Work force management solutions: Optimizing people power
Published: February 2, 2006
This article was originally published in Retailspeak magazine
Until recently, the work force has not been regarded as a source of competitive advantage. As a result, most work force management software is focused on automating time and attendance with only limited scheduling features.
The need for greater automation is clear. Retailers are seeing slower growth, reduced profitability, increasing customer expectations, and rising competitive pressures. The focus is turning to the retail store where sales are lost due to a lack of staff in general, a lack of staff at peak periods, and overstaffing at non-critical times. This leads to overwhelmed store managers who often spend too much time battling to solve problems, losing focus on other issues.
Also, the wage bill continues to rise, contributing to between 7−30 percent of a retailer's turnover, so available labor must commit to the needs of the customer in ways that are more productive as well as more profitable. Further, retailers who want to attract and keep the best employees in an industry with staff turnover rates at as much as 170 percent per annum, are under pressure to provide more flexible and consensual schedules for their staff. This flexibility cannot be achieved with existing systems.
Retailers and solution vendors now recognize that to maximize and maintain the benefit gained from scheduling applications, the breadth of these applications needs to be implemented at the center of store systems. These applications also need to incorporate full integration with budgeting, point-of-sale (POS) systems, footfall/pedestrian flow systems, alerts, employee kiosks, and centralized task management systems.
Standardized operations
While some vendors of work force management solutions simply overlay their systems onto existing schedules and ways of working, the critical precursor must be the creation of a standard, corporate method of operation. This is a blueprint for determining that the level of in-store workload required to maintain consistency in a volatile trading environment is accurately determined and clearly communicated to the store manager. The output of the operating model is then used to determine store wage budgets and weekly schedules. Its credibility and accuracy should not be underestimated.
Acceptance of the model and its output in the store is the next challenge. Scheduling tools are often rejected or overridden by store managers because of a variance between the store's weekly wage budget and the weekly workload generated by the scheduling tool.
The answer is to create a wage budgeting module, helping to ensure that the workload demand generated by the scheduling tool complies with the store wage budget. This is achieved using the same operating model to determine weekly workload demand for both scheduling and budgeting purposes.
Opportunities for improvement
Once work force management systems are in place, it becomes possible to do a number of calculations for further improvements that were once considered impossible or only the result of guesswork.
For instance, email systems and mobile phones can be used to immediately alert managers to known resource problems. Holiday planning can be automated to help ensure that the level of service is not compromised during peak and normal trading periods, that overtime costs are controlled, that trading periods are adequately covered, and that holidays are spread across the year with no backlog at the end of the year. Commission payment schemes can be worked out to help ensure accurate payment of employees for various schemes that are currently in use. And the work force management system can be used to plan, execute, and monitor compliance of tasks generated by the corporate office such as promotional activity and stock counts. Task management can also be incorporated to further improve the planning process.
Significant gains are possible from work force management scheduling systems, particularly when implemented in conjunction with budgeting. Costs are cut because scheduled time that is not required is removed. And financial gains are made through helping to ensure that the right employees are available when needed.
Average inefficiency levels in retail rosters are at approximately 25 percent, a level that could be cut in half. Uncovered demand for staff averages at around 20 percent. Again, gains of up to 10 percent are possible.
Market research suggests that there is more than a 60 percent savings from time spent scheduling staff, a 75 percent average reduction in overstaffing, and a 1−6 percent savings on wage costs. Companies could achieve a 1−6 percent improvement in productivity with effective scheduling.
In the real world, Metro Cash & Carry, a division of Metro Group, the world's fourth largest retailer, has cut its labor costs by 3−7 percent. Metro Cash & Carry also cut customer lines by 50 percent, following a pilot project to use work force management software.
With 77,000 employees, Metro Cash & Carry had largely been handling tasks at the store level using paper-based schedules, Microsoft Office Excel spreadsheet software, and regional software solutions. Schedules were mostly based on historical sales figures. When sales were expected to spike, store managers responded (with little scientific basis) by increasing staff numbers.
Metro Cash & Carry is now rolling out a Web-based forecasting and scheduling solution across 700 sites in 28 countries and 28 languages. It helps managers build schedules based on sales as well as items, invoices, registers, levels of customer service, centrally-driven task management tasks, and historical data.
