLTenforceszerotoleranceforsignificantbreachesinethicalbehavior.TheChiefPeopleOfficerorthelegalcounselinvestigatesallreportedpotentialbreachesinethicalbehavior.Whenaninvestigationrevealsthatanethicalbreachhasoccurred,progressivediscipline,uptoandincludingtermination,isinitiated.

1.2c(1) Duringthe2012SPP,theLTlookedatallsocietalrespon-sibilityandcommunitysupportprogramsrecentlycompletedandplannedforthecomingyear.LTmembersrealizedthatmostoftheworkfitunderaHEALTH(Health,Exercise,Attitude,Training,andHealing)comprehensiveportfolio.Inacycleofrefinement,thisledtotheevaluationofnewprogramsagainsttheHEALTHcriteriaandbecameastrategicadvantageforFitHabits.

Providingthecommunitywithaccesstounbiasedfitnessinforma-tionandeducation,rangingfromacademicstudiestobreakingnewsinnutritionandexercise,istherightthingtodo.FitHabits’onlineeducationinitiatives,underHEALTH,provideastrongdifferentiatorinthemarketplace,supportthebrand,andbuildcustomerloyalty.

Tofurtherthecontributiontosocietalwell-being,FitHabitsworkswithsupplierstomaintainafocusthatthemajorityofproductsandpackagingare“MadeinAmerica.”

FitHabitspridesitselfinbeingagreencompany,havingtakenthesteptoadoptaboard-approvedGreenPolicyStatement.Thecompanydeploysasystematicapproachtobeinggreen,usingimprovedtechnologiestodecreaseenergyconsumptionandcarbonoutput(1.2b[2]andFigure1.2-2).Asaresultoftheseefforts,FitHabitshasbeenrecognizedbothlocallyandnationallyasaleaderingreeninnovation(Figure7.4-11).

Tofurthersocietalwell-being,FitHabitshascreatedaspecialfocusonchallengedathletes.Thisstartedasanefforttosupportdisabledveterans.Asthecompanystartedlookingatspecialactivewearandathleticshoesforthem,theLTsawtheneeds

presentinthelargerchallengedathletepopulation.FitHabitsmadeacommitmenttohiringandsupportingchallengedathletesinitsheadquartersgeographicarea;thisincludedtherecenthireofamarketingspecialistfromtheranksoftheseathletes.Inaddition,FitHabitsisfinalizingseveralpartnerships(inalignmentwithCC1andCC3)withnationalassociationssuchastheExtraceptionalOlympics,SteelWoMan,andOurCountryTriathletes.

1.2c(2) FitHabitsevaluatesitskeycommunitiesannuallythroughtheSPP.KeycommunitiesareidentifiedasthecommunitiessurroundingtheFitHabits’facilities.ThecoachforcommunityrelationschairsateamofmembersrepresentingeachsitecalledtheHEALTHTeam,whichannuallyselectseventsandcompaniestosupportwithfundsand/orvolunteers.TheHEALTHTeamconsiderstheHEALTHcriteriainevaluatingopportunitiesforsupport.EachproposedopportunityhastomeetatleasttwooftheHEALTHcriteria.

TheHEALTHTeamisresponsiblefordevelopinganannualplanandbudgettopresenttotheLTforapproval.InadditiontoannualsupportforJoinedPathateachsite,asampleofrecenteventsandorganizationssupportedcanbefoundinFigure1.2-3.

In2008,FitHabitshasalsoidentifiedanearbyRichmondneighborhoodasakeycommunityandannuallytakesongoingstepstostrengthenit.RepresentativeLTmembersparticipateinthelocalCommunityActionCommittee,leveragingCC1,the

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corecompetencyofrelationships,tostayabreastofcommunityneeds.In2010,anevaluationofcommunityneedsledtothedevelopmentofOperationFitShoe.AnexampleofFitHabits’commitmenttotheneighborhood,OperationFitShoe,nowinitsseventhyear,providesanopportunitytomakesurechildrenhavenewshoestostartschool.FitHabitsworkswithitsshoesupplierstoprovideshoestoFitHabitsatcostorforlesseachyear.LTmembersparticipateinFitShoeevents,providinglemonadeandhealthysnacks,tohelpchildrenbefittedwithfree,newshoes(Figure7.4-13).Teammembersvolunteertheirtimetomakethisanannualsuccess.

FitHabitsengagesteammembersinsupportofcommunitiesbyprovidingeachteammember16hoursofannualpaidvolunteer

timeoff.Thisprogram,consistentwiththeFitHabits’valueofService,allowsteammemberstopursuevolunteeropportunitiesandsupportorganizationsandprojectsthatinterestthem.Teammembersenterthevolunteerhourstheycontributeinanonlinesystem(seeFigure7.4-12),andtheyarerecognizedbytheLTforexceptionalvolunteerismwithcertificates,communityserviceawards,andEveningofExcellencerecognition.

FitHabitscontinuouslyevaluatesandimprovestheHEALTHapproachtocommunitysupporttofocusoncausesimpactingfit-ness(CC3)andhealth,especiallyinthecommunitieswithFitHab-its’facilities.Thewebsitealsoprovidesinformationonfitness,health,andnutritionforcustomersandthegeneralpopulation.

Category 2 Strategy

2.1 Strategy Development2.1a(1) FitHabits’five-phaseSPP(Figure2.1-1)isoneofthemostvitalfunctionsusedbytheLTandBODtoensurethattheyareproactiveandmeetingtheneedsofkeystakeholders.PhaseIisFitHabits’innovativeBusinessAnalyticsScanningProcesstoaddresstherapidlychangingfashionandtrendsinactivewear,customerandworkforcerequirements,andinfrastructurerequire-ments.Thisapproachtranslatesintotwokeyplanninghorizons,whichaddresstheprimaryelementsofFitHabits’organizationalenvironment:

■ Shortterm,upto24months:Primarilyfocusedonfashiontrends,thecompetitorlandscape,workforceandcustomeroverallrequirements,andsupplierrelations;and

■ Longerterm,greaterthan24months:Primarilyfocusedoninfrastructureandcapitalinvestments.

Becauseofthenatureoftherapidchangesintheactivewearindustryandtoremainagileandretainorganizationalreadinessforshiftsintrendsandthedemandsofcustomers,theLTandBODidentifiedearlyinFitHabits’historythattwoplanning

horizonsprovidedthecompanywiththecriticalassessmentpointstorapidlyandeffectivelyrespond.Thesehorizonsservethecom-panywelltorespondeffectivelytocustomerandmarketsshifts.

Phase I: Businessanalysiscomponentsconsistoftwokeysteps.

Step1:Acomprehensive,robustbusinessanalyticsprocess,comprisedofthreeparts,occurstwiceayear,withupdatesfromvariousgroupswithinFitHabits.Everysixmonths,MarketingandSalesTeammembersperformacomprehensivescanofthefashionandactiveweartrendsandprovideanextensiveanalysisofindustrytrendsinretail,Internetshopping,andactivewearclothingandfootweardesign,aswellasofanyshiftsinthecompetitivelandscapeandmarketforces.ThisanalysisisinputintoPhaseII:StrategyDevelopment.Annually,theChiefPeopleOfficerconductsanextensivereviewandsummaryofworkforcechallenges,needs,andexpectations,asthefirststepintheCapa-bilityandCapacityPlanningModel(Figure5.1-1).MarketingandSalesTeammembersperformacomprehensiveanalysisanddatagatheringfromfivekeyfocusgroups(activewearsuppliers,athleticfootwearsuppliers,teammembers,trainers,andfitness

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coaches)forkeycollaboratorsandcustomers.TheyanalyzetheresultsfromtheVOCmethods,suchastheGuppolsurvey,customerfocusgroups,andsocialmedia(Figure3.1-2).Inaddi-tion,datagatheredfrommonthlyandquarterlysupplierreviews(6.2b)areanalyzedtoidentifysupplierrequirements,advantages,challenges,andopportunities.TheseanalysesareinputsintoStep2(below).Annually,thecapitalandinfrastructuralneedsassessmentsareconductedbytheCOO,CFO,andothers,asappropriate,toprovideinputstothecompany’sabilitytomeetthedemandsofkeyareasincludinginventorymanagement,informa-tiontechnology(IT)/webordering,andCallCentersupport.ThisanalysisisinputintoStep2.

Step2:InanannualFebruarytwo-dayplanningretreat,theLTandBODworkthroughStep2oftheSPP.TheyreviewthebusinessanalysesfromStep1;theyalsoreviewthecurrentyear’sBSCwithstrategicchallenges,advantages,priorities,andsuc-cessesandassesstheirrelevancetothecurrentmarketconditionsandFitHabits’BSCgoals.Basedonthisinformation,theLTandBODperformastrengths,weaknesses,opportunities,andthreats(SWOT)analysisandidentifyanyemergingcriticalchallengesandopportunities,threats,orweaknesses,includingorganizationalrisksorpotentialblindsspots,andanyshiftsinorganizationaldirectionsandcompetencies.Annually,theparticipantsvalidatethefourstrategicfocusareas(customers,inventory,teammem-bers,andfinance/growth),whichhavebeenconstantforthepastsixyears.ThekeyoutputsprovidetheinputsfortheLTandBODtomoveintoPhaseII:StrategyDevelopment.

Phase II: StrategicdevelopmentisconductedinSteps3and4.InStep3,theLTandCEO/presidentmeetinlateFebruaryforaone-dayfacilitatedStrategyDevelopmentWorkshop.Inputsfromearlierretreatsarereviewed,andparticipantsdiscussandvalidatekeyorganizationalfactors,includingthevisionandmission,currentcorecompetencies,potentialfuturecorecompetencies,thethreekeyworksystems(KWSs;Figure2.1-2),anytrendsinworkforcerecruitmentorretention,anyshiftsormodificationstothestrategicchallengesandstrategicadvantages,planninghorizons,andthefourstrategicfocusareas(above).Thepartici-pantsdevelop(new)orupdateand/oradjustpreviousSOs(basedonthefocusareas).

Step4:Followingthisworkshop,eachSOisassignedanLTmem-bertoconductaformalizedresourceneedsassessment(RNA,see2.2a[3]).RNAsareconductedwithinarobustsoftwareprogram,inwhichdataareaggregatedandanalyzedtoensureresources(bothinternalandexternal)areaccountedfororputintotheresourcerequestfunnel(RRF)forfutureresourceneeds,suchastheidentificationofanewsupplierand/ornewproductoffering.TheRNAsarefurtherrefinedwiththeAPdevelopments(2.2a).

DatafromcompetitiveanalysesareupdatedeverythreemonthstoensurethatFitHabitsismonitoringitsmarketpositionandaddressinganysignificantchangesinatimelyfashion.Priorto2013,FitHabitsonlyreviewedthesedataannually,butinlate2013,itidentifiedthatarelativelynewboutiqueretailer,DZMT,hadrapidlytakenabout3%ofthemarketinbothactivewearandathleticshoesinjustsixmonths.Toimproveitsmarketknowledge—andavoidthistypeofsurprise—FitHabitsmovedtoaquarterlyupdate.

Phases III and IV: APdevelopmentandimplementation(deploy-ment),Steps5,6,and7,areaddressedin2.2aand4.1b.

2.1a(2) Thecomprehensivebusinessanalyticsapproachprovidestimelyinformationandanalyticstocriticalcustomer-andspecificindustry-focusedstrategicopportunitiestostimulateinnovationinFitHabits’productlines,technology,andworkforcesupportpro-cessesandinbeingproactiveinmeetingandexceedingtheneedsofcustomers,whileatthesametimestayingaheadoftherapidlychangingactivewearfashionrequirements.Strategicopportunitiesarevettedandtheintelligentrisksarestratifiedbasedonasetofstandardizedfactorsforbothexternalopportunities(productstosell)andinternalopportunities(e.g.,infrastructureinvestments)toensurethatappropriateandinformedrisksareassessedandduediligenceconductedbeforepursuinganidentifiedstrategicopportunity.Forexample,forthemid-2014businessassessment,basedoninputsfromsocialmedia,customers,theactivewearmarket,andsuppliers,theLTassessedthegrowingdemandsfromchallengedathletestohavefashionable,practical,andreasonablypricedactivewearandathleticshoes.

Bylatefall2014,twokeysupplierswereidentifiedwhocouldmeetboththeproductrequirementsandthemanufacturingtimeframetoeffectivelyaddressthisnewstrategicopportunity.A2016strategicopportunityforFitHabitsinvolvesenteringintoseveralsustainablefashionactivewearproductlinesfromtwoemergingminority-ownedmanufacturers.

2.1a(3) StrategicconsiderationsarepartofthecomprehensiveanalysisconductedinPhasesIandII.BasedoninputsandanalysesconductedinPhaseI,goingintotheFebruaryworkshop(Step3),theLTmemberssynthesizedataandusethemasthebackdropforthedeterminationsofstrategicchallengesandstrategicadvantagesandaddressanyknownorpotentialrisks,includingchangestotheregulatoryenvironment,toorganizationalsuccessandsustainabilitythatFitHabitsneedstoconsiderandaddressinitsnextstrategicplanningcycle.Theexecutionoftheplanisaccomplishedthroughdiscussionsofthestrategicfocusareas;inaddition,afullRRFisconductedtoensurethatresourcesareavailable.ThroughannualShapeItUpcycles,potentialblindspotsareassessedandmitigated.Forexample,priorto2013,keysupplierrequirementswerenotakeyconsiderationinPhaseI’sbusinessanalytics.Basedonthe2012ShapeItUpevaluation,thiswasidentifiedasamajorflawintheSPPandthusbusinessanalyt-icsforthetop-supplierrequirementwererefinedin2013.

2.1a(4) FitHabitshasthreeKWSs(Figure2.1-2).

TheseKWSsareannuallyreassessedandvalidatedinStep3.Duringthisstep,theLT(re)assessesFitHabits’capabilitiesandcapacitywithineachKWSandalignsthosetoensurethatthethreecorecompetencies(relationships,innovation,andfitness)aresustained.ProcessesthatarenotprimarytothebusinessandcorecompetenciesofFitHabitsareevaluatedforoutsourcingreturnoninvestment(ROI)andsupportivefunctionstothecorebusiness.Forexample,themanagementofCustomerRelationsisaprimarybusiness;thustherearenooutsourcedprocesseswithinthisKWS.However,inOperationsandSupport,FitHabitscurrentlyhastwooutsourcedprocesses.ThefirstistheProductShipmentProcess,managedthroughkeysupplierSendPIx.On-timedeliveryandproductshipmentareSendPIxcorecompetencies,andthrough

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anexclusivecontractandsuperiorrelationshipwithSendPIx,FitHabitsisguaranteed24-houron-timedelivery(ContinentalUnitedStates),withfewexceptions,toitscustomers(Figure7.1-16).Thesecondoutsourcedprocessisthemaintenanceandupkeepofthestructuresandhousekeepingservicesinfacili-ties,managedbyAFM.Allotherkeyworkprocesses(KWPs;Figure6.1-1)areperformedbyandprimarytothecorebusinessofFitHabits.

AspartofStep3,futurecorecompetenciesandKWSsareassessed.Forexample,in2013,theKWSswerere-structuredfromtwosystemstothecurrentthreetocreateaseparateSup-plier,Manufacturer,andCollaboratorRelationsSystemtofurthercapitalizeonthecorecompetenciesofrelationshipandinnovationwiththesekeystakeholders,whileatthesametimenotlosingthemomentumofthesecorecompetencieswiththecustomersandworkforce.

2.1b(1) GoalsforSOsareseeninFigure2.1-3.Keychangesidentifiedinthe2016strategicplanincludeashifttotwonewsuppliersforsustainablefashionsandactivewearproductlinestargetedforchallengedathletes.

2.1b(2) DuringStep4oftheSPP,theLTandBODconductanexercisetoensurethattheidentifiedSOsstrengthenthestrategicadvantages,leveragecorecompetencies,andhelpmitigatestra-tegicchallenges.EachSO,asappropriate,isassignedshort-andlong-termgoalstoensurethattheconsiderationsandneedsforeachcustomergroupandstakeholdersarebalancedandalignedtotheFitHabits’missionandvision.

2.2 Strategy Implementation2.2a(1) Phase III:InStep5oftheSPP,theLTandcoachesdevelopcomprehensiveAPstoaddresseachSOandensurethattheappropriateAPsaredevelopedtoeffectivelyaddresseachoftheplanninghorizons.TheAPDevelopmentProcesstypicallytakesfourweekstocomplete.ThiscompressedtimeframeenablestheLTandcoachestoensurethatallofthevariousconsiderationsarefullyevaluatedandresourceassessmentsmade(2.2a[3])toensureachievement.Thisshortenedtimeframewasacriticalchangethe

LTmadein2014totheAPDevelopmentProcesstoinstillagility,whileatthesametimeenhancingtheabilitytomakedecisionsbasedonfactsandcriticalconsiderationsforeachplanninghorizon.

Forexample,eachSOisassignedanLTowner.EveryMay,duringweek1oftheSPP,eachSOowneristaskedwithassem-blinghis/herteamtoidentifyanddevelopproposedactionplans(PAPs)byhorizontoaddressthatSOandcompletetheRNA(see2.2a[3];availableon-site[AOS]).Week2,thePAPsandRNAarecompiled,vetted,anddiscussedtoensurethattheentireLTunderstandsandsupportsthePAPsandtheRNAimplications.Iftherearequestionsoradditionalworkrequiredtoensurebuy-inbytheentireLT,theSOownergoesbackandrefinesthePAPsandrevisedactionworkplan(RAW),andthosearebroughtbackinweek3forfinalvalidationandalignment.Week4,theLTreviewsandapprovesorrejectsthePAP;allapprovedPAPsareconvertedtoAPsandbecomereadyfordeployment.

ThephasesofFY2016APsareshowninFigure2.2-1.APsarefurtherrefinedtoensurespecificityoftactics.Forexample,someAPsareownedattheLTlevel;othershavemorespecifictacticsandmilestonesmanagedbyindividualcoaches;andsomeAPsareveryspecificwithfront-linetacticsandmilestonesmanagedbyindividualteammembersand/orteams,asappropriate.ThedelineationofkeyAPsensuresclearlinesofaccountabilityandownership.

2.2a(2) Annually,allAPinformationiscapturedandcollatedintoaone–two-pagedocumentcalledtheFitPlan,whichissharedwiththeentireworkforceandotherstakeholders(Step6),usingtheKeyCommunicationsMechanisms(Figure1.1-2).TheannualFitPlanprovidesforconsistentmessagingandintendedworkforthenextyear.TheFitPlanisdeployedinlatespringofeachyeartotheworkforcethroughthreekeymethodsandisspecificallyalignedtoaddressthespecificityofAPs.

Thetwo–threeweeksfollowingtheannualall-team-membersmeeting,eachcoachisrequiredtofurtherdiscusstheFitPlaninhis/herweeklystaffmeetinganddailyhuddlesandaddressanyadditionalcommentstodevelopLevel2tactics.Allteam-memberfeedbackiscapturedandreviewedattheearlyJuneLTmeetingtoevaluateopportunitiesforrefinementsand/orchangestotheFitPlan,aswellastoalignallocatedresources(2.2a[3]).Intheeightyearsthesedeploymentstepshavebeeninplace,onlyinthefirsttwoyearswastheFitPlanmodifiedpriortothestartofthefiscalyear,andbothtimesthesemodificationswerebasedonteammembers’insightstotechnologyadvances.Thus,in2010,thebusinessanalyticsphasewasenhancedtoincludeadditionalworkforceandotherstakeholders’inputs,furtherreducinganopportunityforblindspots.

