How to improve supermarket operations, reduce labor cost and enhance customer service

Article originally published in Linkedin by Alberto del Barrio, Orquest CEO.

Over the past few years, leading supermarkets have dedicated great efforts to improve their processes and gain efficiency, with great results, reducing operating costs by up to 15% thanks to lean retailing initiatives. But fierce competition and customers that have become more and more demanding, have forced the most advanced supermarkets to look for new ways to improve productivity and customer service.

Considering that labor cost is one of the highest variable costs, without a doubt, one of the area’s most susceptible to improve is the workforce management, planning and scheduling. For many years, the standard planning solutions, have been used generally to plan the staff and their schedules, to manage their execution and to generate their payrolls, but none have considered neither the dynamism of the demand, nor the fluctuations in the workload. 

Each point of inefficiency in staff planning and scheduling, translates at the end of the year into thousands, in some cases millions, of euros in losses. Planning extra hours when not necessary, may imply in losses in labor cost, planning less hours at times of maximum activity, could translate into notable sales losses. Not to mention the reputational cost of poor customer service, or the impact on customer service of having unsatisfied employees.

How can we avoid such amount of losses, due to workforce management inefficiencies?

If a supermarket could predict the optimal sizing of employees and their skills in each task / position, every hour of the day, and day of the week, it could guarantee the best customer service with the supermarket perfectly replenished, the lowest queue-time in cashiers, and employees in the sales floor when the customer needs it. This would ensure that employees are neither idle nor overworked, which would be reflected in labor cost savings and increased sales through better customer service.

The difficulty of having perfectly aligned employee planning and scheduling with the real activity of the supermarket is evident. Faced with variable customer traffic, and a constant change in customer consumption habits, being precise in this area is extremely difficult.

Due to this complexity, in most cases the reality is different, and rarely are the schedules aligned with the real supermarket labor needs. Many supermarkets decide on labor budgets in a very simple way, requiring that the labor costs of each store do not exceed 10% of sales. From here, they calculate the volume of hours, to later distribute them throughout the year according to the expected sales. This simplistic approach is ignoring the real activity that each of the stores and their areas will have, not to mention that it is not considering the uniqueness of each supermarket.

The perfect staff coverage

The good news is that nowadays, achieving this goal is possible, and leaders in the sector are already doing so, adopting a data-based and advanced analytics approach.

Thanks to the latest techniques in artificial intelligence, today it is possible to accurately predict on an hourly basis the customer traffic, the amount of sales in each area, even the amount of product sold by family. Using these predictions and applying advanced rules, and machine learning models it is possible to calculate accurately the optimal number of employee’s hour by hour in each task/position of the supermarket, that guarantee the best customer service. In summary, the perfect staff coverage.

But even if we know the perfect staff coverage on an hourly basis for each position in the supermarket, probably the most complex puzzle to solve is still to generate the schedules and task planning for each employee that ensures the best possible coverage, taking into account all variables in play like, labor regulation rules, workload balance, fairness of breaks, employee contracts singularity, employee’s skills and aptitudes, employee preferences and so on.

Luckily advanced mathematics optimization technics could help enormously on that, generating the schedules and task plan of each employee, ensuring compliance with all restrictions and variables in play, at the same time as guarantying the best customer service at the lowest cost.

Orquest is the AI first workforce management solution that can provide you all the advanced analytics required to have the right employees working at the right times, performing the right tasks and spending the least amount of time required for those tasks. In doing so, a supermarket can save up to 12% in labor costs and increased sales by up to 8% by improving customer service, reducing checkout lines and improving shelf replenishment. 

And don’t forget, a staff structure aligned with your needs have been required first 

However, a perfect scheduling that ensures coverage of the optimal sizing of employees at any time could be an impossible mission if we start from a staff structure not aligned with the reality of the supermarket, with wrong labor contracts, mismatched training and unbalanced time availabilities. 

But, changing the staff structure requires time and think ahead, in order to consider, the different periods of store’s activity, inherent in the retail seasonality. This is the reason why it is necessary to have a long-term vision, that ensure us detect peaks and valleys of activities early enough to act.

Even having a long-term activity forecast, the difficulty of identifying accurately when to hire, which contract type, duration, employee skills, and so on, is evident. If you face this challenge without the help of smart tools, you will have to apply your intuition, and this will inevitably lead you to fail.

Fortunately at this point again, the data and advanced analytics can help. Using mathematics optimization technics, you could identify in detail the number of hours mismatched per day and time slot, at any position so that it is possible to identify the optimal recruitment plan that ensures an optimized structure that perfectly fits with business needs.

Orquest is the first workforce management solution specifically designed for the retail industry to give support with a long, medium and short-term vision on all crucial points in the in-store staff planning and scheduling process.

Six key points for an efficient planning of the staff

In short, you will be able to make a significant impact on the results of the supermarket by paying great attention to the six key points for an efficient planning of the staff in the store:

1.     Planning for a flexible workforce with a combination of full-time, part-time and temporary staff that can be adapted to the schedules, and daily and weekly needs of each store.

2.     Predict for each hour the flow of customers, the income by area, by product family for each store, based on advanced models of artificial intelligence. Only from these reliable predictions we can configure the supermarket as the customers need at each moment.

3.     Calculate the optimal sizing of each task/position independently in each store, based on the demand production made, considering the duration of the execution of each task and using advanced analytic models and business rules.

4.     Calculate each employee’s schedule considering the particularities and uniqueness of each employee, adjusting their work plan to the needs of the store, without forgetting to meet labor regulations, and giving importance to load balancing, fairness in breaks and individual preferences of each worker. Guarantee a good customer service but without forgetting the satisfaction of your employees. Only this way you will get happy customers for being served by happy employees.

5.     Track execution and performance in a way that allows you to act quickly and adjust when needed to ensure the productivity levels and planned quality of service.

6.     Analyze your decisions, how you planned and executed, and their impact on performance to identify learning points to enable you to improve planning processes and their impact on your business performance.