Your labor forecast is only as good as the data you feed it.
Retailers who haven't purchased dedicated labor management software are fast becoming the minority as stores continue to tighten operations budgets. Reports of savings anywhere from 5% to 20% of sales are not uncommon among those who have implemented labor management solutions correctly. To get the most out of dedicated labor management software, retailers must understand what they do, what kind of integration is required to make them work effectively, and how to most effectively provide the user interface.
Schedule Employees By The Forecast
Leading dedicated labor management applications have several things in common, and they are by and large features that can't be found in the scheduling application that may (or may not) have come with your POS application. The ability to create sales and labor forecasts and schedule the right balance of employees accordingly is one example. Building schedules based on expected workloads helps retailers control labor costs by avoiding over scheduling. It also helps stores maintain customer service levels by ensuring adequate store coverage. "It doesn't matter how good a scheduling algorithm you have, without a good forecast, you won't understand how much labor you need," says Evan Grossman, EVP at labor management software provider Radiant Systems (Alpharetta, GA).
Forecasting Is Integration Dependent
"If you truly want to make your store more efficient, it helps to integrate with a broad range of systems," says Grossman. The most obvious system retailers must integrate with labor management software is the POS, from which labor management applications draw sales volume data. Randy Park, product director for workforce solutions at Tomax (Salt Lake City), says retailers shouldn't expect results without that integration. But he also says retailers must understand that results achieved by forecasting are bound only by the limits of data integration. In other words, the more store-level data you can feed your labor management application, the better. "To get the most out of a forecast, retailers need to understand that there are more indicators of labor needs than just sales volume," he says. Indeed, while spikes in sales volume may indicate a need for more labor, sales data should not be construed as an indicator of traffic.
Traffic counting products like that offered by Brickstream (Atlanta), however, do measure traffic, and therefore should be integrated with the scheduling function of a labor management system. "Traffic counters and products that measure queues give retailers traffic data by time element, which helps them build a history. It takes this history to build forecasts," says Timera's (Irving, TX) director of marketing, Kevin Schock. "When you can see traffic volume and patterns in 15-minute increments, you can determine trends and schedule employees accordingly."
Vendors report integrating with other systems, such as learning management, warehouse and supply chain, HR (human resources), payroll, ERP (enterprise resource planning), and labor standards systems. Particularly, Grossman says stores with multiple departments must tie learning management data into their labor management programs. "There are situations where retailers don't want an employee working in a given department, such as guns and ammunition, until they have specific certification," he explains. "You need to track employee training to assure certain employees are not scheduled in that department until they've been certified." Another derivative of this integration is employee visibility. If an employee is scheduled to attend a training, an automated scheduling system pulling data from a learning management program will know to avoid scheduling that employee for work that day.
Schock emphasizes the need to integrate data from HR systems. "This gives direct visibility to which employees a retailer has to schedule, as well as the qualifications and skills of those employees." Perhaps more importantly, though, labor scheduling must tie in with budgeting systems. "Retailers need to schedule within the budget to hit sales per labor hour. If my sales are 5% below projection and trending toward 20% below, I can adjust labor on the fly in order to maintain profitability," he says. But in order to do this, the systems must be locked together.
Data pulled from specific departments of a store can also improve labor forecasting and scheduling. In the grocery vertical, many stores are going so far as to pull data from department-specific hardware like deli scales into forecasting algorithms. This helps hone the accuracy of the labor forecast for deli staff.
Special Circumstances Affect The Forecast
Another buzz word popular with labor management and scheduling software vendors is event management. An event is classified as anything from a holiday or special promotion to a shipment of merchandise, or any other variable that will change the normal pattern of labor needs. Good labor scheduling systems will produce accurate forecasts with any number of such variables. "Consider what happens when something as simple as a price adjustment happens," advises Park. "It takes hours of front and back end labor to accommodate a price change, which, in turn, affects labor needs." While this boost in required labor falls outside the realm of day-to-day store operations, leading dedicated labor management systems take such events into account as they forecast labor needs and create schedules.
Labor Is No Longer In The Store Manager's Hands
Taking advantage of data from many retail systems will bring retailers closer to the Holy Grail of labor management, something vendors in the space have called workforce optimization. In the meantime, labor management systems are tending to move out over the Web, for a couple of key reasons. Employees and enterprise-level management access dedicated applications more often than store- level managers, which represents a dramatic shift in traditional labor management. Employees are now given browser access to schedules from home, where they are empowered to communicate with store management, indicate availability, and swap shifts with other employees. On the corporate side, managers can access dashboards via the Web, which display the vital statistics of the company's labor expenditures and give them the opportunity to take a more active role in labor management. Clearly, labor management works best when threaded through the enterprise, plugged into several retail applications, and distributed over the Web.