Inthethreeweeksleadingtothestartofthenewfiscalyear,becauseoftheplanninghorizontimeframes,thespecificAPsareaddressedasfollows:

■ Short-termAPownerworkswithhis/herteamstomapoutthefinaltacticsandmilestonestoaccomplishtheAPwithinthenext6–24months.IftheAPisacarry-overfromthepreviousyear,theAPownerupdatestheAPandalignsworktacticstoensurethattheAPwillbeaccomplishedintheallottedtime.Ifit’sanewshort-termAP,theAP

Figure 2.1-3: Strategic Objectives, Action Plans, and Projections

Customers: Delight Always

Inventory: Provide the Right Product, Right Time, Always

Team Members: Be a Team Embracing Fitness

Finance/Growth: Increase Financial and Market Position

Key :

Improve customer loyalty by I 0% through sales interactions and relationships

• Increase warehouse capacity by 50% Increase supplier product portfolio options by 25%

• Reduce returns by 20%

I Sustain team members' engage-ment and alignment to WellFit participation at 80%

1 · Improve net income by I 0% • Improve net margin by 5% • Be a top boutique activewear

provider in the United States

CC: I, 2, 3 SA: 1, 3, 4, 6, 7 SC: l, 2, 5, 6

CC: 2, 3 SA: 2, 3, 4, 5, 6, 7 SC: 3, 4, 5, 6

I CC: l, 3 SA: l, 4, 7 SC: 7

CC: 1, 2 SA: l, 2, 4, 5, 6 SC: I, 3, 4, 5, 6

• Customer engagement Sales $ per customer encounter

• # SKU offered • $ cost/square foot • % supplier performance • % returns • % in-stock rate

1 · Overall team member engagement

• High-performing team member retention rate

• Net margin • Net Income . Activewear ranking

I

• 7.2-8, 7.2-9

• 7.1-4

• 7.1-3 • 7.l-25

7.1-29 • 7.1-13 • 7.1-14

• 7.3-12 . 7.3-1

• 7.5-2 • 7.5-1 . 7.5-9,

7.5-10

ST: ST:

ST:

LT:

LT:

ST: ST: ST:

LT: LT: LT:

ST:

LT:

ST:

LT:

LT:

Reduce abandon call rate Increase promotional items per week per supplier Increase product offerings for challenged athletes Expand product portfolio and selections Increase collaboration with national and local organizations

Improve invoice accuracy Improve uptime ofFitWeb Improve supplier performance and satisfaction Reduce total cost per square foot Maximize relationship with shipper Increase warehouse capacity

Provide additional participation in WellFit for team members and family Increase training and development opportunities

Expand portfolio to include additional offerings for challenged athletes Improve ROI of improvement projects Reduce total cost per invoice

• Abandon call rate • Promotions ROI • % of new offerings • % of new product offerings

# of new collaborative relationships

• Invoice accuracy • FitWeb uptime

Supplier performance and satisfaction

• Total cost per square foot • Average shipping cost per order • Warehouse capacity (SKU)

• # of events % of team member participation in WellFit

• Training and development dollars per FI E

• % of new offerings • ROI from improvement projects • Total cost per invoice

Strategic Advantages : SA I : Superior customer service; SA2: Innovative Reverse Product Identification and Capture Process; SA3: FIT platform; SA4: Focus on continuous improvements ; SAS: ISO 9001 :2015 certification and ISO/IEC 27001 compliance ; SA6: HEALTH comprehensive portfolio; SA7: Highly engaged team members

Strategic Challenges : SCl: Emerging competitors and mergers; SC2: Cyber security; SC3: Maintaining an adequate profit margin; SC4: Current warehouse space/inventory constraints; SCS: Maintaining and securing robust inventory selection; SC6: Changing customer demands and expectations; SC7: Retaining skilled team members in competitive boutique athlete market

Core Competencies: CC 1: relationships; CC2 : innovation; CC3 : fitness

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ownerworkswithhis/herteamstomapoutthetacticsandmilestonestoaccomplishtheAPwithinthenext12–24months.

■ Long-termAPownersreviewquarterlyAPsthataregreaterthantwoyearsinscope.Occasionally,long-termAPsarecarriedoveranadditionalyear(uptofiveyears),aswasthecaseforthenewwarehouseimplementation.

APachievementisevaluatedthroughperiodicreviews(4.1b,Figure4.1-4),andachievementovertimeisshowninFigure7.4-17.Annually,aspartofPhaseV,theentireSPPisevaluatedforitseffectiveness,efficiencyofresources,andengagementofteammembersandotherstakeholders.

2.2a(3) ForeachAP,aRNAiscompletedbytheAPownertoensurethatappropriatefinancial,workforce,andotherkeyresourcesareavailable.TheRNAsarestartedwithinPhaseIIIduringweek1andarefinalizedbytheendofweek3(2.2a[1]).AlloftheRNAsareelectronicallyaggregated(inweek2)toassessanddetermineoverallfinancialandotherresourcerequirements.

EachRNArequirestheAPownertoprioritizerequestedresourcesagainstsixkeycriteriaelements:

StrategyImpactMarketImpactOperationalImpactWorkforceImpactFinancialImpactTechnologyandInnovationImpact

TheRNAisweightedandscoredusinganImpact/ResourceDemandMatrix(AOS)todetermineanoverallRNAscore.Duringweek2oftheAPprocess,theLTreviewsandworkswiththeappropriateAPownerstomakeresourceadjustmentstosupporthigher-scoringAPaccomplishmentsandappropriateplanninghorizons.Financialrisksforavailableresourcesand/orthereallocationofresourcesisevaluatedbasedontheoverallRAWscores.APswithRNAscoresthatdemonstratehighimpact

areprovidedthemostresourcesandoversight;thosescoringlowestarere-prioritizedand/orremoved.Byweek4oftheAPprocess,RNAsareincorporatedintothefinalAPdeployment,andteamsaremadeawareoftheirresourceallocationsandbudgetaryconstraints.

2.2a(4) AsRNAsaredeveloped,theAPownersidentifythestaffinglevelsandskillsrequired.ThePeopleTeamaggregatestheseforecaststodeterminecapabilityandcapacityrequirementsacrossthecompany(5.1a[1]).Thestaffingandskillsaretranslatedintorequirementsforadditionalheadcountorre-deployedteammembers.TheyalsogeneraterequirementsforLearningandDevelopment(L&D)stafftosupportskilltrainingonneworrefreshedcompetencies.

TheentireFitPlanforthenextyearissharedatanall-team-membersmeetingintheMaytimeframe.ThisisfollowedupwithbreakoutsessionsanddepartmentmeetingswhereteammemberscanaskquestionsspecifictotheirareasorjobstoensuretheircomprehensionandexpectationsforeachoftheAPsandtactics.

2.2a(5) ExamplesofFitHabits’keyperformancemeasurestotrackAPsareshowninFigure2.1-3.TheseAPmeasurescascadeuptotheoverallSO,arereflectedontheBSC,andarealignedtoappropriateplanninghorizons.Forexample,APmetricsforthelonger-termhorizonsareprimarilytrackedonaquarterly-to- semiannualbasis,aschangeinthedataislessfrequent.APmeasuresareidentifiedthroughtheMSP(Figure4.1-2)andappropriatecomparatives(Figure4.1-3).

2.2a(6) PerformanceprojectionsfortheappropriateplanninghorizonsareshowninthefigurescitedinFigure2.1-3.FitHabits’projectionsarebasedonhistoricaltrends,anticipatedchangesinthemarketplace,andsupplierinputs.Performanceprojectionsareaddressedineachsupplierquarterlydiscussiontoevaluateforshiftsand/oradjustments.Quarterly,theLT,throughdataanalytics(4.1a),runsasimulationofeachcompetitor’sperfor-mancebasedonmarketandcustomerdata,andnewprojections

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ofbothFitHabits’performanceandkeycompetitors’projectedperformanceareadjusted.Ifperformancegapsareidentified,theSOownerconductsathoroughevaluation,andthosefindingsmaywarrantrevisinganAPand/orstayingthecourse.

2.2b FitHabits’APscanbemodifiedfortwobasicreasons.ThefirstisbasedontheassessmentandevaluationofAPachievement(perthereviewprocess,4.1b);ifthecurrentAPisnotwithin25%oftheexpectedlevelofachievementattheendofeachidentifiedreview,theLTand/orAPownerwillevaluatewhytheAPisoffplananddoacoursecorrectiontobringitbackintoscopewithinthenext1–2reportingcycles.Ifafterthattime,theAPisnotyetbackontrack,aformalAPModificationTeamwillbeformed,andmoreremedialstepswillbeassessedandimplemented.FitHabitshasonlyhadtodothistwotimesinitshistory,andbothtimes,theAPhasbeenbroughtbackintoexpectedlevelsbytheendofitsoverallplannedhorizon.

ThesecondreasonformodifyinganAPisformajorshiftsinthemarketplacesuchascompetitoracquisitionsand/orsuppliercomplications,whichareoutsideofFitHabits’controlorinflu-ence.Inthethreetimesthatthishasoccurred,FitHabitshasbeenabletorecoverfromoneofthosebyrapidlybringingadifferentsupplierintofillthevoidininventory;however,theothertwoeventsinvolvedvariationsofcompetitorand/orsupplierconsoli-dation,whichbothresultedincustomersshiftingawaytootheroptions.ThisresultedinamajorupswingindemandforFitHabits’productsthatoutpacedexpectations,andthecompanyfounditwasachallengetofindthecapabilitytoadjustthespecificAPsforinventoryfastenough.Thus,agapinprojectedsalesandinven-toryintworeportingcyclescouldnotbeadequatelyabsorbed,andAPmodificationscouldnotadjustfastenoughtomeettheincreaseddemands.Whileseveralkeyactivewearcategoriessoldoutbecausethecompetitorandsuppliersshifted,FitHabitsalsosawaslightdecreaseincustomersatisfactionuntiladjustmentscouldbemade.Akeylearningfromtheselasttwoevents(in2010and2013)resultedinimplementingaBrowsingTransaction

SurveyintheFitHabits’ListeningandLearningMethods(Figure3.1-2)toenableordersforhotitemstobeflaggedsothatcustom-ersaregivenpersonalizedserviceandoptionsforalternatives.

Phase V:TheevaluationofthecompleteSPPisconductedannuallyduringtheFallLTretreat.ThelastStep(8)intheSPPisanannualevaluationoftheeffectivenessandefficiencyoftheentireSPPaspartofFitHabits’ShapeItUpcycleofevaluationandimprovement.Ineachofthelastsixcyclesofimprovement,theSPPhasbeenimproved.Forexample,inthefollowingyears,thecompanymadetheseimprovements:

■ 2010,formalizedandstandardizedStep5,APDevelop-ment,andmodifiedthebusinessanalyticsTier1processtoabiannualassessment

■ 2011,differentiatedtheplanningprocess(PhasesIandII)fromthedeploymentandimplementationprocess(PhaseIV),andincorporatedanevaluation/improvementphase(PhaseV)

■ 2012,enhancedtheenvironmentalscanandSWOTanalysis(PhaseI)toensurethatblindspotswereaddressedandcomprehensivecompetitoranalysiswasconductedsemiannuallyversusannually

■ 2013,incorporatedthetop-10suppliersintotheSPPtoaligntheirrequirementstoFitHabits,andspecificallytotheSOstoensuresuccessacrosstheproductareas

■ 2014,cycleinvolvedapplyingSustainIttoleanoutnon-value-addedSPPstepsandtightenthetimeframesbetweenhandoffsforeachofthefirstsevensteps,reducingtheprocessfromninetosixmonthsandenablingittostartinearlyJanuaryandbefullydeployedbytheendofJuneforthestartofthenewfiscalyear

■ 2015,cycleofevaluationandimprovementresultedinarefinementoftheSPPvisualtomirrorthatofa2010BaldrigeAwardhealthcarerecipientthatwasbenchmarked.Figure2.1-1providesaclearvisualtoensureamoreconsistentmessageoftheeightstepstoallstakeholders

Category 3 Customers

3.1 Voice of the Customer3.1a(1) ThroughtheVoiceoftheCustomer(VOC)Process(Figure3.1-1),FitHabitsintegratestheVOCListeningandLearn-ingMechanisms(Figure3.1-2)(1)withtheSPP(Figure2.1-1)tousecustomerinputstosetprioritiesand(2)withtheperformancereviewcycle,calledtheFitTrackingProcess(Figure4.1-1),forreviewandimprovementthroughShapeItUp,asneeded.

Step 1: Listen and Learn from the VOC—FitHabitsusesanintegratedapproachtolistento,interactwith,andobservecustomers,leveragingformalandinformalmechanisms.Someofthesemechanismsvaryacrossdifferentcustomergroupsandsegments,ashighlightedinFigure3.1-2.Dataandinformationobtainedareusedasdescribedin3.2aand4.1a(3).Forexample,theAdvisoryBoard,selectedfromacrosssectionoffrequentlyengagedcustomers,providesnotonlyearlyfeedbackoncataloguelayoutsbutalsoinputsonproductstylesandcolors.

AsanInternetretailer,FitHabitsrecognizedthatitishighlydependentonsocialmediaforitssuccessandcharteredaSocialMediaTeamin2012.TeammembershavedevelopedandexpandedtoallkeyavenuesincludingHowIlookbook,Witter,Zolp,Wckler,Meowsuite,andWitterDeck(3.1a[1]).Inearly2011,anonlineRatingsandReviewsplatformwascreatedandintegratedintotheFitWebonlinecatalogueandCallCenter.Aftereachcustomerexperience,arequestforRatingsandReviewsisdeliveredtothecustomer.Withanover55%responserate(Figure7.2-11),thisisoneofFitHabits’measuresofengagement.FeedbackfromwebsitessuchasHowIlookbookandWitterisalsomonitoredforfeedback.

Step 2: Analyze and Use the VOC—TheCustomerListeningTeamoverseestheaggregationandanalysesofallVOCinforma-tion.Teammembersaggregatesurveyinformation,feedbackfromRatingsandReviews,“NotesofInterest”fromthewebsite,

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“HeardontheStreet”reports,anddissatisfactionreports.TheyalsoreviewtheconclusionsofRBR’s“DataShop:MarketingNow.”ThisdataanalyticstoolreceivescustomerinformationfromFitWebandhelpsFitHabitsunderstandcustomerrequire-ments,buyingtrends,andpatternsofdissatisfaction.

TheenhancementsthatFitHabitsbuiltintotheredesignofFitWebenablethecompanytotracknotjustbuyingpatternsbutbrowsing

episodesbyeitheruseridentificationoranIPaddress.Further,FitWebhassurveysbuiltintotheuserexperi-encethataretiedtobrowsingandeaseofaccess,aswellaspurchasingandeaseoftransactions.ThisinformationgoestotheCustomerListeningTeamforanalysis.

Weekly,theCustomerListeningTeammembersdistribute“HotNews”bulletinsontrendstheyseetoallteammembers.In2013,theirreportoncustomersaskingfortangerine-coloredactivewearvalidatedearlyindustryreportsthatMarketingandSaleshadreceivedon“tangerine”beingthenewcolorofchoice.Onamonthlybasis,theCustomerListeningTeampresentsitsanalysistotheLT.Annually,theLTreviewsandanalyzestheVOCfeedbackasinputstotheSPP.

Step 3: Improve and Innovate—ResultsreceivedfromtheCustomerListeningTeamareusedinseveral

departments,includingMarketingandSalesandtheCallCenter,tovalidateorimproveexistingprocessesandintheSPPtohelpprioritizeimprovements.Annually,BSCresultsarereviewedagainsttheVOCresultstodeterminetheeffectivenessoftheVOCmechanismsandtosuggestimprovements.In2014,thecreationoftheAdvisoryBoardoffrequentlyengagedcustomerstoprovideinputsoncataloguesandproductsstartedasaresultofsuchanalysis.

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Step 4: Evaluate, Modify, and Sustain—IfVOCresultsindicateaneedforimprovement,aShapeItUpteamwillbeassembledtouseLeanandFITTESStoolstoaddresstheneedforimprove-ments.Toensuretheimprovementsmadearesustained,changesareintegratedintoSustainIt.Forexample,whenimprovementsweremadetoservicerecoveryprocessesasaresultofVOCinputs,SustainItprocessesmadesurethatthechangeswereincorporatedintoSOPPs,onlineforms,anddailyhuddles.Theseimprovementsinservicerecoveryledtoanincreaseincustomerloyalty(Figure7.2-10).

Toenhancelisteningandlearningmechanismswithcustomers,theLTmadeacommitmenttogatherinputfromsocialmediabyestablishingtheSocialMediaTeam.FitHabitshasusedRatingsandReviewsfromcustomerstoreviewtheirexperiencessince2011.FitHabitsalsohasanofficialpresenceonHowIlookbook,OurTube,Witter,Zolp,Wckler,Meowsuite,andWitterDeck.TheSocialMediaTeammonitorsthesechannelsandgeneratesweeklyreportsthataggregateandtrendinterestandengagementtohelpguidemarketingeffortsandimprovecustomerengagement.

Toexpandthebodyofcustomerinformation,in2014,FitHabitsintroducedtheAdvisoryBoard.Thisgroupofstakeholdersismadeupofengagedcustomerswhoprovidefeedbackonproductselectionstylesandcolorsthroughamonthlyonlinesurvey.TheyareencouragedtoparticipatenotonlytooffertheiropinionsbuttoreceiveachancetowinaFitHabits’giftcardinmonthlydrawings.TheirfeedbackhelpsensurethatFitHabitsoffersthemerchandiseandservicesthatbestmeetcustomers’needs.

3.1a(2) Approachesusedtocapturethevoicesofformercustom-ers,potentialcustomers,andcustomersofcompetitorsareshowninFigure3.1-2.Formercustomers(thosewhohavenotmadeapurchasewithintwelvemonths)aresurveyedtounderstandtheirviewsonproductquality,availability,andvalue,aswellastheirexperienceswithcustomerserviceandFitWeb.MarketingandSalesTeammemberstaketheresultsofthesesurveysintothesemiannualplanningefforts.Onoccasion,thereisanopportunityforservicerecovery,andteammembersareempoweredtofollowthroughtoregainacustomer.FitHabitslistenstopotentialcus-tomersthroughsocialmediaandthroughFitWeb.Asaservicetothefitnesscommunity,FitWebprovidesinformationonmarathonsandlocalfunrunsthroughhealthorfitnessblogsandthe“ask-a-fitness-friend”feature.FitWebcapturescustomerandpotentialcustomerinformationandtrackstheirinterests.Likeotheronlineretailcompanies,FitHabitspurchasesdetailedanalyticsfromthirdpartiesthatcanshowthebrowsinghabitsofanyonewhoclicksonFitWeb.Sortingouttheexistingandformercustomers,FitHabitscanaddressspecialpromotionstopotentialcustomersandcustomersofcompetitors,andconductsurveysthataregeneralinnaturebutcanprovideactionabledataforFitHabits.TheMarket-ingandSalesTeamfollowsupontheseefforts.

Inadditiontosocialmedia,FitHabitsalsolistenstopotentialandformercustomersthrough“oldfashioned”methodsandfilesinformationasthe“HeardontheStreet”reports.WhenFitHabits’teammembersstaffeventssuchastheRiverFunRun,theycollectandreportoncommentstheyhearonactivewearclothingandathleticshoes,aswellasonFitHabitsanditscompetitors.ThisinformationisfiledontheintranettobeusedduringtheSPP

(2.1a[3])byMarketingandSalesTeammembers(3.2a[1])andbysuppliermanagementteammembers(6.2b).

3.1b(1) FitHabitshasengagedtheGuppolcompanytogatherdataonthesatisfaction,dissatisfaction,andengagementofcustomers.Everymonth,Guppolsurveysastatisticallyvalidsampleofcustomersfromeachofthekeycustomersegments,usingquestionsspecifictothatsegment.Carehasbeentakentoselectquestionsthathavehighvalidityandprovideinformationthatmaybeusedtodrivethecompany’sprogressonitskeygoals.TheGuppolresultsareusedindailyoperationsacrossthecompanyandareupdatedmonthlyontheFitWebintranet,withcomprehensivereportsprovidedquarterly.

Theseresultsarealsocomparedwiththedailysurveysforbrows-ingtransactions,purchasingtransactions,RatingsandReviews,andotherlisteningmechanisms.AllsurveyshelpFitHabitsunderstandhowwellitismeetingitsmissionofclothingcustom-ersforafitlifeanddelightingthem,always.

3.1b(2) FitHabitsworkswiththenationalathleticmediawhoperformcomparativeanalysisofathleticproductsandservicesonbehalfoftheirreaders.ThesereviewsfunctionmuchlikeJWStrengthreviews,asmeasuringsticksforrelativesatisfactionwithboththecompany’sbrandanditsproducts,asopposedtoitscompetitorsandtheproductsandservicestheyprovide.

TheMarketingandSalesTeamusesthebrandsurveytodeterminewhethercustomersalsopurchaseproductsandservicesfromcompetitorsand,ifso,howsatisfiedaretheywiththoseproductsandtransactions.SocialMediaTeammemberscontinuallyscanthemediausingtoolssuchasWitterDeckaswellastheircompeti-tors’HowIlookbookpagestounderstandhowsatisfiedcustomersarewithFitHabitsandtheircompetitors.

