Concentrating on the Important Stuff

Darrel Willis
Senior Industrial Engineer

A question is asked to two different professional peer groups: Store Managers and Corporate Senior Leaders:

“What is your main day to day focus?”

From senior leadership you would most likely hear the following, ”Sales, Customer Experience and Profits.” From store managers you would most likely hear, “Labor and Scheduling.” Wouldn’t it be ideal if the store teams were more focused on Sales, Customer Experience and Profits?

The reason you hear from store level teams that they spend a lot of time focusing on labor is because the plan (forecasted sales and/or activities) does not match what ultimately occurs.

A lot of time and effort is required to ensure the budgeted labor target is achieved when there are variances to the sales or activities that were planned for, especially if the plan is modeled around a poor forecast. If that is the case then the plan is going to fail, the result of which is one of three things:

  • Having to adjust the existing personnel schedule during the week-in-progress (whether sales are above or below expectations)
  • Seeking ways to reverse a sales shortfall, or missing both labor targets and/or service expectations
  • Reducing expense during a week-in-progress by strategically identifying where labor can be eliminated, combined with trying to persuade associates to take additional time off

These strategies can prove to be very difficult, especially the first and the third. Not covering shifts for associate sick calls can lead to poor service levels, and convincing associates to come to work during pre-designated time off can also be very challenging and time consuming, let alone potentially incredibly costly given the fair labor laws being introduced at federal, state and municipal levels which may add additional costs to last-minute changes to employee shifts.

The answer is having the best plan in place from the start. One of the biggest challenges in producing the optimal weekly labor plan is having the right sales and activities forecast before writing a store schedule. If the tools used to build a forecast are not effective with a high degree of accuracy, failure is imminent. If a forecast is aligned to actual results, the scheduling guesswork and week in progress reactions can be mitigated.

Store managers and corporate senior leaders alike should expect their forecasting systems to produce incredibly accurate metric data forecasts for sales, items, customer traffic and other important business drivers. Leaders in this space should not only be leveraging the latest in machine learning and artificial intelligence to continuously improve forecast accuracy, but they should also be leveraging data analysis to measure the accuracy of the resulting translation from metric forecasts to staffing plans and the resulting labor schedules.

Furthermore, such systems should be utilizing more than just historical sales to forecast future sales and the required labor to support them. They should be able to identify current trends and anomalies quickly, as well as allow effective what-if analysis related to a variety of promotional pricing options, one-time events (e.g., a competitor in the trade area closing, the introduction of a new service or product line, etc.).

If the right forecasting and scheduling tools are in place this should lead to having scheduled the right person, in the right place, at the right time performing the right work. This ultimately should eliminate or greatly minimize the time store leaders spend on modifying execution to make up for a poor plan, allowing them to focus on what is most important: Serving the customer, training and coaching, and driving sales and profits.

I think leaders at every level of a retail organization would agree that is the important stuff to concentrate on.