Magazine Article | July 1, 2002

Control Your Labor Expenses

Source: Innovative Retail Technologies

Integrated Solutions For Retailers, July 2002

As a retailer, you might not have jurisdiction over consumer spending, market trends, or the economy, but you will always rule over your labor expenses. Just be sure to consider both your employees' and customers' needs when it comes to labor scheduling. As Mike Goodyear, IT business analyst at Spartan Stores Inc. (Grand Rapids, MI), learned: "In the grocery industry, labor is 50% of the controllable expenses. If you don't have control over half of your controllable expenses, I don't know how you can operate a profitable business." A combination of labor scheduling and time and attendance software can relieve some of the manual strain that comes with managing thousands of employees. And by creating employee schedules based on customer traffic, you can influence consistent productivity and improved service levels.

Unify Disparate Systems, Maintain Current Processes
Spartan Stores operates 100 supermarkets and 25 discount drugstores in Michigan and Ohio. But since it acquired them over the last two years, its stores had seven different names and just as many disparate human resource policies and software. Since some of the policies were based on union and payroll requirements, the company didn't want to change the companies as much as it wanted to unify their software systems. "We didn't want to interface to everything. We wanted to alleviate all the disparate systems, but still be flexible enough to handle all the rules," Goodyear said.

In April 2001, the retailer installed Kronos Inc.'s (Chelmsford, MA) Timekeeper Central time and attendance software along with Forecast Demand Scheduler labor scheduling software from Timera, Inc. (Irving, TX). The Kronos software works with Timera's software to create and maintain daily labor schedules. The software also integrates with Spartan Store's IBM POS (point of sale) system to create schedules based on sales and demand in each store. The systems access employee information as stored in the company's PeopleSoft (Pleasanton, CA) financial systems.

The company plans to continue the system rollout in 2002 and to complete it in April 2003. "Today we are only using the system to schedule the front-end cashiers and next we will move into the pharmacy. In the supermarket business about 50% of the labor is on the front end, so we wanted to begin there first. Our goal is to eventually dynamically schedule each entire store," Goodyear said.

Increased Productivity Puts Time On Your Side
Without a standard way to look at its labor, Spartan Stores had problems maintaining consistent customer service levels across its chains. Since installing the software, however, the retailer has seen a decrease in customer complaints. Goodyear said in one region, customers complained about insufficient staffing about 10 or 12 times a week, but now those numbers have decreased to about one a month. The company attributes its improved customer service to better staffed registers at key times of the day based on sales. "The systems enable us to measure how many customers are going through our stores during any 15-minute period, so we can adjust our schedules accordingly," Goodyear said.

The Timera software also allows Spartan Stores to build human-friendly scheduling rules. Formerly, its schedulers manually rotated employees so they didn't have to work more than three weekend days without a weekend day off, for example. Now all of those rules are built into the software. Consequently, scheduling time was reduced from eight hours a week to two hours a week. Spartan Stores can also schedule employees across departments during the same shift. "We can split an employee's shift between the bakery and the register, for example," Goodyear said. The retailer has also seen productivity increases, which are measured by the number of sales per labor hour. The retailer attributes this to understanding its traffic patterns and staffing its stores accordingly.

Spartan Stores beat its business plan of earning a payback in six months. In the future, the company would like to move to the enterprise version of both the Kronos and Timera solutions.