3.2 Customer Engagement3.2a(1) FitHabitscapturescustomerandmarketinforma-tionthroughthecomprehensiveListeningandLearningMechanisms(Figure3.1-2).Thesedata,bothformalandinformal,areprocessedthroughtheVOCProcess(Figure3.1-1)toprovideinputstoPhaseIoftheSPP(Figure2.1-1).Thedataarealsousedtounderstandmarketconditionsandcustomerrequire-ments,andtheyareusedduringSWOTanalysisintherefinementordevelopmentofnewproductsandstrategies.Forexample,theSocialMediaTeamprovidesinputsbyaggregatingallofitsinputstreamstoprovideacurrentlookatthecustomerandfuturecustomerbase.TheplantoprovideactivewearandathleticshoesforchallengedathletesstartedinWitterfeedsandwasbroughtintothemid-yearbusinessanalyticsin2014.MovingthroughSWOTandcomprehensiveactionplanning,across-functionalteamwasformedwithteammembersfromfinance,marketing,suppliermanagement,andL&DandledbyamemberoftheLTtoshepherdtheplanningthroughanRNAandthehiringofachallengedathletetoworkinthemarketingofthisproductline.Asthenewproductlineisreleased,L&Dwillprovideinforma-tionmodulesthroughtheLearningManagementSystem(LMS;

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5.2b[1])tointroducetheproduct,aswellasprovidebackgroundinformationformembersoftheCallCenter.

AsFitHabitsisaretailcompany,itiscriticalthattheMarket-ingandSalesTeammembershavetheir“ears”opentothefashionandproductmarketplacestolearnofnewproductdevelopmentandenhancements,aswellastrendsinthemarket.Representationatsemiannualfashionandannualfitnesstradeshowsprovidesinformationoncomingtrendstouseinsuppliernegotiations.FeedbackfromtheAdvisoryBoardprovidesinsightsonactivewearandshoeproducts,aswellasonthereceptionofmarketingcampaignsandcatalogues.AllofthisinputisusedbyMarketingandSalestoidentifywaystoexceedtheexpectationsofallthecustomerandstakeholdergroups(P.1b[2]).

Inlisteningtocustomers,FitHabitsisabletoidentifynewproductofferingsandmarketsegmentstoenter.TheSOtoenterthechal-lengedathletemarket,asdescribedabove,isthelatestresultoflisteningmethods.PartneringwithExtraceptionalOlympicsandOurWarriors,FitHabitsisworkingwithitssupplierstoprovideproductstomeettheneedsofthismarket.Roll-outofthisnewproductlineisscheduledtobecompletedbyFall2016.

3.2a(2) Easytransactionsareakeycustomerrequirement.Cus-tomerswanttoopentheFitHabits’website,quicklyaccesstheirsectionofinterest,logintoaprofile,findhelpthroughanonlinechatorahotline,andmakepurchaseseasilyandsmoothly.Doingthis,theyincreasetheirengagement,returntoFitWeboften,andrecommendFitHabits.Enablingthesetransactionsistheheartofthecompany,meetingitsmission.FitHabitsusesVOCmethods(Figure3.1-2)suchassurveys,focusgroups,andsocialmediatodetermineandprioritizethesecustomersupportrequirements.Forexample,thevalueoftheAdvisoryBoardmemberswasamplifiedwhentheyparticipatedinfocusgroupsonhowFitHabitscouldsupportthembetter.

TherecentredesignofFitWebfocusedonprovidingmultiplemechanismsforcustomersandpotentialcustomerstoaccessinformationonproductsandcustomersupport.MarketingandSalesTeammembersworkedcloselywithITtoensurethatcus-tomersupportrequirementswereconsideredintheredesign.Forexample,in2014,FitHabitsreleaseditsownmobileapptoenablecustomerstoaccessitswebsite,placeanorder,orcheckorderstatusfromanymobiledevice.Thiscustomeraccesswassys-tematicallyidentifiedusingtheVOCmechanisms(Figure3.1-2).Customerkeysupportrequirementsgatheredfromthosemethodsledtothedevelopmentoftheonlinechatfunction,theonline“hotline,”anexpandedcustomerprofile,andtheonline“NotesofInterest,”whichprovidescustomerswithatooltosendFitHabitsarequest,aquestion,anobservation,oracomplaint.Thekeysup-portrequirementsweresimilarforallcustomergroups,withtheexceptionofthecustomerprofile.Thisfunctionalitywaslimitedtoengagedcustomers,notlurkersorNYRs.

EachofthecustomersupportrequirementsissupportedbyaSOPPthatincludesresponseandresolutiontimesforonlineandphonehotlines,aswellas“NotesofInterest.”Allcustomerinteractionshaverequirementsforgreetings,messages,andclosings.ThesearedeployedthroughtheSOPPsandtrainingfornewCallCenterandMarketingandSalesTeammembers.The

requirementsarealsocoveredinall-team-membersmeetings,withLTmembersroleplayingsomeofthebestandsomeofthemostlackinginteractionsoverthelastquarter.

3.2a(3) UnderstandingFitHabits’customerstoday,theirbrowsingandpurchasingpatterns,andwhowillbeFitHabits’customerstomorrowiskeytoFitHabits’success.AsFitHabitsbegantoidentifycustomergroups,thefirstgroupingwaseasy—thosewhopurchasedandthosewhojustlookedaround.AnanalysisofIPaddressesrevealedthatthegroupofnonpurchaserscouldbeclearlysegmentedintothosewhocamebacktoFitWebmanytimes—thelurkers—andthosewhovisitedonlyoneortwotimes.Specialpromotionsandsurveysfocusedonthelurkers,aseffortstriedtomovelurkerstothecustomergroup.Closerlooksatthecustomergrouppurchasingpatternsshowedthatabout35%ofthecustomerspurchasedactivewearand/orathleticshoesonlyinJanuaryandthendidthesamethingthenextJanuary.ThiscustomergroupbecametheNewYearresolutioners(NYR).Theother65%ofcustomerswhopurchasedproductsthroughouttheyearbecameknownasthe“engagedcustomers.”

Althoughcustomerrequirementsaresimilar,customersegmenta-tionallowsFitHabitstodirectdifferentmarketingcampaignsandpromotionstospecificcustomergroups.In2015,FitHabitshadnearlyhalfamillionuniquecustomerexchanges,with75%oftheexchangeswithreturningcustomers(Figure7.2-1).

AnewChiefMarketingandSalesOfficerin2014pushedthecompanytofurtherunderstandtheengagedcustomers.Theadditionofthe“DataShop:MarketingNow”salesanalyticstoolhelpedsegmenttheengagedcustomersintothreegroups:(1)frequentbuyerswhomadepurchasesalmosteverymonth,(2)persistentbuyerswhomostlymadeseasonalpurchasestostayupwithtrends,and(3)occasionalbuyerswhomadepur-chasesthroughouttheyearonaneed-it/replacementbasis.Thissegmentationofengagedcustomershelpedtofocusmarketingcampaigns,particularlythosedesignedtomovepersistentandoccasionalbuyersintothefrequentbuyerscategory.

Lurkerswereconsideredtobepotentialcustomersand/orcompetitors’customers.OnceidentifiedbytheirIPaddresses,lurkerswouldfindFitHabits’adspoppinguponlineinplacesliketheirHowIlookbookfeedsandinthemiddleofonlinemagazinearticles.

Alloftheinformationoncustomergroupsandsegments,aswellasothermarketknowledge,isassessedduringthesemiannualmarketanalyticsinPhaseIoftheSPP(Figure2.1-1).Thisassess-mentledtotheidentificationofthestrategicopportunityofthechallengedathletemarket,asdescribedin3.1a(1).Inputsintothemarketanalyticsin2011alsoshowedamajorpushforactivewearclothingforadolescentgirlsbyacompetitor,whichsoonafterannouncedanagreementwiththeFemaleSeekersoftheUSAtobeasolesupplierforitsgirls’activewear.FitHabitsconsideredasimilarcampaignwithanotherteencompany,buttheevaluationrecommendednotpursuingthisintelligentrisk.

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3.2b(1) Sinceitsfounding,FitHabitshasbelievedthatifitoperatesbyitsvalues(Fun,Innovative,Team-based,Healthy,Agile,Balanced,Integrity,Timely,andService)thatthecompanywillliveintoitsmission:Clothingourcustomersforafitlifeanddelightingthem,always.Thecorporateresultshaveagreedwiththatbelief(Figure7.5-1).Thecorecompetenciesofrelationships,innovation,andfitnesshavebeeninterwoveninallthathasbeendone,buttheyshineparticularlystrongincustomerrelationships.

FitHabitshassteadilygrownacustomerbaseandincreaseditsmarketshareintheboutiqueonlineactivewearclothing/athleticshoesretailmarket.FitHabitshasaccomplishedthisusingnumerousmechanismstomarket,build,andmanagerelationshipwithcustomersandthefitnessindustry.ThesehaveincludedtheredesignedFitWeb,aswellasthemobileappforsmartphonesandtabletsthatenablescustomerstofindproductsmoreeasily,searchanexpandedfitnesstopicresource,haveanenhanceduserprofile,locatefitnessevents,anduseone-clicktechnologytomakepurchases.Theuserprofileisnotjustaboutstoringaddressandcreditcardinformationbutincludessizinginformation,favoritecolors,andtypesofclothingpreviouslypurchased.ThisisusedbyFitHabitstosuggestclothingorshoesthatwereprevi-ouslyconsideredbythecustomerandtodisplayclothingonavirtualmannequinsizedsimilartothecustomer,whiletakingintoaccountthesizevariationsindifferentproducts.

Additionally,themissionoftheSocialMediaTeam(3.1a[1])istoenhancerelationshipswithcustomersandpotentialcustomersbyprovidingengagingcontentonFitWeb,OurTube,andWitter.Teammembersalsotrackvarioussitesandapplicationsforinformationthatcanbeusedinmarketingandstrategicplanning.WeeklyreportscreatedbythisteamprovideinformationtotheCallCentertobeabletohelpcustomersbedelightedwithFitHabits.Theeffortshavehelpedincreasecustomerengage-ment,aswellastotransformanumberoflurkersintoengagedcustomers.

TobuildandenhancethebrandofFitHabits,theSocialMediaTeamblogsonaregularbasis,withresponsestopostsanalyzedandrespondedto,asappropriate.Additionally,FitHabitsadvertisesinnationalfitnessmagazines,suchasLadies’ Fitnow,Men’s Fitnow,Skipping,GamesIL,and Soccer Women.Sponsor-shipoffitnessevents,suchastheWalkforBreastCancer,alsosupportsenhancementoftheFitHabits’brand.In2015,FitHabitsmadetheleapintotelevisionadvertisingduringtheWomen’sSoccerBiggestEventgamesandworkedwithXZContheRace-Around-France.

FitHabitsevaluatesandimprovesallofthesemechanismsannu-allyunderSustainItprocessesandasnewstrategicopportunitiesemerge,liketheSocialMediaTeam.

Tohandleallofthedataanalyticsandsecurityneededtorunthebusiness,FitHabitscontinuallyscansthedevelopmentofnewtechnology.Ontheback-endofthebusiness,FitHabitsselected“DataShop:MarketingNow”togiveFitHabitstheabilitytoplan,test,andexecuteonlinepromotionsandcampaignsofanysizeorcomplexity.Thesoftwarealsoprovidesarobustsetofpredictiveanddataminingtools.

3.2b(2) Since2014,FitHabitshasusedtheComplaintManage-mentProcess(Figure3.2-1)toresolveandlearnfromcomplaints

byaggregatinganddisseminatinginformation.Thisapproachensuresthatcomplaintsareresolvedpromptlyandeffectivelyandallowsforrecoveryofcustomerconfidence.Forexample,whenacustomerindicatesonlinedissatisfactionwithanunavailableselection,ashiptime,alostshipment,oranyotherreason,acustomerservicespecialistwillapproachthecustomeronlinetodeterminethecorrectservicerecoveryapproach.Thecustomerservicespecialistisempoweredtoofferdiscountsoracouponforfutureproducts,asappropriate.Ifthesituationisresolvedinstantly,thecustomerservicespecialistwillrecordthecomplaintintheKlagensystem,whichaggregatesandanalyzesittodetermineifitispartofatrendthatneedsfurtherattention.Ifanupperlimitonthenumberofsimilarcomplaintsisreached,theKlagenwillautomaticallyissueanoticeviae-mailtotheDirectoroftheCallCenter,whodirectstheproblemstothecorrectdirectorforresolution.

Ifacomplaintcannotberesolvedinstantly,itisrecordedinKlagenandescalatedtothecoachondutyattheCallCenterforfurtherinvestigation.Ifthecoachcannotresolvethecomplaint,itcontinuesontoaShapeItUpteamwiththeexpectationthattheproblemwillberesolvedoractiontakenwithinsevendays.FinalresolutionofthecomplaintisstoredinKlagen.Monthly,KlagenissuesareportoncomplaintsandresolutiontimesthatisreviewedduringtheFitReviewprocess(Figure4.1-4).

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Category 4 Measurement, Analysis, and Knowledge Management

4.1. Measurement, Analysis, and Improvement of Organizational Performance4.1 FitHabits’comprehensivemeasurement,selection,review,andimprovementoforganizationalperformancearemanagedthroughtheFitTrackingProcess(Figure4.1-1).ThisprocesssupportsFitHabits’strategicadvantageofafocusoncontinuousimprovementsandoverallachievementoforganizationalgoalsandAPs.Varioussubprocessesareaddressedbelow.

4.1a(1) Throughseveralcyclesofevaluationandimprovement,arobustMSP(Figure4.1-2)wasdevelopedasthesecondStepofFitTracking,toeffectivelyselect,collect,align,andintegratedataandinformationintrackingdaily,monthly,quarterly,andannualorganizationalperformance.DuringPhaseIIIoftheSPPwhenAPdevelopmentisalignedtospecificorganizationalgoals,theLTandAPownersdefineandproposemeasuresthatthenareflowedthroughtheMSPtofinalizethemeasure.ThesemeasuresmakeuptheBSCofkeyFitMeasures.Outcomeandin-processFitMeasuresarealsoselectedanddifferentiatedduringthisprocess.DepartmentFitMeasuresaretrackedthroughdepartment-leveldashboardsandABsusingthesameselectionprocess,andindividualFitMeasuresaretrackedthroughtheQCPs.

PerformancedataandinformationarecollectedandperformanceanalyzedduringStep4ofFitTracking.ThisstepincludesanalysisofthedashboardFit-Measures,progressofAPs,anddepartmentandprocessperformance.ThesedataandinformationareavailablethroughtheFit-TrackOnlinePortal,whichisavailabletoteammembersbasedonjobresponsibilitiesandsupportsdailyoperationsanddecisionmaking.FitTrackOnlineisanend-to-endbusinessplatform,providingaccesstotheinformationandanalyticsneededtoimple-mentanddeployactionableinformationacrossthecompanythroughscorecardsanddashboardsthatreflectappropriatelevelsandsegmentationofFitMeasuresoutcomeand/orin-processmetrics.

4.1a(2) AkeyelementofFitTracking(Figure4.1-1)isthesystematicselectionofeffectiveandappropriatecomparativesourcesandlevels.OncekeyFitMeasuresareselected(Figure4.1-2),comparativeopportunitiesareidentifiedusingtheComparativeSelectionProcess(Figure4.1-3)basedonfivekeysources.Ifcomparativesexistfromthesesources,thentheFitHabits’comparativetargetissetatthetop10%.Thecomparativeisthenusedontheappropriatedashboardstomonitorperformanceandsupportoperationalandstrategicdecisionmaking.Ifacomparative

sourceisnotavailable,ameaningfulcomparativewillbedeterminedfromhistoricalperformanceand/orinterreliability,andastretchgoalofatleast10%betterthanpriorperformanceisestablishedandmonitored.

Overthepastsevenyears,throughcyclesoflearnings,FitHabitshasimproveditsuseofcomparativesfromlessthan10%togreaterthan65%comparativesinplaceforallkeyFitMeasures(Figure4.1-4).

4.1a(3) VOCandmarketdataandinformationareidentifiedfromtheVOCProcess(Figure3.1-1)andkeylisteningandlearningmechanisms(Figure3.1-2).MarketdataandinformationareselectedbasedonkeysourcesofinformationfrompurchasingpatternsandmarketanalysisfromPhaseIoftheSPP.TheseVOCdataandinformationaredeployedandintegratedthroughAPs(2.2a),theL&DSystem(5.2b[1]),andkeyworksystemsandprocesses(Figure6.1-1).VOCandmarketinformationandmea-suresaresystematicallyevaluatedthroughperformancereviewsandimprovement(Figure4.1-1);inaddition,bestopportunitiesareidentifiedanddeployed.ThisinformationsupportsoperationalandstrategicdecisionmakinganddirectlycontributestoFitHabitsbuildingandsustainingamorecustomer-focusedculture,as

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evidencedbysustainedcustomersatisfactionandengagementresults(Figures7.2-2through7.2-6,and7.2-8through7.2-10).

Informationiscaptured,analyzed,andtrendedonaweeklybasisandsharedacrossthecompany.AsummaryisreportedmonthlytotheLT.AnynegativecommentsareimmediatelyresearchedandrespondedtobytheSocialMediaTeam.TheeffectivenessoftheonlineRatingsandReviewsandComplaintManagementProcess(Figure3.2-1)isevaluatedannually(Step7,FitTracking).

4.1a(4) AnnualevaluationofFitTracking(Step7;Figure4.1-1)andfrequent,scheduledreviewsoforganizationalperformance(Figure4.1-4)ensurethatFitHabitsanditsperformancemeasurementsystem(FitTracking)areabletorespondtorapidorunexpectedorganizationalorexternalchanges.EachyearduringtheSPP,theLTandAPownersevaluatethedashboardsandscorecardsforFitMeasuresandgoalsandmakenecessarychangestosupporttheSOsandaddressthecompetitiveandregulatorylandscape.Frequent,scheduledperformancereviewsalerttheLTandothercoachesacrossthecompanywhenakeyprocessorsystemisnotperformingtogoal;thisapproachenablestimelycorrectiveanalysisandaction.FitTrackingalsoallowstheadditionofnewFitMeasuresthroughouttheyearifanewprocessisimplementedorsignificantprocessredesignoccurs(6.1b[3]).

4.1b FitHabits’performanceandcapabilitiesarereviewedthroughSteps4and5ofFitTracking(Figure4.1-1).Thisapproachtoperformanceanalysisandreviewensuresthat

1. FitMeasuresarealignedtostrategy(improvethebusiness)and/oroperations(runthebusiness),

2. performanceisassessedusingabalancedsetofmeasures, 3. performanceresultsareanalyzedtoprovidetheLTand

coacheswithinformationfordecisionmaking,and 4. improvementplansaredevelopedandimplemented.

Avarietyofrobustanalysesandanalytics,includingcomparative,quantitative,rootcause,trend,variance,andcorrelationanalysis,areconducted.

AsshowninFigure4.1-4,theLT,BOD,andothercoachesreviewFitMeasures,includingfinancialperformance,onaregularlyscheduledreviewcycle.FitHabitscomparesperformance,progress,andsuccesstoitskeycompetitors,BaldrigeAwardrecipients,andthenationaltop10%(4.1a[2]),whenbenchmarksareavailable.OFIsareidentifiedwhenaFitMeasureisnotmeetingexpectedlevelswithin5%oftheexpectedrangeforthatspecifiedtimeperiod.FrequencyofperformancereviewsatalllevelsensuresFitHabits’abilitytorespondrapidlytochangingorganizationalneedsandchallengesintheoperatingenvironment.ThisFitReviewfrequencyisevaluatedannually,withthelatestcycleofimprovementin2015beingtheadditionoftheBestPrac-ticeandImprovementSustainabilityReviewtoensuretractionofbest-practiceimplementationacrossthecompany(4.1c[1]).

4.1c(1) High-performingareasareidentifiedthroughanalysis,includingprocess,customerfeedback,quality,supportfunction,regulatory,andworkforceFitMeasures.InStep6ofFitTracking(Figure4.1-1),bestpracticesareidentifiedusingthreecriteria:

1. Thepracticedemonstratesevidenceofsuccess. 2. Thepracticepositivelyimpactsorganizationalachievement

ofstrategicgoalsandobjectives. 3. Thepracticehasthepotentialforreplication/adaptiontoother

areaswithinthecompany.

