Retail Labor Efficiency Think Lean

Want Higher Retail Labor Efficiency? Get Lean With Your Thinking

Anthony Henry
Senior Retail Consultant and Project Manager

One of the largest retail expenses is labor efficiency. Companies employ various strategies to improve their labor rate for this reason. To perform at an optimum labor efficiency rate, retailers place equipment and tools within the work environment to maximize their workforce output. In my experience, some organizations do not have the right tools in place, while other organizations have what they need, but their organizational or maintenance tactics are so loose that they burn money on stalled production. Today’s blog post will review the effects of great equipment maintenance and organization, as well as how this affects workforce labor efficiency, through a topic called lean.

For those of you unfamiliar with this arena, lean comes from six sigma terminology and is focused on reducing waste in the workplace to ultimately reduce variation within production. For the most part, six sigma (which is the reduced variation piece) has been most effective in the manufacturing industry. The good news for those not in manufacturing is that lean (the reduced waste piece) can apply to any industry including retail. Within this blog post, going lean will refer to storing and managing tools effectively so employees know where to find what they need for every step of each process, even if the employee is new. More than that, going lean includes reducing unnecessary steps within the process that cost retailers money. Let us begin.

Get the right equipment in place first

No matter how skilled associates may be, they cannot execute at maximum output if the retailer lacks essential equipment or tools to do the work required. This is especially true when overall resources are compared to the number of employees who need to use them within each task. By providing associates with enough resources to get their jobs done, the retailer’s bottom line is positively affected, and the additional tools eventually pay for themselves. How does a retailer know if they have the right tools in place? First and foremost, a retailer must understand their processes, or standards. What does every step of every task require? To find out, many companies use engineers skilled in time and measure studies to lay out these standards across departments.

Store the tools in the same place every time

Inadequate storage of work materials is another factor that can impact labor efficiency. With poor equipment organization, retailers risk damaging tools or, at minimum, increasing wear and tear. Sure, some items are larger and therefore harder to lose, but if there are no preferred methods for storing smaller equipment, they often get lost. In some industries, like aviation, losing small parts in dangerous spaces (called Foreign Object Debris) can cost billions. In retail, keeping equipment in the same, well-defined, properly labeled space every time saves money in part replacements and labor efficiency. How does a retailer do that? Consultants and engineers often utilize a system called 5-S for this endeavor. Adapted from the Toyota company, the 5-S system stands for: sort, set in order, shine, standardize, and sustain.

Maintain the tools to increase safety and reduce costs

Regular maintenance of equipment is another factor that can have a positive impact on labor efficiency in the workforce. Maintenance often covers activities including inspection, testing, replacement and adjustment of tools necessary for the workforce. Maintenance plays a vital role in reducing the risk associated with workplace hazards and providing safer and healthier working conditions. Additionally, systems like visual method sheets show associates how to use tools properly, lessening the wear-and-tear on equipment and reducing maintenance. Those same visual aids can alert the right people when maintenance is due because they function as tracking mechanisms.

The indirect effect of going lean

Beyond the direct impact that proper equipment, maintenance and storage have on productivity and efficiency, there is an impact on associates’ morale which must be considered. When associates’ tools are organized and maintained effectively, it shows that leadership cares about them. Their morale increases, propelling them forward to do their jobs most effectively. This can cause a retail culture to unify around the vision and mission of the organization. Employees showcase passion for their work, and the result is more corporate energy to get jobs done, thus driving costs down.

What to do next

For these reasons, we encourage retailers to consider going lean through proper equipment maintenance and storage. The first step is to understand all the tasks that are expected from associates day to day. Many companies offer services to help in this standards development process. Next, with an understanding of the work, retailers can determine what tools are needed to perform to standard. Maybe existing tools will do the trick, but maybe updated equipment is needed to effectively compete with other retailers or to adequately meet customer demands. Once tools are procured, figuring out how to store and maintain those tools in a way that makes sense to employees who use them, keeping them safe and effective, will boost a retailer’s labor efficiency.

For retailers beyond these points, continue going lean. Consider storing only what is needed, organizing and upgrading equipment in an intuitive way, and creating guides for others that explain how and why standards are set like they are. Often, retailers do not have to spend significant capital to get more organized, but can do so in a piecemeal fashion over time. Regardless of the approach, going lean will reap dividends for any organization willing to take it on.