Magazine Article | December 1, 2001

Out With Labor Scheduling, In With Workforce Optimization

Source: Innovative Retail Technologies

The evolution of workforce optimization brings with it buzzwords like ASP (application service provider) and neural networking. It's clear that labor management isn't just scheduling anymore.

Integrated Solutions For Retailers, December 2001

You've got a storefront, you've got employees, you've got customers, you've got sales. You've got it all. Or do you? If you're not familiar with workforce optimization, you may not be running full throttle.

Labor scheduling started to resemble workforce optimization when it migrated from paper to computer screens in the mid-1990s. With the advent of stand-alone software dedicated to the automation of scheduling, some forward-thinking vendors started experimenting with optimization back then. At its simplest, workforce optimization involved scheduling the right employee (based on his or her skill sets) to work at the right place at the right time, in order to best service customers. Vendors who have taken a lead in the field have differentiated themselves in a crowded market by rapidly developing more sophisticated approaches to workforce optimization. One such vendor is Tomax (Salt Lake City). "We did an informal Internet survey recently that found more than 200 time and attendance vendors, from punch-clock peddlers to developers of mathematical optimization models," said Barry Blumberg, the company's VP of marketing. While the majority of the space is filled with traditional time and attendance vendors, Blumberg says the market wants more. "Retailers want automated, enterprise-level scheduling and forecasting systems to help them manage labor costs in direct correlation with other facets of their business," he said.

Ask About The ASP Option
Retailers with multiple employees - from two to thousands - shouldn't ignore the benefits of workforce optimization software. That couldn't be said a few years ago when the high cost of premium solutions posed a barrier for one- and two-store operations. But today's small retailers ought to consider it a viable proposition thanks to affordable solutions offered by ASPs (application service providers). "Increases in business productivity drove the last economic boom and will be a key element in surviving the current downturn," says John T. Anderson, director of workforce solutions marketing at SimplexGrinnell (Westminster, MA). "Technology that drives productivity is always a high priority, boom or bust."

Workforce optimization requires labor management to integrate scheduling, time and attendance, and payroll functions at an enterprise level. For small- to medium-sized companies, a lack of infrastructure and/or money for up-front expenses often leads them to an ASP. While SimplexGrinnell's large enterprise customers have been tempted by browser-based applications for the same reason that they are attractive to mom-and-pop shops, Anderson says it doesn't take long for big payroll operations to learn that ASPs are not yet ready for them. "With hundreds of payroll clerks demanding system resources at the same time (right before the payroll deadline), Web-based solutions will require an enormous server farm, a big pipe, or a very efficient client-server approach," he said.

Software With A Brain?
Clayton McMillan, director of optimization and applied mathematics at Tomax, stresses the importance of schedule optimization to small retailers. "It's more important for an independent grocer with two stores to have an optimized schedule than it is to a megachain. If I'm a small store owner, I have less payroll budget to work with, so it's important that I have three cashiers working if I need three cashiers working," says McMillan. "Two cashiers means I don't serve my customers correctly and I lose money, and four cashiers means I dole out too much payroll." It doesn't take a director of optimization and applied mathematics to understand that. But this relatively easy concept leads to a more complicated science that Tomax is focusing on, a science that will take optimization one step further for retailers of all sizes.

Called neural networking, the science deals with building software models that are capable of "learning," enabling the software to draw conclusions based on external information and historical data. The key value of neural network technology to a labor scheduler is its forecasting function.

Smarter Management Of People And Product
By analyzing historical data, a neural network forecaster tied into a labor scheduling system takes the guesswork out of scheduling labor for exceptionally slow or busy times of the year. Taken a step further, neural networks can help determine inventory needs based on the analysis of historical sales data and the demographics of the neighborhood in which a store is located. For instance, the program may predict a rise in sales in November and December, prompting the store manager to hire more labor for this time period. At the same time, the program forecasts what will sell, indicating to a manager in a predominantly Jewish neighborhood, for example, that an additional order of menorahs might be more prudent than stocking up on Christmas trees. Tomax has even implemented a neural networks program to help deduce which of its management solutions best suits an individual client's needs.

Not long ago, the sophistication of a manager's labor scheduling system was limited to the "robust" features of a mechanical pencil. Today it's clear that retail labor management solutions are more about achieving enterprise-wide efficiency than they are about simply filling in the gaps of a schedule. Exploring the options might be your first step toward optimization.

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