BestpracticescanbeidentifiedbyanyoftheFitReviewpartici-pants(Figure4.1-4),ShapeItUpteams,orLT.

Onceabestpracticeisidentified,theoriginatingareaisaskedtodocumentitsprocessand/orpracticeonaSustainIttemplate.Thisissenttoalldepartmentswithtalkingpoints.Coachesareaskedtoshareapplicableprocesseswiththeirteamsatthenextteammeeting.Ifitisapplicable,theexpectationisthatthebestpracticeisadoptedanddocumentedwithinthreemonthsintheSustainItPortal.Sincetheinceptionofthispracticein2012asakeymethodforknowledgetransfer(4.2),best-practiceadoptionhasgonefromlessthan5%toasustainedlevelof75%orbetterforthelastthreeyears(Figure7.1-21).

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4.1c(2) InStep3ofFitTracking(Figure4.1-1),futureperfor-manceprojectionsaredeterminedasoneofthelaststepsoftheComparativeSelectionProcess(Figure4.1-3),andprojectionsareintegratedintotheSPPtosystematicallyprojectfutureperfor-mance.DuringtheSPP,Step8,theLTandseniorcoachesanalyzeperformancereviewfindingsandkeycomparativedatainlightofhistoricaltrends,alongwithplanninghorizonsandinternalcapabilityandcapacityfactors.ProjectionsaresetforthemajorityofkeyBSCFitMeasures(keyAP,outcome,andfinancialmea-sures)butarenotsetformostFitMeasures(primarilyin-processmeasures).Establishingaccurateprojectionsisbothanartandascience,andFitHabitshasimproveditsprojection-settingcapabil-ityinthelastfiveyearstobeover80%accurate,within2–3%ofactualperformanceyearoveryear.

BecausetheAPprocessisintegratedintoPhasesIIIandIVoftheSPP,therearerarelysituationswhereAPprojectionsdonotreconcilewithprojectionsestablishedinFitTracking,Step3;however,whenthisdoesoccur,theLTworkswiththeindividualAPownerstoreviewdatausedtosetprojectionsandmutuallyagreeonappropriateprojections.

4.1c(3) PerformanceFitReviewfindings(Figure4.1-4)drivethedevelopmentofprioritiesforcontinuousimprovement,best-practiceidentification,andinnovationthroughtheSPP(Figure2.1-1).FitReviewfindingsprovidekeyinputsintotheSPPanddrivethedefinitionanddeploymentofAPs(forallthreeplanninghorizons),improvements,andinnovativeopportunities.AsAPsareidentified,APownersandteamsareselected.Theyarerespon-siblefordevelopingtheAPstoachievedesiredimprovement.

ImprovementinitiativesaredeployedthroughtheSustainItPortaltosharewiththeentireworkforce.CoachesatalllevelsusetheSOsandAPs,alongwithdepartmentalperformanceresults,toprioritizedepartmentalgoalsforcontinuousimprovementandworkwithteammemberstoaligngoalsintheirQCPs.SuppliersandcollaboratorsareincludedonShapeItUpteams,asappropri-ate,toensureorganizationalalignment.

4.2 Knowledge Management, Information, and Information Technology4.2a(1) FitHabits’knowledgemanage-ment(FitKM;Figure4.2-1)focusesonconsistentcollectionandtransferofinformationandknowledgeacrossthecompany.Informationreflectingcurrentperformanceisshared,aswellasbestpractices,innovations,SOPPs,andOFIs,throughthecommunicationsmechanisms(Figure1.1-2).TheSustainItPortalmakesinformationavailableacrosstheentirecompany.Improve-mentopportunitiesareidentifiedthroughreviewofperformancemeasures(Figure4.1-4).

Knowledgetransferoccursviamultiplevenues,includingcoach-ing,communicationsmechanisms,teammember-to-teammemberinteractions,andmentoringopportunities;thereisalsotwo–threeweeksofcrosstrainingwhenteammembersaretransferringtootherdepartmentsand/orleavingthecompany.Operationalperformancetrendsarecommunicatedindaily,monthly,andquarterlyreports.

Workforceknowledgeiscollectedandtransferredthroughpoliciesandprocedures,SOPPs,KeyCommunicationsMechanisms(Figure1.1-2),theL&DSystem(5.2b),trainingmaterials,andtheSustainItPortal.Additionalinformationsystems(IS)-basedshareddrivesprovideaccesstoinformationwithindepartmentsandcross-functionalgroups.Knowledgeisalsotransferredthroughmonthlylunch-and-learnsessionsandadedicatedonlinenewslet-terfortheworkforce.

Knowledgeistransferredtoandfromcustomersthroughelectronicforms,includinge-cataloguesandpapercatalogues,customerinquiries,activewearkeyinformationanddescriptions,andthe“What’sHappeninginyourRegion”sectionofFitHabits’website.

Knowledgeistransferredtoandfromsuppliersandcollaboratorsusingcommunicationsmechanisms(Figure1.1-2).Annually,a

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numberofkeysuppliersandcollaboratorsareinvolveddirectlywithbestpracticesandinnovativeandimprovementinitiativestofurtherthetwo-wayknowledgetransfer.ThesearedocumentedandcapturedwithintheSustainItPortal.

4.2a(2) OrganizationallearningissystematicallyembeddedinFitHabits’operationsthrougheachofthefivefoundationalelementsofthePES(FigureP.2-4)andfurtherenhancedthroughbest-practicesharing(4.1c[1]).Keylearningsandcriticalknowl-edgearecapturedandhousedwithintheSustainItPortalforeasyaccesstoinformationandtrackingofapproachesthathavebeenadoptedinotherareas.ALTfocusonFitHabits’cultureofexcel-lencehelpstosustainthedriveforimprovementsandinnovativepractices,whichencouragesnewlearningstocontinuouslybeembeddedinday-to-dayoperationsandstrategicdirection.Forexample,learningsfromquarterlysupplierreviewswithakeysupplierareoftensharedwithotherkeysupplierstoenhancetheproductstheybringtomarketaspartofFitHabits’portfolio.

4.2b(1) FitHabits’ISandwebprocessesensurethatthequalityoforganizationalandcustomerdataismaintained.Weekly,anISandwebreportisdeliveredtoalloftheLTtoprovidetranspar-encyintoIToperations.FitHabitsputsastrongemphasisontheintegrity,security,validity,andconfidentialityofcustomerandorganizationaldataandinformationandhassystematicandfullydeployedapproachestoaddressthedataandinformationproper-tiesofitsISandwebprocesses(Figure4.2-2).Annually,thesepropertiesarereviewedtoensurethattheyaremeetingorgani-zationalandcustomerneeds.Improvementshaveresulted;theseincludethe2012implementationofasurveyforcustomersandotherkeystakeholderstogatherkeyISandwebrequirements,the2013improvementresultingintheaccuracyofdatacapturefromcustomersthroughimprovedsecurityfeaturesforweb-ordering,andthe2014implementationofthird-partyassessmentsfromannuallytoeverysixmonths.

4.2b(2) Theconfidentialityandsecurityofcustomers’personaladdressesandbillinginformationareakeyfunctionofISservices.Datasecurityandsensitivityofinformationareman-agedandensuredthroughleveragingtechnologyandinnovationwhilebalancingtheneedsofallstakeholders.FitHabitsutilizesanindustrystate-of-the-artsystemthatmanagestechnologiesandsystemstosupplyrelevantandsecureinformationtotheappropri-atestakeholder.Customerdataarestoredandmaintainedthroughamultilevelsecuredatawarehouse,withcustomerpasswordsandPINsthatmeettheISO27001regulatorycompliance.Securepor-talsexistforteammembersforreal-timeinformation,scorecards,andotherimprovementsandcriticalknowledgesources,aswellasforkeysupplierstoaccessreal-timeinformation,supplychaintracking,andstatusoforders(6.2b).

FitHabitsensuresthesecurityofsensitiveorprivilegeddataandinformationthroughalayeredsecurityapproachcalledDefense-in-Depth.Multiplelayersofdefenseoperateindependentlyandproviderobustprotectiontothenetwork.Securitylayersincludeperimeterfirewalls,serverandworkstationfirewalls,serverandworkstationantivirusandantimalwaresoftware,regularsecuritypatches,dataandtransportencryptionwhereappropriate,andastrongpasswordpolicy.Securityinthecustomerdatasystemandfinancialaccountingsystemiscontrolledthroughgroups,andthesegroupsareassignedtheappropriatepermissions.Cybersecurityisverifiedduringannualsecurityauditsperformedbyacybersecurityauditvendor,CyberVendor,Inc.FitHabitstrainsallteammembersannuallythroughaprogramdevelopedbyanothervendorspecializingincybersecuritytraining,CyberCompany,LLC.

4.2b(3) FitHabits’ISandwebprocesses,hardware,andsoftwareareintegratedacrossallareasandplatforms.AllISandwebprocessesarereviewedannuallyforeffectivenessinensuringthatdataandinformationarereadilyavailable,timely,and

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user-friendlybasedoncustomer,supplier,andotherstakeholderrequirements(verifiedeverytwoyearsthroughanIS/websurveytokeycustomersandstakeholders).In2014,inresponsetoFitHabits’customers,aFitHabits’appwasdevelopedtoprovideaccesstoorderingandorderstatusfromanymobiledevice.

4.2b(4) ThenatureofFitHabits’businessdemandshardwareandsoftwarereliability,security,anduser-friendlinessasbusinesscriticalfactors.KeymethodsandapproachesareshowninFigure4.2-2.Systemreliabilityisaddressedthroughduplicationofinfrastructurecomponents,suchasfirewalls,domaincontrollers,routers,switches,andaphonesystem.Activemonitoringofsys-temperformanceandutilizationallowsforimmediateresolutionofbottlenecks.Allchangestothecoresystemsgothrougharigiddeploymentprocessfromdevelopmenttotesting,changecontrol,deployment,andmonitoring.Reliability,hardware,andsoftwarearemanagedthroughreal-timeperformancemonitoring.

Systemsecurityisensuredthroughlimitedaccesstosensitivehardwaresystemsviakeypadsandpersonalizedaccessbadgesforauthorizedpersonnel.Internetaccessissecuredwithafirewall,antivirussoftware,andInternetcontentfiltering.

Proactivemaintenanceincludesbothhardwareandsoftware.Hardwareisproactivelyreplacedwhenitisnolongermaintain-ableordoesnotmeetbusinessneeds,asidentifiedduringtheSPPandbudgetingprocess.Workstationoperatingsystemsandsoftwareareupdatedmonthly,andserveroperatingsystemsareupdatedquarterly.Firmwareforinfrastructurehardwareisupdatedbiannually.Enterprisesoftwareisupdatedasneededwiththegoalofbeingnomorethanonemajorversionbehind.The

cloud-basedmanagementsystemisupdatedcontinuously,andFitHabitsisalwaysonthemostrecentversion.Faulttoleranceisprovidedthrougharchitecturedesignthatminimizessinglepointsofhardware failureandrapidrecoveryfromhardwarefailure.Thenetwork,storage,andserversdonothavesinglepointsoffailurebecauseofacombinationofhardwareredundancyandsoftwaredesign.

Technologyinfrastructurehardwaresuchasnetwork,storage,andserverscancontinuetooperatewithoutdisruptionifanyindividualcomponentfails.Forinstance,ifafirewallfails,anotherfirewallwillassumethefunctionsofthefailedfirewallwithoutinterruptiontoteammembersorinterventionbytheISDepartment.Intheeventofcatastrophicfailure,FitHabitsbacksupandreplicatesessentialdata.Theapproachtobackupandreplicationiscalled3-2-1andinvolvesthreecopiesofthedata,onatleasttwodifferentstorageplatforms,andoneoff-sitebackup.FitHabitsusescloud-basedplatformsintargetedrolessuchasaWarehouseManagementSystemandanti-spamservicestosupplementthereliabilityandrobustnessofonlinesolutions.ThemostcriticalsystemistheFitWebOnlineCatalogueandOrderingSystem,whichishostedwithacloudprovidertoensurethebestavailabilityforthiscriticalapplication.Foranti-spam,havingacloudproviderensuresthate-mailsenttoFitHabitsisreceivedandfilteredindependentlyforspam,viruses,andmalwareaspartoftheDefense-in-Depthapproach.

4.2b(5) FitHabits’IS,webteam,andSafetyHabitsCommittee(6.2c[2])havedevelopedandimplementedextensivecontingencyplanningtoensurethecontinuedavailabilityofcriticalinforma-tion,data,hardware,andsoftwareintheeventofanemergencyordisaster.In2013,FitHabitsimplementedanannualrisk-basedassessmenttoidentifyandprioritizeanEmergencyOperationsPlan(EOP).TheEOPoutlinesandaddressesfivelevelsofhardware/softwareemergenciesbasedonbusiness/customerimpactandlikelihoodofoccurring.Level1beingthemostdamagingcontainstwokeyissues:physicaldamagetotheITserversandacyberbreachofcustomerdata.Firewallsaretesteddailyforintegrityandmonitored24hoursadayforanytypesofcyberattacks,spam,andsuspectactivity.ISperformsregularnightlysystemwidebackupsofcriticalcustomer,supplychain,company,andteammemberinformationanddata.Regulartestinganddrillsareconductedtoensurethatpoliciesandproceduresareinplaceandteammembersarepreparedandtrainedoneffectiveandtimelyresponse(seeFigure7.1-28).Debriefingsareheldafterdrillstosolicitparticipantfeedback,assessplaneffectiveness,anddevelopAPstoaddressopportunities.

Toensureemergencyavailabilityofon-sitesystems,anindepen-dentdisasterrecoverydatacenterstoresareplicaofcriticaldata.Afullyfunctionaldatacenter,withbackupservers,isavailableforuseattheindependentdisasterrecoveryfacility.Forcloud-basedsystems,suchastheWarehouseManagementSystemandtheFitWebOnlineCatalogueandOrderingSystem,theservicecontractincludesrequirementsfordisasterrecoverycapabilities.

Forkeysystems,includinge-mail,thecatalogueandorderingsystem,andnetworkfileshares,Sauvegardersoftwarereplicatestheentireserverevery15minutes,andservicescanberestoredwithinminutes,ifneeded.Forless-criticalsystems,nightlybackupsarecopiedtothebackupservers.

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Category 5 Workforce

5.1 Workforce Environment5.1a(1) BeforethestartoftheSPP,thePeopleTeamcompletesStep1oftheCapabilityandCapacityPlanningModel(Figure5.1-1),analyzingthecurrentworkforcecompositionbyassessingskills,competencies,production,andengagementlevels.TheresultsofthissteparereviewedinthebusinessanalyticsoftheSPPPhaseI.Throughthebusinessanalyticsandtheplanningretreat,theChiefPeopleOfficernoteschangesincapabilitiesthatmaybeneededinthenextyearandsharesthatwiththePeopleTeamtodevelopthefuturestate,primarilylookingatorganizationalcapabilities,inStep2.Forexample,whentheplanningbeganontherewriteandtransitionofFitWebin2010toprovideforcustomereaseofuseaswellasincreasedsecurityandfirewalls,itwasclearthathumanresourcesprofessionalsandcybersecurityITexpertisewouldbeneeded.IntheSPPPhaseIII,theAPsandRNAsarecompletedandprovideinputstothePeopleTeamonneededcapabilitiesandcapacitylevels.ThePeopleTeamaggregatestheneedsintheRNAstodeterminecapabilityrequirementsintermsofknowledge,skills,abilities,andspecificcompetenciesandcapacityneedsbyassessingtheamountofworkandthenumberofpeoplerequiredforeachrole,inStep3.

InStep4,FitHabitsassessescapacityagainstbenchmarkstoevaluateiftargetsareconsistentwithbestperformersintheindustry.Thisstepwasaddedin2013afterbenchmarkingwithtwoothercallcentersandadjustingthestaffinglevelstomatchindustrybenchmarks.ThathelpedincreasethesatisfactionlevelsoftheCallCenterteammembers.Wherepossible,staffinglevelsarebenchmarkedandadjustmentsaremadeasappropriatetoenableoperationalefficienciesacrossthecompany.InStep5,strategiesaredevelopedtoachievedesiredlevelsoforganiza-tionalcapabilityandcapacity,andtherecruitment,hiring,andplacementoccursduringStep6.StaffinglevelsareseasonalatFitHabits,withanincreaseincapacityneededintheearlyfallthroughtheholidayseasonandearlyJanuarytoaccommodate

productsales,returns,andtheincreasewithNYRs.ContractteammembersprimarilyfortheCallCenterandwarehouseshelptoaddressthecapacityneeds.InStep7,progresstowardmeetingtheforecastedcapabilitiesandcapacitiesismonitoredandreviewedforthemid-year,andadjustmentsaremade.AspartofSustainIt,thePeopleTeamannuallyevaluatesandimprovestheCapabilityandCapacityPlanningModel.

5.1a(2) FitHabits’leaderslearnedearlyinthecompany’shistorythat,asauthorJimCollinssaid,havingthe“rightpeopleonthebus”wascriticalforthecompany’ssuccess.Inthe2009SPP,facedwithengagementscoresthatwerelowerthangoalandahighturnoverrate,theLTselected“teammemberrecruitmentandhiring”asastrategicopportunity.TheChiefPeopleOfficerledacross-functionalteaminthedesign,testing,andimplementationofanewrecruitmentandhiringprocess,usingTargetedSelec-tion,abehavioral-basedinterviewingprocess(7.3a[1]).Thenewprocessalsoincludesalistingofkeyskills,competencies,andbehaviorsneededforeachjob.Thischangehascreateda“slowtohireandquicktofire”situationbutithasbeeneffective.Inthreeyears,theprocesshelpedimproveteammemberengagement(Figures7.3-12and7.3-13)andretentionresults(Figure7.3-1).

UnderstandingthegapsincapabilityandcapacityidentifiedthroughtheRNAs,thePeopleTeamusesmultipleapproachestorecruitcandidates.Theapproachesincludesending/postingannouncementstoFitWeb,onlinerecruitmentsites,professionalassociations,socialmedia,andprintmedia.FitHabits’needfortechnicalskillsrequiresspecializedrecruitingapproaches.

Torecruitdiverseteammemberstotheworkforce,FitHabitsactivelyseekscandidatesfromvariousnationalities,cultures,backgrounds,andlifestyles.Tomeetdiversitygoals,recruitersreachouttoprograms,suchas

■ MomsBacktoWork,anonprofitgrouphelpingmotherswhowanttoreturntotheprofessionalworkforce,and

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■ StartFit,anin-houseinternshipprogramdesignedtoexposehigh-performingcollegestudentstothebusiness,whilegivingthemtheopportunitytodeveloptheirprofessionalskills

Therecruitersactivelyparticipateinveteranjobfairs,localcommunitycollegejobfairs,andtheCityUniversityjobfairsthatfocusonminorities.Inaddition,therecruitersalsolooktolocalandchallengedathleteeventssponsoredbyFitHabits.Teammemberreferralsalsocontributetothepoolofapplicants.Lastyear,22%ofallnewteammemberswerereferredbyanotherteammember,anindicatorofhighengagement(Figure7.3-3).

Jobcandidatescompleteanonlineapplicationthatrequiresthemtopledgetoacceptthevalues(FigureP.1-1).Recruitersscreenapplicationsandforwardqualifiedapplicantstothehiringcoaches,whoconductinterviewstoassesstechnicalskills,job-specificcompetencies,andvalues-fit.Ifthefitlooksgood,thehiringcoachschedulesaPeopleTeaminterview.Usingbehavioral-interviewingtechniques,theteamassessesteamworkandteamfitwiththecandidateand,ifthefeedbackispositive,anofferismade.

NewteammembersparticipateintheFitWelcome!orientationprogramthatstartstheironboardingprocess.WithafocusonthevalueofFun,FitWelcome!isledbyoneofthefoundersandincludessigningtheFitFulpledge(1.2b[2]).Attheendoforientation,a“FitBuddy”fromanotherworkteampicksthenewteammemberup,takeshim/hertotheworkarea,andmakesintroductionstoallinthegroup,includingthecoachwhotakesthenewteammembertohis/herdeskorworkstationtostarttheonboardingprocess.

Afterrealizingin2013thattheretentionoffirst-yearteammem-berswaslowerthantheoverallretentionrate,theChiefPeopleOfficerimplementedaStandardizedOnboardingProcess,utilizingShapeItUp.Someofthetoolscreatedtofacilitateonboardingincludethefollowing:

■ OnboardingInsideTrack,acentralrepositoryofinforma-tionfornewteammembers,whooftenhaddifficultytrackinginformationfrommultiplesources,thatisavail-ableonlinefromtheteammemberportal

■ FitBuddy,aresourceforthenewteammemberduringtheonboardingperiodandthroughoutemploymentatFitHabits.TheFitBuddyisselectedfromaworkteamsimilartotheonethatthenewteammemberwillbejoining.TheFitBuddyservesasaresourceforpolicies,procedures,andpaperworkandisencouragedtosetupweeklymeetingswiththenewteammember.

■ LunchwiththeFitHabits’CEO/president.Monthly,theCEO/presidentinviteseveryonewhojoinedFitHabitsinthelast30daysorsotojoinherforlunch.Sheelaboratesonthefoundingofthecompany,includingsomeofherfavoritecorporateaccomplishments.Shetalksaboutseniorcoaches’open-doorpolicyandgivesnewteammembersacopyofherbusinesscardwithherhomephonenumber.

SinceimplementingtheStandardizedOnboardingProcess,retentionoffirst-yearteammembershasimprovedandlookstoeventuallybetrendinghigherthanoverallretention(Figure7.3-1).

5.1a(3) FitHabitsorganizestheworkforceintofunctionaldepart-ments,suchastheCallCenterorIS,andalsointocross-functionalteams,eitherstandingorproject-based,toaccomplishtheworkofthecompanythroughtheAPs.SOPPsarereviewedannuallytosupporttheprocessesofthecompany.

ByaligningtheSOsthroughtheAPsandthedepartmentstoteammembers’QCPs,FitHabitsreinforcesacustomerandbusinessfocus.ThisalignmentenablesteammemberstobeengagedwiththesuccessofFitHabitsastheyachievetheirgoalsandexceedperformanceexpectations(5.2a[3]).

5.1a(4) FitHabitspreparestheworkforceforchangingcapabil-ityandcapacityneedsthroughseveralmechanisms.First,theLTleadsthefocusontransparency,planning,anddisciplinedexecutionofAPs.Sincetheearlydaysofthecompany,theLThassharedfinancialandbusinessplanninginformationduringthequarterlyall-team-membersmeetings.Teammembersknowwhenthecompanyisexpandingorholdingsteadythrougharoughperiod.Inaddition,FitHabitspreparestheworkforceforchangesthroughtheL&DSystem,SustainItefforts,andtheQCPProcess(5.2a[4]).TheQCPProcessprovidesteammemberswithavehicletoidentifypersonal,professional,andeducationalgoalsandenablesleadershipcoachingthroughquarterlydiscussions.

FitHabitshasneverhadlayoffs.Consistentlowperformerswhoareunabletomeetthestandardsofthehigh-performingcultureareencouragedtoseekemploymentelsewhere.

Theworkforceexpandstemporarilythroughthefallandintothenewyeartoaccommodatetheincreaseinsales,shipping,returns,andNYRs.Continuityofprocessesisensuredforbothpermanentandseasonalteammembersthroughtraining,education,frequentcommunication,SOPPs,andcross-training.

5.1b(1) Providingteammemberswithahealthy,secure,andaccessibleworkenvironmentisimportanttoFitHabits.Thelightingoftheparkinglotswasmodifiedin2012basedonteammembers’concerns.Achangeinforklifttrainingthatgreatlyreducedinjurieswasmadein2013afteraShapeItUpanalysis.ProcessesandpoliciesaresupportedbySOPPsandreinforcedduringseniorcoachroundingandtrainingtominimizeandaddressotherhealthandsafetyrequirements,whichvarybyjobcategory(FigureP.1-3).PerformancemeasuresandimprovementgoalsareshowninFigure5.1-2.

5.1b(2) FitHabitsoffersavarietyofservicesandbenefits.Thecompanyofferschoices,showninFigure5.1-3,inbenefitsandretirementpackagessoteammemberscantailorplanstomeettheirneeds.TheLTreviewsthesebenefitsannuallyandmakesadjustments,asnecessary.

FitHabitsisproudofitsWellFitProgram,implementedin2008,thatprovidesteammemberswithfinancialrewardsforengaginginhealthyandresponsiblebehaviors.Theon-siteFitCenteratheadquarters,whichopenedin2006,isavailablefreeofchargeforteammembersandatasmallfeeforfamilymembers.TheFitCenterprovidesnotonlyclassesandworkoutareasbuthealthylifestylecoachingandpersonalizedhealthassessmentsforteammembersandtheirfamilies.

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5.2 Workforce Engagement5.2a(1) TheMVVlaysthefoundationforFitHabitstofosteranorganiza-tionalculturecharacterizedbyopencommunication,high-performancework,andanengagedworkforce.Thisfoundationisstrengthenedthroughthecorecompetenciesofrelationships,innovation,andfitness.WiththeMVV,thecorecompetencesareintroducedduring

FitWelcome!andarepartoftheQCPProcess.TheLTensuresacultureofopencommunicationandtransparencythroughtheapproachesdemonstratedinFigure1.1-2.FitHabitsmakesthepromisetoteammembersthattheywillbepartofawinningteam.

Seniorcoachroundingprovidesopportunitiestosharemessageswiththeworkforcebutalsotolistentotheirconcerns.TheLTaggregatesthisinformationandfound,in2014,adesireformorecompanyperformanceinformation.ABsshowingcorporategoalsandperformance,aswellasdepartmentgoalsandperformance,modeledafteraBaldrigeAwardrecipient,wereinstalledineachdepartment.TheLTensuresthatteammembersareengagedinworthwhileworkandareempoweredtomakedecisions.FitHabitsincreasesitsvalueasaworkplacebyinvestingintrainingandcoaching,anditprovidesongoingsupportbylistening,communi-cating,andensuringtransparency.Inreturn,FitHabitsasksfortheworkforce’scommitmenttothecorevalues,100%effort,work/lifebalance,andacontinuousdesiretolearnandimprove.

TheFitHabits’cultureisbasedonthediverseideasandback-groundoftheworkforce.Tobuildthisculture,FitHabitsrecruitsfordiversity,encouragesopencommunicationsandnewideas,andoffersprograms—includingStartFit(5.1a[2])—toprovideflexibleworkingarrangements.

5.2a(2) Usinganannualteammembersurvey,FitHabitslever-agesGuppol(3.1b[1])todetermineandassessthekeyelementsthataffectworkforceengagement.Throughextensiveresearch,benchmarkinganalysis,andcorrelationstudies,Guppolidentifiedthesurveyquestionsthatmosteffectivelymeasureworkforceengagement.TheLTalsoreviewedinputsfromthecommunica-tionsmechanisms(Figure1.1-2)andpastengagementresultstodefineengagementfactorsforjobcategories.ThefactorswerevalidatedthroughQCPdiscussions,huddles,annualteammembersurveyactionplanning,andall-team-membersmeetings.

5.2a(3) In2012,theteammembersurveysbeganfocusingonquestionsthatserveasindicatorsofworkforceengagementandonquestionstoidentifyspecificareasforimprovementandofinteresttoFitHabits.Thissurveyprovidessegmentationofresultsbyjobcategories,departments,jobroles,tenure,ages,andgenderstoenablethecompanytodeterminetheengagementfactorsfordifferentworkforcegroupsandsegments.Thevendoralsoprovidesbenchmarkdataforthegenericquestionsthatcanbespecifiedbyindustryandsizeofcompany,providingbest-in-classcomparisons.

Inadditiontotheformalteammembersurvey,FitHabitsalsoassessesworkforceengagementusingindicatorssuchasretention(Figures7.3-1)andsafetyresults(Figures7.3-7).Correlatingtheresultsfromtheformalandinformalmeasureswithresultsincustomerengagementandfinancialmeasureshelpstoindicatepotentialissues.Forexample,in2013,adropinwarehouseteammemberengagementscorestiedwithincreasesinproductshiptime,creatingadropincustomersatisfaction.ThroughFITTESSanalysis,theLTdeterminedthattheheavyuseofcontractstaffinthewarehouseswascreatingamoraleissue.TheLTmadethedecisiontoeliminatetheuseofcontractstaffandaddpermanentpositionsinthewarehousesand,asaresult,bylate2014,teammemberengagementincreased,productshiptimesmetgoals,andcustomersweredelightedonceagain(Figure7.2-1).

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5.2a(4) FitHabitsdriveshigh-performanceworkandworkforceengagementthroughtheQCPProcess.Establishedin2013,theQCPProcessreplacedatraditionalperformancemanagementsystem.IthelpsFitHabitsalignorganizationalgoalstoindividualperformancetofullyleveragethestrategicadvantageofhighlyengagedteammembers.InPhaseIIIoftheSPP(Figure2.1-1),departmentcoachesmeetwithindividualteammemberstoestablishgoalsthatarealignedwiththeSPP,APs,anddepartmentgoals.IndividualgrowthgoalsfortheteammemberarealsoincludedintheQCP.DepartmentmeasureswillbetrackedondashboardsandABs;individualteammemberstrackgoalsontheirQCPs.

Quarterly,eachcoachmeetswithhis/herteammemberstoreviewprogressonthegoalsandprovidecoachingandfeedbacktoenhancetheteammember’slearningandperformance.TheQCPmaybeupdatedwithrevisedgoals.Onayearlybasis,theannualperformancereview(APR),heldearlyinthesecondquarter,istheculminationoftheQCPProcess.TheAPRhighlightstheteammember’smostsignificantaccomplishments,contributions,andstrengths,aswellasopportunitiestoreachahigherlevelofperformanceinthenextyear.Teammembersarecompensatedbyaformulathatincludesindividualgoalperformanceanddepartmentperformance.AnnualbonusesfromtheTeamMemberVariablePayProgramaredistributedatthediscretionoftheLTandarebasedonachievementofthestrategicgoals.In2014,theFitInnovatorbonuswasimplementedtosupportthecorecom-petencyofinnovationandisgiventoteammemberswhohaveoutstandingcontributionsinintelligentrisktakingorinnovation.

RecognitionisimportantatFitHabits.Therearecompanycelebrationswhenthesalesandprocessesof“BlackFriday/CyberMonday”aresuccessfulorwhenthe“CountdowntoChristmas”isover.Therearedepartmentandteamcelebrationswhencertaingoalsarereachedorwhenagroupgoes“aboveandbeyond”tomakesomethinghappenforaninternalorexternalcustomer.FitArrowawardsareusedforpeer-to-peerrecognitionwhenhelpwasappreciated.OtherapproachestorewardsandrecognitionatFitHabitsincludethefollowing:

■ Recognitionbonusesforcertificationachievementsanddegreecompletion

■ Personalrecognitions(birthdays,weddings,births,long-termillnesses,bereavement)

■ Anniversary:annualcertificate■ Anniversary:FitHabits’jacketatthreeyears■ Referralbonusforwhenateammemberrecommendsa

newteammember,andthenewteammemberreachesasix-monthanniversary

■ SummereventforFamily,Friends,andFun(“FitF3”)

Theapproachestorewardandrecognitionareevaluatedeachyearusingtheresultsoftheannualteammembersurveyandthecom-municationsapproaches(Figure1.1-2).ThePeopleTeamreviewsthesurveyresultsand,iftheapproachestobenefits,specificallyrewardandrecognition,havedropped,aShapeItUpinitiativeisstarted.In2015,learningfromaBaldrigeAwardrecipient,theLTstartedcollectinginformationfromteammembersonrewardandrecognitionbyaskingcoachestostronglyencourageteammemberstocompleteaformontheintranetentitled,“HowIwanttoberecognized .”Informationfromthisformenablesthecoach

tounderstandtheindividual’spreferenceforrecognitionand,whenaggregated,willhelptheLTunderstandthepreferenceofteammembersasagroup.

5.2b(1) AsFitHabitsgrew,itwaseasytohirefriendsandfriendsoffriendstofillavailableopenings.Butsuddenly,thefoundersrealizedthattheydidn’thavetherightskillsetstogrowthecompany.TofigureoutwhatskillsFitHabitsneeded,theyworkedwithanorganizationaldevelopmentconsultanttodefinethecompetenciesforeachjob.Knowingthecompetenciesrequiredforajobcertainlyhelpedinthehiringprocess,butitalsoledtothedevelopmentofcompetency-basedtrainingplansforeachteammember,includingtheCEO.Thecompetenciesforeachjobareavailableonlinetouseincareerdevelopment.In2004,FitHabitsacquiredtheLMStotrackthecompetenciesforeachjob,thetrainingavailableforthosecompetencies,andindividualtrainingplansforteammembers.

Today,theL&DSystemincludestheLMSandthecurriculatosupportorganizationalneedsandthepersonaldevelopmentgoalsoftheworkforce.TheL&DSystemincludestrainingtargetedtoeachstaffinglevel,fromnewteammembertoseniorcoach,aswellastheprocess-specificSOPPs.ItalsoincludescriteriafortheTalentDevelopmentProgram.FitHabitsintroducesnewteammemberstotheMVV,corecompetencies,andstrategicchallengesinFitWelcome!andreinforcestheminotherclasses.Arole-specificcompetency-basedtrainingplanisgiventoeachnewteammemberattheendoftheorientation.ThecompetenciescouldrequireHazCommtraininginthewarehousesandnegotia-tionskillsinsuppliermanagement.Oneofthefirsttaskswiththecoachisforthenewteammembertoreviewinwhichcompeten-cieshe/shewillneedtraining.Thatinformationgoesintotheteammember’sQCPandtotheL&DTeamwhoenteritintotheLMS.Thisinput,alongwiththelearninganddevelopmentneedsassociatedwithAPs,isidentifiedduringtheSPP(2.1a[1])andhelpsdefinethetrainingprogramsofferedthatyear.

Inaddition,in2013,theL&DSystemwasrefinedtofullyaligntotheFHLS.Thischangewasdrivenprimarilybyinputsgatheredduringroundingfromnewcoacheswhofeltthattheydidn’thaveallthetoolstheyneededtobesuccessfulatFitHabits.Forexample,anassessmentofnewcoachesin2012showedtheneedformoretrainingandpracticumsincoachingtheirteammembers.L&Dpilotedanewprogramtoaddressthisneedand,basedontheevaluationsafterthreemonths,addedtheprogramtotheleadershipcurriculum.

TrainingthatsupportsPIandinnovationisrequiredofallteammembers.WithatoolboxcontainingacomprehensivesetofLeanandFITTESStools(ShapeItUp),teammembersstartwithaone-dayorientationintheirfirstsixmonthsthatcoverstheurgencyandneedsofPIaswellasanoverviewoftheBaldrigeExcellenceFramework.Then,astheybecomeengagedwiththeirprimaryteamsandcross-functionalteams,theytakeadditionalPItooltrainingforuptofourdays.In2015,Modern Training magazinenamedthePIprograma“HallofFameOutstandingTrainingInitiative.”

TheFitWelcome!orientationdiscussesethicsandethicalbusinesspractices,andteammemberssigntheFitFulpledge.Teammem-berstakearefresherethicscourseandsignthepledgeannually.

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TheL&DSystemishighlyintegratedwiththeFitKM(Figure4.2-1),andtheonlineL&DcurriculumisavailableviatheLMS.Workinginteamshelpsensurethatkeyinformationdoesnotresidewithoneteammember.Ifateammemberleavesorretires,timeisscheduledtotransferknowledgetootherteammembers.Departingteammemberscompleteachecklistindicatingthatknowledgehasbeentransferred.

5.2b(2) FitHabitsevaluatestheeffectivenessandefficiencyoftheL&DSystem.AseachcourseisdesignedorenteredintotheLMS,theevaluationprocessisidentified,basedontheKirkpatrickmodel.Informativeoroverviewcoursesareevaluatedthroughparticipantreactionsurveys.Skill-basedtrainingisevaluatedbyademonstrationoftheskillattheendofthecourseandthenanotherdemonstrationintheworkareaafter90days.Thesebehavioralevaluationscanindicateaprobleminthetrainingapproachorintheneedforadditionalordifferenttraining.Othertrainingprograms,suchascoachingorperformanceevaluation,areevaluatedbyasurveyoftheparticipants,aftertheyhavehadachancetopracticethenewskill.

Organizationalresultsineachdepartmentareimpactedbytheeffectivenessofthetraininginhelpingteammembersacquireskillstohelpthemcompletetheirwork.Sometraining,suchasthePItraining,crossesmultipledepartmentsandhelpsintheachievementoftheAPs.

TheL&DDepartmentsummarizestheevaluationresults,aswellastheeffortsintrainingdevelopmentorcourseacquisition,todeterminethedepartmentscorecard.Theresultsalsopointtoopportunitiestoimprovespecifictrainingcoursesorcurriculum.

5.2b(3) CareerprogressionforteammembersismanagedthroughtheQCPProcess,coaching,andencouragementforteammemberstoachievetheirprofessionalandpersonalgoals.AchangeintheQCPProcessin2014addedasectiononcareeraspirations.ThecoachandteammemberdiscusswaystoachievetheaspirationanddocumentthatintheQCP.Supportforcontinuingeducationisavailablewithtuitionreimbursement,certificationreimbursement,andmodifiedworkschedulestosupportoutsideclasses.

Successionplanningforcoaches,seniorcoaches,andotherLTmembersstartswiththeQCPProcess.Feedbackfromthe2013teammembersurveyledtheLTtocreatetheTalentReviewSystem.Annually,eachcoachreviewsthetalentsoftheirteammemberstoidentifycoachesorpotentialcoacheswhoarereadytoadvanceorwillbeinthenearfuture.Usingtheidentifiedcom-petenciesforthenextlevel,thecoachworkswitheachindividualonaplantoacquireneededcompetencies.Eachseniorcoachusestheseresultstodevelopformaltwo-deepsuccessionplans.

Category 6 Operations

6.1 Work Processes6.1a(1) FitHabitsdetermineskeyworkprocess(KWP)andproductrequirements(Figure6.1-1)usingitslisteningandlearningmechanisms(Figure3.1-2),regulatoryrequirements,ISOrequirements,strategicandoperationalrequirements,andsupplierandcollaboratorinputsreceivedthroughthecommunica-tionsmechanisms(Figure1.1-2).KeysuppliersparticipateonanumberofShapeItUpteams,aswellastheAdvisoryBoardandothercustomerfocusgroups,whichareusedwhendetermin-ingandvalidatingcustomerrequirementsaskeyproductsandfashionsshift.TheseinputsareanalyzedbyShapeItUpteamsintheInnovatephaseandtestedintheTestphaseofFITTESS.IftheShapeItUpteamsidentifyrequirementchanges,thesearealsoreviewedandvalidatedbytheCEO/presidentandseniorcoachesinaregularperformancereviewmeeting(Figure4.1-4).KeyproductandprocessrequirementsforFitHabits’workprocessesarereviewedannuallyduringtheSPPtoensurestrategicalign-mentandongoingoperationalfocusonmeetingandexceedingtheserequirements.

6.1a(2) FITTESS(Figure6.1-2)providesadisciplinedapproachtodesignandinnovateFitHabits’KWPstomeetrequirementsandensurethatproductsmeetandexceedcustomers’expectationsandrequirements.

NewKWPsorthoseselectedforimprove-mentintheSPParedesignedandinnovatedwiththeguidancefromFitHabits’MasterBlackBelt.InStep1(Focus),eachstrategicPIprojectisintendedtodriveachievementofstrategicandoperationalobjectivesandbeginswithacharterdefiningkeyelementsthatincludestheprojectobjectiveorgoal,abusinesscaselinkingtheprojecttoastrategicoroperationalobjective,processmeasuresassociatedwithcycletime,andatimetablefortrackingachievements.Toaligntheprojectwithstrategicoroperationalobjectives,thebusinesscasemustincludealignmenttooneofthecorecompetenciesand addressastrategicchallenge.

InStep2(Innovate),newtechnology,organizationalknowledge,benchmarking,customerandserviceexcellenceexpectationsandrequirements,andthepotentialneedforagilityareincorporatedintothedesign,revisions,andinnovationofworkprocesses:

■ NewtechnologyisoftentiedtoefficiencyandsupportsorresultsinrefinementofanexistingKWP.Onceithasbeendeterminedthatacquiringanewtechnologymeetscustomerororganizationalneeds,processesassociatedwiththetechnologyaredevelopedorrefinedusingFitHabits’PEStoolsandmethodologies(P.2c).

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Figure 6.1-1: Key Work Systems, Work Processes, Requirements, and Measures

I Key Work I I

Key Work Systems Processes Key Requirements Key FitMeasures and Figures (Additional measures AOS)

Customer Relations System Marketing Timely, quality, relevant, effective . Customer loyalty (7.2-10) communications, timely promotions . Customer satisfaction overall and by competitors

(7.2-2 and 7.2-3) . Promotions ROI-overall (7.1-1 , 7.1-2; by event AOS) . Active # of customers overall (7 .2-1) . % Abandoned cart strategies (AOS)

Product Product selection, product . Average sales per customer encounter (7 .1-4) Merchandising availability, competitive pricing, . Gross sales (7.5-3)

(Sales) financial performance . Revenue sales by team member (7.1- 7) . % products "Made in America " (7.1-19)

Call Center Time per encounter, timeliness, . Abandoned call rate (7 .1-8) (Order and Issue accuracy, satisfaction, ease to do . Total sales per call (7.1-4)

Resolution) business with . Phone uptime (7 .1-12) . Ease of doing business with (7.2-7) . Average seconds to answer and first-call resolution (AOS)

I Key Support

I I Key Work Systems Processes Key Requirements Key Measures and Figures

Supplier, Manufacturer, Supplier Timely, effective . Supplier satisfaction (7 .1-29) and Collaborator Communications . Supplier performance (7.1-29)

Relations System Supply Chain Quality products , cost effective, . Inventory turns (7.1-30) Management fill rates, selection, inventory . In-stock rate (7.1-14)

availability . Inventory turns per supplier (7.1-31) . # of products per supplier (AOS) . % of recycled shipping materials used (7.1-18) . # available products-overall; by segment (AOS) . product return rate-overall (by supplier AOS)

Fulfillment Timely, accuracy, getting the . % Returns (7.1-13) right product to the right customer . Cost per invoice (7 .1-15)

every time . 24-hour shipping guarantee (7.1-16) . Cost ofreturns (7.1-13) . Product return rate (7 .1-13) . Shipping accuracy (7 .1-1 7) . Shipping package quality (7.1-18)

Operations and Finance and Accuracy, integrity, timely . Net margin (7.5-2) Support System Accounting . Invoice accuracy (7 .1-17) . Responsiveness to customers (7.2-7) . Net income (7.5-1) . Gross sales overall (7.5-3) . Gross sales by product line (7.5-3) . Days cash on hand (7.5-6)

Performance Timely, engages customers and . ROI from improvement projects-overall (7.1-21 ; Improvement suppliers, ROI by projectAOS) . ISO corrective actions , preventative actions (7.1-22)

Information Ease of use, uptime, secure, accurate . FitWeb speed (homepage load time; 7.1-23) Technology information . FitWeb uptime (7.1-23) . e-orderuptime (7.1-12) . # ofcyber attacks (7.1-24) . IS audit compliance rates (7 .1-24)

Facilities Clean, adequacy of space, effective . Total cost per square foot (7.1-25; additional Management work space segmentation AOS) . % preventative maintenance on time (7 .1-25)

Workforce Engaged team members, effective . Direct labor cost per invoice (7.1-27) Management climate, safe and productive . Total cost per invoice (AOS)

environment, learning opportunities . Training and development hours per FIE (7.3-25) . Team member retention (7.3-1) . Team member satisfaction/engagement (7.3-12)

Key: In Red = BSC and/or AP key FitMeasures

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■ Organizationalknowledgeisintegratedintoworkprocessdesignbyselectingacross-functionalteamwiththediversityinexperienceandknowledgetoachieveanoptimizedoutcome,includingteammemberswhoworkdirectlywiththeprocess.Knowledgeabouttheneworrevisedprocessissharedwithteammembersthroughcom-municationsmechanisms(Figure1.1-2),learningmethods(Step4,FITTESS,and5.2b),andSustainItefforts,aswellastheculturalfocusonPE(P.2c).

■ CustomerandserviceexcellenceareaddressedinStep2ofFITTESS.Throughbenchmarkingintheactivewearandathleticshoesindustries,aswellasinothersectors,

thecompanyhasidentifiedopportunitiestoexcelinservicesandbestpractices.TheseeffortscontributetoCC2(innovation).TocapitalizeonCC1(relationships)andtoincludekeycustomergroups,FitHabitstargetsspecificprojectsthroughfocusgroupsordirectinteractiononShapeItUpteamsand/orkeysupplierstoprovidedirectknowledge,engagement,andinputsintothedesignand/orrevisionsofprocessesandproducts.

■ ThepotentialneedforagilityisintegratedintoStep2andthentestedinStep3ofFITTESStomonitorprocessresultsforindicationoftheneedtorefine,redesign,orinnovatetheprocessifitisnotmeetingdesignexpectationsfortheKWPorcustomerrequirements.

6.1b(1) ThedesignofaKWPusingFITTESSandsupportedwithdocumentedSOPPs,workinstructions(Step5,FITTESS),andteammembereducation(Step4,FITTESS)ensuresthattheday-to-dayoperationoftheprocessmeetskeyrequirements.Thedesignofnewprocessesincludesin-processmeasurestomonitorprogresstowardsachievingtheoptimizedoutcome.PerformanceoftheseKWPsandkeysupportprocesses(KSPs)ismonitoredthroughperformancereviews(Figure4.1-4).Inaddition,keyindi-catorsandotherstatistical,productivity,andexpensemeasuresareusedbycoachesandteammemberstotrackdailyoperationsandreviewduringdailySustainItefforts.Keyperformancemeasuresandin-processFitMeasuresforcontrolandimprovementofKWPsareshowninFigure6.1-1.

6.1b(2) Supplier,Manufacturer,andCollaboratorRelations,andOperationsandSupport,twoofFitHabits’KWSs,areconsideredsupportivesystemstotheCustomerRelationsSystem.TheKSPsembeddedwithintheKWSsaredeterminedduringtheSPP.TheKSPs(Figure6.1-1)provideforeffectivesupplierrelationsandoperationalandsupportfunctions.TheseKSPsaredesigned,implemented,andmanagedtomeetrequirementswiththesamerigorastheKWPs,asoutlinedin6.1aand6.1b(1).

6.1b(3) FitHabitsimprovesitsworkandsupportprocessesandproductofferingstoenhancecustomerexperiencesandfeedback,aswellastosustainorganizationalsuccess.ProductandprocessOFIsareidentifiedandmanagedthroughthefiveelementsofthePES(FigureP.2-4).OFIsareidentifiedfromannualBaldrigefeedbackreports,ISOinternalandexternalaudits,customerreviewsandfeedback(3.1),supplierreviewsandfeedback(6.2b),andoperationalandstrategicperformancereviews(4.1b).ImprovementeffortsaremanagedthroughtheuseofShapeItUpcross-functionalteams,whichoftenincludecustomersand/orsup-plierstocapitalizeonCC1,LeanandFITTESS,SustainItefforts,andacultureofperformanceexcellence.Cross-functionalteamspromoteinnovativethinkingandopportunitiesforbenchmarkingfromotherindustries.

Processimprovementrecommendationsarederivedfromdataanalysis;strategictargets;best-in-classbenchmarks;regulatoryagencies;andfeedbackfromcustomers,suppliers,andteammembers.WhenKWP/KSPandproductkeymeasuresareunder-performingasidentifiedduringperformancereviews,theprocessownerisrequiredtoevaluatetheprocessandidentifybarriersandOFIsand/orinnovation(CC2).AnAPiscreatedandmonitoredthroughSustainIteffortstodriveachievementofthedesiredoutcome.Workprocessimprovements,bestpractices,andlessons

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learnedaresharedacrossthecompanythroughthekeycommuni-cationsmechanisms(Figure1.1-2),knowledgetransfermethods(4.2a),andtheL&DSystem(5.2b).PerformancereviewsandSustainIteffortsareusedtoreviewsuccessesandopportunitiesonaregularbasisandconsiderprocessstandardization(Step6,FITTESS)toreducevariabilityinprocesses.

6.1c FitHabits’innovationissupportedbyanInnovationCouncil,whichensuresasystematicprocessforsolicitingideasfornewstrategicopportunities,selectingthemostpromisingideas,performingsmall-scaletesting,andevaluatingandsharingwhatislearned.ThisfollowstheFITTESSProcessandisincorporatedintoSustainIteffortsacrossthecompany.In2013,innovationconceptslearnedfromattendingvariousASQseminarsandworkshopswereintegratedintotheFITTESSProcess,andStep2wasrevisedfrom“Identify”to“Innovate”toencourageandsustaininnovativethinkingandconceptsintoeveryprocessandproductdesignandrevisionproject.AssessingrisksassociatedwithimprovementeffortswasalsointegratedintoStep2toensurethatappropriateopportunitiesareidentified,evaluatedforimpact,andresourcedappropriately.

Asteamsidentifyinnovativeimprovementefforts,anticipatedROIandresourcerequests(Step2,FITTESS)arerequiredtomoveforward.ReviewedthroughtheInnovationCouncil,thetwoprimaryresourcesrequiredforthemajorityofFitHabits’innova-tiveideasandimprovementsaretimeandmarketingresources.Forexample,theintelligentrisktoaddactivewearspecificallydesignedforchallengedathletesrequiredsignificantresearchandengagementtimewithsuppliersandtargetedcustomergroups,andthenadditionalmarketingresourcestoadaptFitHabits’websiteande-cataloguetoaccommodatespecialrequirementsforthespecificactivewearlines.

FitHabitscontinuestobuildanenvironmenttolerantoffailureforthesakeoflearningandinnovation.Atthepointofsmall-scaletesting(Step3,FITTESS),iftheresultsarenottrackingtotheexpectedimprovementsidentifiedintheprojectcharter,pursuitoftheopportunityisdiscontinued.Supportforhigher-priorityoppor-tunitiesisevaluatedinthenextperformancereviewtoensurecontinuedalignmentwithstrategicandoperationalopportunities.

Inaddition,tosupportinnovativeideasfromacrossthecompany,theFitInnovatorbonuswasaddedin2014(5.2a[4])tosupportthecorecompetencyofinnovationandisgiventoteammemberswhohaveoutstandingcontributionsinintelligentrisktakingorinnovation.

6.2 Operational Effectiveness6.2a FitHabitscontrolstheoverallcostsofitsoperationsandworkandsupportprocessesthroughthePES(P.2c)andFitTracking(4.1b).Pro-cessesaredesignedusingShapeItUpandFITTESStools,withmethodsthatspecificallyaddressthecycletime,productivity,efficiency,andeffectivenessofeachprocessandtheimpactthesemayhaveonteammembersandthecompany’soverallcapabilitiesandcapac-ity.Keyin-processFitMeasures(Figure6.1-1),suchascycletimeandproductivity,areregularlymonitored(daily,weekly,monthly,

etc.)pertheperformancereviewcycleviaFitTrackingbyseniorcoaches,coaches,andteammembers.Whenindicatorsidentifyunderperformance,theprocessownerisrequiredtoevaluatetheprocessandidentifybarriersandOFIsand/orinnovativeinterven-tions.Theparticipantsinthevariousperformanceanalysesandreviews(Figure4.1-4)helptocreateabetterunderstandingofperformancegaps.AnAPiscreatedandmonitored,includingfactorsrelatedtoproductreturns(Figure7.1-13),warrantycosts,rework,andserviceerrors(Figure7.1-17),todriveachievementofthedesiredoutcomes.

WhendevelopingKWPsandKSPs(especiallyevidentinStep3,Figure6.1-2),FitHabitspreventsreworkanderrorsusingShapeItUp,FITTESS,andSustainIteffortsintegratedintothePES;theseeffortsincludeprocessandvaluestreammappingforprojectsfocusedonwastereductionandprocessefficiencies.Thisapproachallowsearlyrecognitionofpotentialreworkanderrorsandtheiravoidanceasasystem,withKWPs/KSPsdesignedandrefinedbeforeimplementation(Steps3–6,FITTESS).AdditionaltoolsutilizedduringthedesignandtestingincludeFMEA,RCAs,andbenchmarkingtohelpdriveprioritizationandstandardizationof(re)designefforts.When“optimal”processesaredesigned,processstepsthatcreatereworkandpotentialerrorsareavoided,yieldingcostavoidanceandensuringexcellenceinmeetingcustomerandoperationalrequirements.Thecostofinspections,tests,andauditsisminimizedthroughgoodprocessdesignandSustainItefforts.Costsassociatedwithongoinginspectionsandauditsareminimizedthroughhardwiringerror-proofedstepsintothedesignofKWPsandKSPs.Forexample,in2009,theentiresupplychainofactivewearclothingandathleticshoeswenttothestandardizeduseofbarcodetechnology,frombeingreceivedinthewarehouses,tocustomerordering,toteammemberspickingproductsfromshelves,topackaging,andfinallytoshipment.Whilethistechnologywasasignificantinvestment,theROIhasresultedinsignificantdecreasesinreworkandwrongproductshipments,andimprovementincustomerandteammembersatisfaction(Figures7.1-17,7.1-13,7.2-2,and7.3-12).Thisrefinementresultedinmeetingtheneedsofcustomerswhilecontrollingtheoverallcostsofoperations.Annually,aspartofStep7(FITTESS),eachKWPandKSPisreviewedforadditionalopportunitiesforimprovedcosteffectivenessandoperationaleffi-ciencies.Forexample,in2015,Financestreamlineditsaccountsreceivable(AR)processestomakeimprovementsoverallandreduceDaysinAR(Figure7.5-5).

6.2b TheFitHabits’SupplierManagementTeammanagesthesupplychainusingSupplyFit(Figure6.2-1).Withinnovationasacorecompetency,FitHabitsworkscloselywithitssuppliers.ASupplierCertificationProgram,basedonsevenkeycriteriaelements(Figure6.2-2),providesdistinctiveadvantagesforsup-pliers.Oncecertified,suppliersenteracollaborativerelationshipwithFitHabitscalledtheInnovativeReverseProductIdentifica-tionandCaptureProcess(SA2).ThisprocessenablesFitHabitstoworkdirectlywithsupplierstodesign,manufacture,anddelivercustomer-specificandspecialtyproductsforkeycustomergroupsinacost-effectiveandtimelymanner.FitHabitsmeetswithsuppliersonaregularschedule(eithermonthlyand/orquarterly)toreviewperformance,performancemetrics,andcustomerfeedback.Suppliersshareinformationontheirsalestrendsaswellasonnewfabricsandactiveweardesigns.FitHabitsalsoprovides

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aggregatedinformationfromuserprofilesoncustomersizing,productratings,andpurchasingpatterns.ThisenablesFitHabits’supplierstodeliverbetterproductssuitedtoFitHabits’customersandmeetthegrowingdemandforcustomizedofferings(suchasforchallengedathletes),whichhelpsthecompanymeetitsmission:Clothingourcustomersforafitlifeanddelightingthem,always.

Suppliersthatarenotmeetingorsustainingexpectedperformancelevelsareinvitedtoparticipateinimprovementopportunitiesandaregivenaspecifiedperiodoftimetomakeappropriateadjust-ments.Forthoseraresuppliersthataredeemed“nonconforming,”

thecontractwiththemisterminated.Forexample,in2014,asupplier’sproductionofseveralkeyactiveweargarmentsnolongerwasmeetingqualityandselectionspecifications.FitHabitsworkedwiththesupplierforoverninemonthstobringitincongruencewithcontractualrequirementsbutwasnotsuccessful.Inearly2015,thecontractandrelationshipwiththatsupplierwereterminated.

6.2c(1) FitHabitsprovidesasafeoperatingenvironmentbyassessingenvironmentalfactorsthroughacompany-widesafetycommittee.TheSafetyHabitsCommittee,whichiscomprisedoftwoseniorcoaches,twocoaches,andfourteammembersfromdifferentunitsincludingISandthewarehouses,monitorsdata,identifiesOFIs,managesrisk,andcoordinatesriskre-education.EnvironmentalsafetyregulationsandISOstandardsaremonitoredandsafetyplanscreatedtoaddressthem.Basedonanannualhazardvulnerabilityanalysis(HVA;6.2c[2]),monthlyenviron-mentalandoperationalauditsareperformedtoidentifypotentialareasofrisk.Ifriskareasareidentified,theyareanalyzedandRCAsareperformedtounderstandthemandmitigatetheissues.Annually,theseplansareevaluatedandupdatedasneededtoaddressorganizational,facility,and/orregulatorychanges.GoalsareestablishedandtrackedthroughperformancereviewsandincorporatedintoSustainItefforts.Thecommitteemonitorsinjuryrates,lostworkdays,andrestrictedworkdays.AnongoingFacilitiesMaintenanceProgrammaintainsfireprojectionsinallFitHabits’facilitiestopreventafireorlimittheeffectsifonewastooccur.Additionaltrainingforareassuchasforkliftoperationsandergonomics(Figure5.1-2)isprovidedtoallteammembersatthetimeofonboardingandannually,asappropriate.

6.2c(2) FitHabits’EmergencyManagementSystem(EMS)utilizesabest-practiceHVAtool,benchmarkedfromapreviousBaldrigeAwardrecipient.HVAidentifiespotentialemergenciesandanalyzesthelikelihoodofthoseemergenciesoccurringandtheirimpactsontheoperations,worksystems,andservicestocustomers.TheEMSisalsopartoftheSafetyHabitsCommittee’sresponsibility.ThiscommitteeevaluatestheHVAannuallytogainunderstandingofinternalandexternalvulnerabilitiesandfocusresources,readiness,andplanningeffortstoensureprepara-tion,readiness,andresponsefordisastersandemergencies.Contingencyplansaredevelopedformitigation,preparedness,response,andrecovery.Drillswithallareasandshiftsofteam

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members,aswellastestingoftheentiresystem,areconductedeverysixmonths.Outcomesareevaluated,andtheSafetyHabitsCommitteeaddressesOFIs.SafetyHabitsalsoaddressescontinu-ingoperationsandbusinessrecoveryinconjunctionwithIS(4.2b[5])shouldamajordisasteroremergencyoccur.Rolesofspecificdepartmentsorindividualsareoutlinedandassessedfortimelyandeffectiveimplementationofemergencyresponseandpotentialimpacttooperations.ThecommitteeworksdirectlywiththeISDepartmenttoensurecontinuityofservicesorminimal

interruptionofservicesintheeventofanemergencyordisaster.In2015,theSafetyHabitsCommitteetestedthecompany’sandseveralkeysuppliers’capabilitiesinaddressinga“mock”productrecallofamajoractivewearproduct.Thismockexerciseresultedintheidentificationofbotheffectiveprocessesinplace,aswellasseveralgapsforbothFitHabitsandthesuppliers,whichhavesincebeenaddressed.Sincethatfirstexercise,twoadditionalkeysuppliershaverequestedtoparticipateinthenextopportunityslatedforlate2016.

Category 7 Results

FitMeasuresarepresentedforkeyareasofimportancetothesuccessandsustainabilityofthecompany.FY2016projections(shortterm)areprovided,withadditionallong-termprojectionsAOS.Top-decilecomparativesareprovidedwhereavailableandarerepresentedas“bestpractices.”Limitedcompetitivecompara-tivesareprovidedduetothelackofavailabilityand/orproprietaryinformation.Additionalsegmenteddataforareassuchasspecificwarehouses,suppliers,productgroups,workforcegroups,etc.,areAOS.

7.1 Product and Process Results 7.1a ProvidingtargetedproductpromotionsisacriticalcustomerdelighterandenablesFitHabitstoengageandretainitscustomers.PromotionsROIisapositiveinfluencerofFitHabits’business,andbeneficialyear-over-yearROIisdemonstratedinFigure7.1-1.ThesignificantgrowthrateofpromotionsasapercentageofoveralluptakeandbyproductareaisshowninFigure7.1-2,withbothactivewearandathleticshoessustainingarateof2–5%yearoveryear.

Inadditiontopromotions,FitHabitscontinuouslyworkswithitskeysupplierstobringtomarketnewproductofferingsineachofitstwoproductareas;theseofferingsaremeasuredbySKU(Figure7.1-3).Inaddition,aSOistogrowwarehousecapacity(Figure2.1-3),asevidencedbythegrowthofSKUsthatFitHabitsoffersdailytoitscustomers.

FitHabitstracksitsoverallsuccessintotaldollarsalesthroughcustomerencounters,measuringe-ordersandCallCentervolume,aswellasoverallvolumethroughbothorderingoptionsandaver-agesalespercustomerencounter,e-order,andperson-2-person(P2P)orders(Figure7.1-4).TheCallCenterprovidescustomers

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withoptionsformorepersonalizedservice;forexample,theycanalwaystalkwithatrainedteammemberP2P.AnotheroptionisthroughFitHabits’securee-orderingsystem.Whileoverallthepercentageofe-orderscontinuestogrow(Figure7.1-5),custom-ersspendmoreperencounterwhenorderingthroughtheP2Poption.TheCallCenteriscustomers’preferredmethodofdoingbusinesswithFitHabits(Figure7.1-5).AdditionalCallCentermetricsareavailabletoteammembersevery15minutes,withhourlyanddailyformatsforcallmanagement,staffing,coaching,andperformanceimprovementefforts.ThesemeasuresareAOS.NotethatSratsa.combestinclassiscomparabletotheindustry’s“top-quartile”performance.

FitHabits’overallgrowthinsalescontinuestobeextremelystronginbothofitsproductcategories(Figure7.1-6).Withtherecentexpansionintospecializedproductsforchallengedathletes(newproductsavailablescheduledthroughFall2016),growthsalesprojectionsinactivewearwillreachover$700millionforFY2016.

FitHabits’successisdependentonitshighlyskilledteammembersandtheircontinuedabilitytoengageinandsustainpositiverelationshipswithcustomers.Salesperteammembercontinuetoincrease(Figure7.1-7).ThedecreaseinsalesperteammemberseeninFY2014wasplanned.ThiswasduetotwomajoreventsoccurringinFY2014:(1)CallCenterupgradesintechnol-ogy,requiringadditionaltrainingandadditionaltimepercustomerencounter;and(2)facilitiesexpansionresultinginFitHabitsutilizingadditionaltemporaryteammembersandovertimetoaidinthistransition.

AsCallCentervolumeremainsstrong,theoverallabandonedcallratecontinuestodecrease(Figure7.1-8).InFY2013,theCallCenterexpandeditsstaffandenhanceditsteammembertraining,whichreducedthepercentageofabandonedcalls.Inaddition,theFY2014CallCentertechnologyupgradeprovidedstate-of-the-arttechnologyforteammemberstomoreeffectivelymanagecallvolumes,whileatthesametimesignificantlyreducingtheaban-donedcallrate.NotethatSratsa.combestinclassiscomparabletotheindustries“top-quartile”performance.

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WhileCallCentervolumesremainstrong,theaveragetimeforP2Pcustomerencounters(asmeasuredinminutes)forbothordersandissuesremainspositive,asdemonstratedbythecontinuedimprovementincustomerengagement(Figure7.1-9).Thisdemonstratesastrongabilityofteammemberstoprovidepositiveservicerecoverywhendealingwithcustomerissuessuchasreturns(Figure7.1-13).TheLTtranslatesthesestrongresultstoteammembers:“moretimewithyourcustomerstranslatesintohighercustomerengagementandhighersales...awin-win.”

ACallCenterefficiencymeasureisthetotalaveragecostofaP2Pcustomerencounter(Figure7.1-10).FitHabits’CallCenterefficiencyhasbeenbetterthanaSratsa.combestpractice(comparabletoindustry“top-quartile”performers)forthepastthreeyears.AnotherCallCenterefficiencymeasureisphoneande-orderuptime(Figure7.1-12).

AnadditionalperformancemeasureistheeffectiveuseofthetotalsquarefootageownedandleasedbyFitHabits.InFY2014,theexpansionofnewwarehousespaceresultedinasignificantdecreaseinsales/squarefootage,whichresultedinaShapeItUpimprovementprojectbeinglaunched.Throughcarefulstudyandanalysisoftheworkflowofvariousdepartmentsandareas,significantconsolidationandmoreeffectiveuseofspacewereimplemented.ThisfreedupspacetootherareasofthecompanytoenablegrowthinSKUandwarehousecapacity.WiththegrowthrateofnewproductofferingsandadditionalSKUsbeingman-aged,peritsprojection,FitHabitshasregaineditsmomentumintotalsales/squarefootatthebestpracticerate(projected;Figure7.1-11).NotethatSratsa.combestinclassiscomparabletotheindustries“top-quartile”performance.

TwokeymanagementmeasuresoftheFulfillmentDepartmentarereducingreturnsfromallcustomerorders,whileatthesametimereducingthecostofhandlingthosereturns(Figure7.1-13);forbothmeasures,FitHabitsismakingprogress.TheseeffortsareaugmentedbytheCallCenterande-orderingsystemtoenablethecustomertoordertherightproductattherightsize(andcolor,andstyle,etc.),reducingreturnsanddissatisfaction.Whenproductsarereturned,FitHabits’barcodetechnologyandrelationshipswithsuppliershaveenabledthecompanytoreduceitsoverallcostofhandlingthosereturns,whileatthesametimeexceedingcustomers’expectationswithreplacementitemsand/orrefundsandcouponsforfutureorders.

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Inensuringeffectivesupplierrelationshipsandwarehouseinven-torymanagement,FitHabits’in-stockrateisprojectedforFY2016tobeattheindustrybestpracticerateof99%(Figure7.1-14).NotethatSratsa.combestinclassiscomparabletotheindustries“top-quartile”performance.

FulfillmentcostperinvoiceandaverageshippingcostperinvoiceareimportantefficiencyindicatorsfortheKWPProductMerchan-dising(Sales;Figure6.1-1).Forbothindicators,FitHabitsisatornearingbest-practicelevelsfortheindustry(Figure7.1-15).

Thefollowingfourmeasures(Figures7.1-16through7.1-19)aremonitoredascustomerrequirementsanddelighters,aswellasenvironmentallysustainablepractices.Inthreeofthesefourmea-sures,FitHabitsisatornearingbest-practiceperformancelevels.Asaboutiquecompanywithinalargemarketspace,FitHabitsisseenasamarketleader,andbyallaccounts(basedonAdvisoryBoardandcustomerfocusgroupinterviewsandcomments),itfaroutpacesanyofitsfourkeycompetitorsinthesefourindicators.

FitHabits’24-hourshippingguarantee(ContinentalUnitedStates),whilenotuniqueinthetotalmarketspace,makesittheonlybou-tiqueactiveweardistributortoprovidethisguarantee.InFY2016,therateisprojectedtobeat99%orbetter(Figure7.1-16).

Shippingandinvoiceaccuracy(Figure7.1-17),aswellaspackag-ingqualityandpercentageofpackagingmadefromrecycledmaterials(Figure7.1-18)andpercentageofproducts“Madein

America”(Figure7.1-19),demonstratesustainedperformanceatornearbest-practiceperformancelevels.FitHabitscontinuestoworkwithitsathleticshoessupplierstoimproveonitsabilitytoincreasethisratewithintheproductline.NotethatSratsa.combestinclassiscomparabletotheindustries“top-quartile”performance.

Thetimefromproductordertoshippingisakeycontributorinmeetingthe24-hourshippingtimeguarantee.Picklines(foreffi-ciencyinfindingproductsinawarehouse)areanotherindicatorofthisguarantee.Thesetwoindicators,showninFigure7.1-20,demonstratethesuperbcontributionsbyFitHabits’teammemberstoreduceoverallorder-to-shiptime,whileimprovingthenumberofpicklinesperhour.

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7.1b(1) Todriveprocesseffectiveness,FitHabitsusesitsPES(P.2c)toidentifykeyimprovementefforts,managesthosethroughitsShapeItUpeffortsandtools,sustainsthebestpractices,leveragestheknowledgeacrossthecompany,andmaintainstheperformancegainsthroughitsSustainItapproachandtools.Thecumulativeyear-over-yearROIfromthosefocusedperformanceimprovementprojectsareshowninFigure7.1-21.Thesesavingshavecontributedtoastrongprofitmargin(seeFigure7.5-2).

EveryFitHabits’KWPissubjecttoextensiveISOstandards,including,ataminimum,annualinternalaudits.Theseauditshaveresultedincorrectiveactions(reactionary).ButtherealvalueFitHabitshasleveragedwithitsISOworkismovingfromthereactionarycorrectiveactionfindingstotheproactivepreventativeactioninitiatives.BymidFY2012,FitHabitsmovedfrombeinginareactionarymodetoaproactivestance(Figure7.1-22).TheseeffortsdirectlysupportFitHabits’abilitytodeliverexceptionalvaluetoitscustomers,teammembers,suppliers,andotherstake-holders,aswellasinnovativeandleadingsolutionsasaboutiquedistributor,asevidentbymanyofitskeyresultsbeingatornearbest-practiceperformancelevelsinitsmarketspace.

FitWebisacriticalresourceforthecompanyandenablescustom-erstoviewproductsandorderandtrackshipments.FitWeb’shomepagespeedanduptime(Figure7.1-23)arecriticalsuccessfactorsthataremanageddailybyISteammembers.

FitWebandtheoverallISsecurityagainstcyberattacksaremoni-toreddaily.ISauditstoISO27001securityandPCIDSSauditfindingsaresharedwiththeLTquarterlytoensurethehighestlevelofdataintegrityandcustomersecurity(Figure7.1-24).

AsaKSP,FacilitiesManagementisanimportantfunctionthatisoftenundervalued.AsFitHabitshasgrownitsfootprintwithnewwarehousespace,theFacilitiesTeamhasdoneanoutstandingjobinmanagingtheoverallfacilities,grounds,andkeywarehouseequipment,resultinginreducedoverallfacilities’costpersquarefoot,whichisprojectedtobeatabest-practicelevelforFY2016.FitHabitsisalsonearinga100%rateoncompletingallpreventa-tivemaintenanceontime(Figure7.1-25).

FitHabitsisveryconsciousabouttheenvironmentandhassustainedzeroEPAviolationsoverthepastsixyearsfromitsoperations(Figure7.1-26).ThisaugmentsFitHabits’effortsinincreasingitsuseofrecycledpackaging(Figure7.1-18)andwork-ingwithsupplierstoimprovethepercentageofproducts“MadeinAmerica”(Figure7.1-19).

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Overallprocessefficiencyismeasuredbytotaldirectlaborcostpercustomerinvoice(Figure7.1-27).FitHabitsisprojectedtooutperformthebest-practiceperformancelevelinFY2016.

7.1b(2) Thesafetyandwell-beingofFitHabits’teammembersareimportanttothesustainabilityofthecompany.FitHabits’emergencypreparednessisfocusedonprovidingevacuationdrillsforallteammembersonallshiftstoensureappropriate

andtimelyresponse(Figure7.1-28).Annually,fivedrillspersiteareconducted.Eachdrillisevaluatedforitseffectivenessandefficacyinmeetingitsspecifiedcriteriaandobjectives.OFIsarereviewedbytheLT,andactionsaretakentoimproveandsustainoverallefforts.

7.1c SupplierandcollaboratorrelationshipsarekeytoalljobsatFitHabits.Whileacoachoverseesday-to-daymanagementandregularsuppliermeetings,almosteveryLTmemberandteammemberregularlyinteractswithkeystakeholdersandvaluestheserelationshipstoensurethecontinuedandsustainedabilitytodelightFitHabits’customers.AdelightedFitHabits’customerisadelightedsuppliercustomer.FitHabitsworksdiligentlytocreateastrongsupplier/manufacturerrelationshiptoensureawin-win.TheseeffortsareevidentinsustainedsuppliersatisfactionandFitHabits’annualevaluationonindividualsupplierperformancetocontractualobligationsandexpectations(Figure7.1-29).Eachindividualsupplierperformanceratingisreviewedwiththesup-plieronanannualbasisormorefrequently,ifwarranted.TheseresultsareAOS.

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Akeysupplychainefficiencyandeffectivenessmeasureisthewarehouses’abilitytoturntheinventory.Reducinginventoryonthefloorisasignificantexpenseandonethatneedstobemoni-toreddaily.InventoryturnsoverallandforeachwarehouseareshowninFigure7.1-30andbykeysupplierinFigure7.1-31.

Productrecallsareasupplier’sanddistributor’sworstnightmare.FitHabitshasbeenfortunateanddiligenttoensurethatithassustainedstrictsupplierrequirementsinorderforamanufacturertobecomeaFitHabits’supplierandtomaintainbeingaFitHabits’supplierthrougheffectivemanagementandstrictoversightoftheexpectations.Thisrelationshiphasresultedinzeroproductrecallsinthepastthreeyears(Figure7.1-32).FitHabitsbelievesthatthisisalsoaresultofitseffortstopushformoreproductsthatare“MadeinAmerica.”TherecallsinFY2010andFY2012wereofproductsmadeoverseasandresultedintwoofthethreesuppliersinvolvedbeingremovedfromtheFitHabits’supplierlist.

7.2 Customer-Focused Results7.2a(1) Clothingourcustomersforafitlifeanddelightingthem,always.ThatmissionstatementdrivesFitHabitstomeetandexceedcustomerexpectations.Armedwiththecorecompetenciesofrelationships,innovation,andfitness,theteammembersatFitHabitsapproacheachcustomerencountertofulfillthemissionstatement.

AsthenumberofcustomerencountersatFitHabitshasincreaseddramaticallyoverthepastsixyears,thepercentageofreturningcustomershashadagentlerbutsteadyincrease(Figure7.2-1).FitHabitsfindsthattheoldadagethatitiseasiertosellagaintoanexistingcustomerthanitistomakeanewcustomeristrueinitsbusinessaswell.Theincreaseofreturningcustomersfromaround55%tonearly80%isatrendthatFitHabitsplanstoincrease.

Overallcustomersatisfactionhasalsoincreased—fromnearly92%to94%(Figure7.2-2).Satisfactionishighestintheactive-wearmarket,reflectingthecreativityandvalueoftheproductsofFitHabits’suppliers.

Inaverycompetitivemarketplace,FitHabitsconsistentlysurpassesitscompetitorsinoverallcustomersatisfaction(Figure7.2-3).

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FitHabitsmeasuresthesatisfactionofitscustomersbytheirrequirements(Figure7.2-4).ThishelpsFitHabitsknowhowtoprioritizeimprovements.Forinstance,whilecustomersupporthasincreased,itdoesnotyetmeettheSratsa.comtop-10%bench-mark.CustomersatisfactionwithproductselectionhasequaledorexceededtheSratsa.comtop-10%benchmarkconsistently.

Returnsarerarelypositiveexperiencesintheretailworld.Providingno-costreturnshippinglabelsandfollowingupwiththecustomerafterareturnhavekeptsatisfactionlevelswithreturninganorderover90%since2010(Figure7.2-5).

Wheneverthereisacomputerglitchoraproblemforacustomerinplacinganorder,thereareopportunitiesforFitHabits’teammemberstoprovidetheextrastepincustomerservice.Whensatisfactionwasbelow90%forseveralyears,anewservicerecoveryprocess(3.1a[1])wasimplementedin2013,bringingthissatisfactiontoover95%.

Promotionsoverall,includingnewproductofferingsand“MadeinAmerica”labels,havehadincreasingsatisfactionlevelssince2011(Figure7.2-6);however,itwasclearthenthatFitHabits

wasnotprovidingsufficientnewproductsonitswebsitetokeepcustomersinterestedandsatisfied.TheSupplierManagementTeamtookupthechallengetoworkwithsupplierstobalancenewproductsonline,replenishproductlevels,anddecreasere-stockfees.Theresultsareseenintheincreaseinsatisfaction,startingin2012 .

In2013–2015,whilesatisfactionwiththeeaseofdoingbusi-nesswithFitHabitswashighat88%to90%,itdidnotmeettheSratsa.comtop-10%benchmark.Across-functionalteamworkedthroughaShapeItUpinitiativeanddevelopednewprocessesattheendof2015.Earlyresultsshowanincreaseinsatisfaction(Figure7.2-7).

7.2a(2) FitHabits’customerengagementlevelsexceedthecom-petitors’levelsandmeettheSratsa.combenchmark(Figure7.2-8).WhensegmentingFitHabits’customergroups,frequentpurchas-ers,asmightbeexpected,havethehighestlevelsofsatisfaction,exceedingtheSratsa.comtop-10%benchmark(Figure7.2-9).

Consideringengagementasthelikelihoodofcustomerstorecom-mendFitHabits,thecompany’sscorehasbeen97%forthepastfouryears,justshortofthebenchmarkat100%(Figure7.2-10).Inaddition,catalogueshaveremainedastrongfeatureoftheonlineshoppingexperience,andforthepastsixyears,catalogueshavereceived97%levelsofapproval.

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FitHabitsgentlyenteredthesocialmediaworld,startingwithRatingsandReviewsin2011(3.1a[1];Figure7.2-11).TheSocialMediaTeamhasmovedFitHabitsfirmlyintosocialmedia,includ-ingHowIlookbook(Figure7.2-12),Witter,andOurTube.Retail Globalhastrackedtrendsinsocialmedia,showingthatFitHabitsisatop-10watchedOurTubechannelintheretailmarket(Figure7.2-13).

Theuseofthe“DataShop:MarketingNow”salesanalyticstoolhelpsFitHabitsunderstandcustomerpatterns,includingreturnsandcomplaints.TheFootwearMarketingTeamreviewedtheresultsonreturnsin2010and2011andworkedwiththeFootwearSupplierTeamonproductinformationandtrendstoconveyto

thefootwearsuppliers.Thesignificantdropinreturns,startingin2012,istheresultofthenegotiationswiththefootwearsuppliers(seeFigure7.1-13).

Overalldissatisfactionhasdecreasedfrom2010,basedonalloftheimprovementsdiscussedaboveaswellastheenhancementstothewebsite(Figure7.2-14).

7.3 Workforce-Focused Results7.3a(1) AkeycomponentofFitHabits’missionistheempower-mentoftheworkforcethroughengagement,teamwork,andprofessionaldevelopment.FitHabitscreatesateammemberclimatethatsupportstheseempowermentelementsthroughthe

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corecompetencyofrelationshipsandtheSO“BeaTeamEmbrac-ingFitness”(Figure2.1-3).

ThekeyworkforcecapabilityandcapacityperformancemeasureforFitHabitsistheretentionofteammembers.TheresultsreflectedinFigure7.3-1arefortheretentionofteammembersoverall,identifiedhigh-performingteammembers,andfirst-yearteammembers.ThelowretentionofnewteammemberswasanalyzedthroughaShapeItUpprojectin2013,andvariousimprovementsweremade,includingtherevisedFitWelcome!orientationprogramandtheFitBuddyprogram.

Overthepasttwoyears,throughShapeItUp,thetimetofilljobvacanciesinnumberofdayswascutbyover60%,surpassingtheAgencyforPeopleManagement(AFPM)75thpercentile(Figure7.3-2).ThisimprovementenablesthePeopleTeamtomeettherequirementsofinternalcustomers.In2014,TargetedSelection,

abehavioralinterviewingprocessthatlooksatall“targets”ofsuccess(knowledge,skills,experience,competencies,andmotiva-tionalfit)wasimplemented.Theprocessnotonlyidentifieswhattolookforinacandidatebutalsohowtomanageaninterviewtoensurethatthehiringmanagersaregettingtothebestdatafromthecandidatessotheycanmakethebesthiringdecisions.Thisrecruitingprocessisalsoattributedtotheincreaseinfirst-yearretentionofteammembers(Figure7.3-1).

Asignofteammembers’engagementistheirwillingnesstoreferfriendsandfamilytoapplyforjobsatFitHabits(Figure7.3-3).In2013,areferralbonuswasawardedtothe“referringteammember”afteranewteammemberpassedasix-monthworkanniversary.

UnscheduledabsencesnegativelyimpactFitHabits’abilitytomeetitsvision.Additionally,theyareoftenanindicatorofworkforcedissatisfaction.FitHabitshasmaintainedconsistentlylowlevelsofunscheduledabsences(Figure7.3-4).

Theimprovementinovertimehoursasapercentageoftotalpay-rollisevidenceofthesuccessofcapabilityandcapacityplanning(Figure7.3-5).OvertimehoursatFitHabitsarecurrentlyhalfoftheBureauofLaborStatisticsbenchmarkandreflectafavorablefour-yeartrend.

Asevidenceofhowthecompanysupportsdiversity(Figure7.3-6),FitHabitshasbeenrankednearthetopofAssortment Magazine’stop50companiesintheUnitedStatesforthepastsixyears.

7.3a(2) FitHabitshascompliedwithallregulationsoftheADA,includingcreatingaccessforallinnewbuildingsandrefittingleasedbuildings,asneeded.FitHabitshasalsocompliedwithallregulationsoftheEEOCandhasnothadaviolationinthehistoryofthecompany.

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Afteraspikeofinjuriesin2013(Figure7.3-7),theSafetyHabitsCommitteereinforcedthetrainingprocessandmaterials.Com-mitteemembersmadepresentationsacrossthesites,successfullybringingtheinjuryratetoalmosthalfoftheOSHAbenchmark.Thetrendforclaimsforworkers’compensation(Figure7.3-8)followedtheinjuryrate.

A2011FitHabits’reviewoftrainingrecordsshoweddecentcompletionratesfornewhiresbutpoorcompletionsfortheannualrefreshtrainingrequiredofallteammembers.When2013startedoffwithanumberofaccidents,theSafetyHabitsCom-mitteeworkedwiththeLTtomakecoachesaccountableforteammembersafetytrainingcompletions(Figure7.3-9).

Traininginsafetybeyondthebasicsisrequiredofanumberofjobs.Forteammemberswhoworkinthewarehouse,traininginHazComm,lockout/tagoutprocesses,andportablefireextinguish-ersisimportantfortheirsafety(Figure7.3-10).Similarly,theteammemberswhodriveforkliftsinthewarehouseneedtobecertifiedannually(Figure7.3-11).

7.3a(3) FitHabitsmeasuresteammemberengagementandsatisfactionthroughteammemberreferralsaswellastheresultsoftheannualteammembersurvey(Figure7.3-12).

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ThesurveygivesFitHabitstheabilitytolookacrosstenuregroupsandfunctionalgroupsofteammembers.Thelowretentionratesoffirst-yearteammembersfrom2010to2012werereinforcedintheirlowengagementscores.AsthePeopleTeammadechangestosupportfirst-yearteammembers,resultswereseeninretentionandengagement(Figure7.3-13).

Theengagementofteammembersincreasedrelativelyconsis-tentlyacrossdifferentjobcategoriesoverasix-yearperiod.TheengagementresultsfortheCallCenterhavebeenthehighest.Whenthisgroupwasstudiedin2014tofindlessonstosharewithothergroups,thecontinual,mostlypositivecustomercontactthat

teammembers’hadwasthekeydrivertotheirengagement.TheLTcouldeasilyseehowtheyimpactedtheFitHabits’missionbydelightingcustomers(Figure7.3-14).

Severalresultstiedirectlytoteammemberrequirements.

Open,transparent,andfrequentcommunicationhasbeenapartoftheFitHabits’culturesincethefoundingdays.Resultsfromcommunicationsmechanisms(Figure1.1-2)suchasseniorcoachrounding,leaderthankyous,CEOupdates,aswellastheinforma-tiononmyFitHabitshomepage,showhighlevelsofengagement,surpassingthebenchmark(Figure7.3-15).

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TeamworkhasalsobeenahallmarkoftheFitHabits’cultureandisseenasoneofthevalues(Figure7.3-16).TheadditionofTargetedSelectionbehavioralinterviewingandselectionprocessusesteamingskillsandbehaviorsasaguideinselectingnewteammembers.

Thetransparentcommunicationmethods,suchasthedeploymentoftheFitPlan(2.2a[2])andQCPProcess(5.2a[4]),keepallteammembersinformedandalignedwiththegoalsandobjectivesofFitHabits.Inadditiontobenefitsoffered,thishelpsincreaseteammembers’prideintheirwork,aswellastheirengagement(Figures7.3-17and7.3-18).

Whilerecognitionhasneverappearedasakeyworkforcerequire-ment,theLTisconvincedthatrecognitionoftheworkforceisanimportantfactorintheengagementofteammembers(Figure7.3-19).ArecognitionbudgetisannuallyincludedintheFitPlan.

Recognizingatrendappearingnationally,in2010,theLTwasconcernedaboutthelowparticipationinthe401Kplan(Figure7.3-20).ThisseemedtobetiedtotheyoungworkforceatFitHabits.WiththePeopleTeam,theLTmountedacampaignin2011toincreaseparticipation,focusingonthecorporatematchingaspect.In2015,recognizingthatparticipationwasstillbelowabestpractice,theLTscheduledaseniorcoachroundinginApriltofocusonthevalueandbenefitsofhavinga401K.

Withfitnessasacorecompetency,FitHabitsencouragesallteammembersinRichmondtoparticipateintheactivitiesoftheFitCenterandforteammembersinIrvingandPortland,subsi-dizedmembershipinalocalfitnesscenter.In2012,theLTtiedsuchparticipationtoareductioninthecostofhealthinsurance forthatteammember,seeingthecorporatecontributionforhealth

carelowerforfitteammemberswhopracticedhealthybehaviors.ParticipationhasnowsurpassedtheAFPMbestpractice(Figure7.3-21).

7.3a(4) Anotherkeyrequirementofteammemberswastheabilitytogrowintheirjobs.Figure7.3-22showsthepercentagewhofelttheyhadtheopportunitytogrow.Whileanumberofopportunitieswereavailable,theintroductionoftheQCPProcessbroughtfeedbackfromtheworkforcetotheLTandhelpedteammembersbecomeawareofopportunities.

OfparticularinteresttotheIS/OperationsSupportDepartmentswasprofessionaldevelopmenttiedtosomeparticularlytechnicaljobs,aswellasoveralldevelopment.TheintroductionoftheQCPProcessin2013,inadditiontothehiringofanewCIOandseveraltechnicalsystemdirectors,helpedfocusthecompany

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onthedevelopmentneedsofthetechnicalstaff.Resultshavecontinuedtoimprove(Figure7.3-23).

Asabusinessstartedinagarageshop,FitHabitshasalwayshadapracticeofpromotingfromwithintheexistingstaff,aslongascapabilitiesweremet.Theresultsforinternalpromotionsexceedthebestpractice,withtheexceptionof2013whentherewasaconsciousdecisiontobringinnewtalenttosupportthewebsiteandsystemsecurity(Figure7.3-24).

FitHabitshasbeenalong-timebelieverinthevalueofeffective,focusedtraining.Takingatipfroma2001BaldrigeAwardrecipi-entseniorleaderwhosaid,“Whatifyoudon’ttrainthemandtheystay?”theLTinvestedearlyinaLMStotracktraining(Figure7.3-25).Asthesystembecamemoreversatile,LTmembersfounditwouldalsodeliveronlinetrainingandtrackevaluationdata.MoreinformationisavailableAOS.

TheL&DDepartmentreviewseachnewtrainingmoduleorcoursetodeterminethelevelofevaluation.FollowingtheKirkpatrickmodel,alltraininggetsevaluatedatLevel1,orsmilesheets.Thesedataareusedtodetermineifthetrainingfacilitiesarecomfortableortheonlineprogramsloadquickly.SometrainingreceivesLevel2,orskillachievement;canthestudentmeettheobjectivesattheendofthetraining?Theanswerhelpsdeterminewhetherthestudentneedsadditionaltrainingorthetrainingisnoteffective.Othertrainingisevaluatedatsomeperiodafterthetrainingoccurredtodeterminewhetherthetrainingwaseffective.Figure7.3-26showsasampleofcoursesandthelevelsofevaluationstheyreceive.MoreinformationisAOS.

Tohelpwithteammemberprofessionalgrowth,FitHabitsprovidestuitionreimbursementstohelpteammemberscontinuetheireducationandreceivedegrees(Figure7.3-27).TheCOOisa

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bigproponentofthisprogram,asshecompletedanMBAthroughtuitionreimbursementandthisgaveherthebackgroundforhercurrentjob.Eachyear,theopportunityforhighereducationisatopicduringseniorcoachrounding.

Insomecases,certificationsarerequiredratherthandegrees.ThisisparticularlytrueintechnicalareassuchasinITandquality.FitHabitssupportsthiseducationaswell.Teammemberswhocompleteeitheradegreeorcertificationarerecognizedduringall-team-membersmeetings,andtheyreceiveabonus.TheLTisproudthat,overthelastsixyears,43degreesand234certifica-tionswereawardedtoFitHabits’teammembers(Figure7.3-28).

7.4 Leadership and Governance Results7.4a(1) ThegrowthandsuccessthatFitHabitshasenjoyedcanbetiedtothesuccessfulapproachesthattheleaders,orcoaches,useforcommunicatingandlisteningtoteammembers.Figures7.4-1and7.4-2presentresultsofannualteammembersurveys.

ABspostedineachdepartmentkeepteammembersupdatedonthecompany.Throughfrequentandtransparentcommunicationmethods,includingrounding,teammembersseeastrongfocusonactionfromtheircoaches(Figure7.4-3).

Seniorcoachrounding(Figure7.4-4)startedinFitHabitsin2009,aftertheCEO/presidentsawademonstrationofitseffectivenessataBaldrigeAwardrecipienthospital.ThepracticewasquicklyadoptedatFitHabitsin2010andbecamepartofthecultureby 2012 .

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TeammembershaveahighconfidencelevelthattheirleadersmodeltheFitHabits’MVV(Figure7.4-5).

7.4a(2) Asevidentin7.5,FitHabitscontinuestoexhibititsvaluesofBalancedandIntegrity.

BecauseFitHabitsisaprivatecorporation,theBODhasfiduciaryresponsibilitytoascertainthatFitHabitsisfinanciallysoundandfollowingcommonaccountingpracticesandallapplicablelawsandregulations(Figure7.4-6).

ResultsoftheBODsurvey(1.2a[2])arereviewedannually(Fig-ure7.4-7),andrecommendationstostrengthentheBODaremade.ArecentimprovementincludedarequesttohavetheCIOpresentabriefingtotheBODonInternetsecuritythatfocusedonchangesintheindustryandonplanstokeeptheFitHabits’networksecure.

FitHabitsisproudoftherecognitionitreceivesfromcompaniesandpublications(Figure7.4-8).Someoftherecognition,suchastherecyclingawards,isaresultofShapeItUpimprovementinitiatives.Others,suchastheHallofFamerecognitionfromModern TrainingforthePItrainingcurriculum(5.2b[1]),aretheresultoftheoutstandingworkdonebyteammemberseverydayatFitHabits.

7.4a(3) FitHabitspridesitselfonnotonlymeetingminimumregulatoryandlegalrequirementsbutworkingtosurpassthem(Figure7.4-9).IntheareasofInternetandnetworksecurity,ITstaffmembershaveparticipatedinindustryroundtablesandutilizebestpracticestohelpFitHabitsstayontheleadingedgeoftheneweststandardsandkeepthenetworkfrombreachesorotherincursions.

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7.4a(4) FitHabitstakescorporateethicsveryseriously.NewteammemberscompleteanethicsunitduringFitWelcome!,andallteammembersandcoacheshaverefreshertrainingeachyear(Figure7.4-10).EachpersonsignsbothaFitFulpledgeonethicsandaCOIstatement.Initsshorthistory,FitHabitshasnothadanethicscasefiled.

7.4a(5) TheresultsshowninFigure7.4-11havequalifiedFitHabitstoreceiveanEnergyStarrating,anEPAmeasurementofenergyefficiency.FitHabitsreceivedthisnewsinApril2016,asthisapplicationwasfinalized.

AllteammembersatFitHabitsareencouragedtosupportcom-munityorganizationsandevents,whetherofficiallysponsoredbyFitHabitsornot.Eachteammemberisallocated16hoursannuallyforthissupport(1.2c[2]).In2015,82%ofallteammemberscontributedalmost12,000hourstotheircommunities(Figure7.4-12).

FitHabitsisinvolvedinhelpingcommunitieswithanumberofeventsandresources.Thepinnacleeventistheannualshoegive-awayforelementaryschoolchildren,OperationFitShoe,whichprovidesFREEshoestochildren(1.2c[2]).Workingwith

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itsshoesuppliers,FitHabitsgetsshoesatcostorlessfromitssupplierstoprovidefortheevent.FitHabitsestimatestheaveragepairofshoes,betweenthediscountedandfreeshoes,coststhecompany$10.Startingwithonelocalelementaryschoolin2010,theprogramhasexpandedtothreeschools,helpingapproximately1,500childrenhavenewshoestostarttheschoolyear(Figure7.4-13).

InadditiontoOperationFitShoe,anumberofothereventshavebeensupportedbyFitHabits,includingtheWalkforBreastCanceratallthreesites(Figure1.2-3).In2016,FitHabitswillsupportsixevents,providingteammemberstostaffeventsandotherresources,totalingnearly$65,000(Figure7.4-14).

FitHabitsisasupporterofJoinedPathateachofitssites.Teammemberparticipationandcontributionshaverisensteadilysince2010(Figure7.4-15).FitHabitswasawardedtheJoinedPathPlatinumAwardin2013forhavingover90%oftheworkforceparticipatingandhascontinuedtoreceivethisawardeveryyearsincethen.

7.4b FitHabitsusestwoprimarymechanismsfortrackingtheachievementoforganizationalstrategyandAPs:(1)theBSCpro-videsahigh-level,strategicviewoforganizationalperformancerelativetoeachfocusarea(Figure7.4-16);and(2)drill-downmeasuresassociatedwiththeAPsprovidemoretactiledetail.

FitHabitsestablishesaggressiveAPs,withthetargettocompletetheshort-termAPsataminimumof85%completionbytheirestablishedtimeframes(Figure7.4-17).Insettingtheseaggres-siveplans,seniorcoachesareawarethatsomeAPs,becauseofcompetingpriorities,resourceallocation,andstrategicagility,willnotmeetthis85%target.Inthesecases,aseniorcoachworkswiththeassignedAPownertomakeappropriateadjustments.AnAPcompletionrateoflessthan70%isnotacceptable.

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7.5 Financial and Market Results7.5a(1) Astheoveralleconomyhasrecovered,sotoohasthemarketforactivewearproducts.Asasmallboutiquebusiness,FitHabits’strongfinancialresultsareastrategicimperative,andcustomersinterestedinfitnessandhealthhavecontributedtoitssuccess.

FitHabitshasimplementedandsustainedkeyinitiativesandpro-cessestoensuresuperiorcustomerservice,acultureofexcellence,strongsalesinactivewearandathleticshoes,andhighlyengagedteammembersandsuppliers.Theseeffortshaveensuredcriticalstrategicadvantages(FigureP.2-3)inthemarketplace,whichhaveenabledFitHabitstodemonstrateextremelystrongperformanceinitsnetincome(Figure7.5-1)andnetmargin(Figure7.5-2).Competitorcomparisonsarenotavailable.

Theoverallrateofsalesgrowth(Figure7.5-3)isadirectcontributortothecompany’sstrongnetincomeandnetmargin.AsFitHabitshascontinuedtogrow,theoverallsalesgrowthrateremainsstrongandiskeepingoverallpacewiththemarket.WhileFitHabits’overallathleticshoessalesremainstrong,theoverallgrowthratehasslowedasadditionalcompetitorscomeintothemarketandtheoverallmarketcontinuestobesaturatedwithoptions.

FitHabits’abilitytopayitssuppliersontimeisakeycontributortosuppliersatisfactionandperformance.Forthepastfouryears,FitHabitshasoutperformeditscompetitorsintheratetosuccess-fullypayitssuppliersontime,asshownbyBaseline&Rich’sPayUpRating(Figure7.5-4).

FitHabits’daysinaccountsreceivablehaveremainedstrongandperformbetterthanBaseline&Rich’stop-quartileperformers,

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nearingthetop-decileperformers(Figure7.5-5).Foraboutiquecompanyintoday’smarket,FitHabitsisveryproudofitsabilitytocontinuallymeetitsobligations.

FitHabits’dayscashonhandhasconsistentlyoutperformedBaseline&Rich’stop-quartileperformersandinFY2016isprojectedtobeatornearthetop-decile-performers’level,withover280dayscashonhand(Figure7.5-6).Thisstrongcashpositionenablesaccesstofunds,allowingtheagilityforFitHabitstotakeadvantagesofopportunitiesquicklyastheyariseandsupportplannedinvestmentsinnewprojectssuchaswarehouseexpansion.

FitHabits’specialfocusareaistocontinuetoexpanditssupport ofchallengedathletesandtoprovideawideselectionofactive-wearproductsspecificallydesignedfortheseathletes(1.2c[1]).Overthepastthreeyears,FitHabitshasbeenfortunatetoexperienceastrongoverallgrowthrateofthesetargetedproducts(Figure7.5-7);moregrowthisexpectedwiththeadditionalspecializedproductsforchallengedathleteslaunchingthroughFall2016.

Inadditiontoensuringitpaysitssuppliersontime,FitHabitsalsoknowsthatitisimperativetofilecompletequarterlytaxfilingsontime(Figure7.5-8).Asaprivatelyheldcompany,FitHabitshasneverbeensubjectedtoanOfficeoftheInspectorGeneralorIRSauditorinvestigation.

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7.5a(2) Marketsharedataaredifficulttoobtain,astheactivewearmarketissaturatedwithcompaniesthatprovideamultitudeoffitnessproducts,services,nutritionalitems,etc.Inthepastfiveyears,FitHabitshashiredMarketAnalyzer,LLCtoanalyzeannualreportsfrompubliclyreportedcompanies,conductmarketresearchontheprivatelyheldcompetitors,andengagewithSratsa.comandSCMComparetohelpidentifythestatisticallysoundmarketpositionsofFitHabits’keycompetitorsinitstwo

productareas(Figure7.5-9).MarketAnalyzer,LLCalsodoesanalysistoidentifyFitHabits’overallmarketposition(Figure7.5-10).FitHabitsremainsinthenumberonepositioninInternetnetsalesofactivewearproductsversusitsfourboutiquecompetitors;itisnumberthreeinsalesofathleticshoes(Figure7.5-9).

FitHabitsremainsthemarketleaderinoverallInternetsalesincomparisontoitsfourboutiquecompetitors.LargeIR/BSretainthemajorityofthemarketshare(Figure7.5-10).

Baldrige Performance Excellence Program Created by Congress in 1987, the Baldrige Program (http://www.nist.gov/baldrige) is managed by the National Institute of Standards and Technology (NIST), an agency of the U.S. Department of Commerce. The program helps organizations improve their performance and succeed in the competitive global marketplace. It is the only public-private partnership and Presidential award program dedicated to improving U.S. organizations. The program administers the Presidential Malcolm Baldrige National Quality Award.

In collaboration with the greater Baldrige community, we provide organizations with

• a systems approach to achieving organizational excellence;

• organizational self-assessment tools;

• analysis of organizational strengths and opportunities for improvement by a team of trained experts; and

• educational presentations, conferences, and workshops on proven best management practices and on using the Baldrige Excellence Framework to improve.

Foundation for the Malcolm Baldrige National Quality AwardThe mission of the Baldrige Foundation is to ensure the long-term financial growth and viability of the Baldrige Performance Excellence Program and to support organizational performance excellence in the United States and throughout the world. To learn more about the Baldrige Foundation, see http://www.baldrigepe.org/foundation.

Alliance for Performance ExcellenceThe Alliance (http://www.baldrigepe.org/alliance) is a national network of Baldrige-based organizations with a mission to grow performance excellence in support of a thriving Baldrige community. Alliance members contribute more than $30 million per year in tools, resources, and expertise to assist organizations on their journey to excellence. Alliance member programs also serve as a feeder system for the national Baldrige Award.

American Society for QualityThe American Society for Quality (ASQ; http://www.asq.org/) assists in administering the award program under contract to NIST. ASQ’s vision is to make quality a global priority, an organizational imperative, and a personal ethic and, in the process, to become the community for all who seek quality concepts, technology, or tools to improve themselves and their world.

For more information: www.nist.gov/baldrige | 301.975.2036 | [email protected]

The ratio of the Baldrige Program’s benefits

for the U.S. economy to its costs is estimated

at 820 to 1.

99 Baldrige Award winners serve as national

role models.

2010 –2014 award applicants represent

537,871 jobs,

2,520 work sites, over $80 billion in

revenue/budgets, and more than 436 million

customers served.

364 Baldrige examiners volunteered

roughly $5.5 million in

services in 2014.

State Baldrige-based examiners

volunteered around $30 million in

services in 2014.

2016 baldrige fithabits case study - the partnership for ... · fithabits is a fictitious baldrige...

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