Magazine Article | May 1, 2003

Who's In Charge Of Your Workforce?

Source: Innovative Retail Technologies

Many variables, like your DC setup, workforce, and payroll policies, must be considered when determining which labor scheduling solution is best for your business.

Integrated Solutions For Retailers, May 2003

Labor scheduling solutions are among the most readily available applications in retail, perhaps second only to POS software. Dedicated solutions are available from all the major retail software vendors, and even small-time POS software companies offer some form of labor scheduling module. Which is best for you? Here, John Orr, vice president of sales operations - The Americas at dedicated labor scheduling software provider TempoSoft (Atlanta), and Gary Merry, CIO at Jos. A. Bank Clothiers (Hampstead, MD), discuss what's available and what works in which scenario.

1. What kind of demand is there for dedicated labor scheduling solutions?

Orr: We're seeing a significant demand for dedicated labor scheduling solutions as retailers recognize that the right solution can help them achieve higher same-store sales while decreasing labor costs. Retailers are also looking for solutions that integrate time and attendance, labor scheduling, forecasting and planning, employee self-service, and performance monitoring.

2. Why should a retailer use a dedicated solution versus a packaged solution?

Orr: Retailers will often find that off-the-shelf POS-based labor scheduling systems lack many of the sophisticated features that provide superior return on investment. To leverage maximum margin and profitability by optimizing the efficiency of workforce and coverage, retailers need a "full strength" solution.

The benefits of an off-the-shelf POS system vs. a dedicated labor scheduling solution depend on whether the retailer is a tier-one, -two, or -three retailer, as the business case varies with the size of the retailer. A small retailer with fewer than 12 locations gets the most value out of a combined solution with POS. However, as you enter the top of the tier-two and move into tier-one, there is more complexity involved that's driven by volume, size, geographic scope, brand scope, etc. This puts more demand on the labor scheduling requirements.

3. What factors go into determining a good retail fit for a labor scheduling solution?

Orr: The potential to increase sales and customer service levels while decreasing labor costs, the number of successful retail installations on the Web, and the geographic scope of the enterprise, for starters. Other important factors are the maintenance of brand equity and the integration of time and attendance, forecasting, scheduling optimization, employee management and self-service, performance monitoring, and exceptions management. Retailers with significant swings in customer traffic and buying behavior, a significant union presence, minor employees, and/or retired persons working also have important and unique considerations. Any retailer who needs to better understand the intricacies of labor coverage and to determine the relationship between the expense and value can benefit from activity-based scheduling and costing.

Merry: The dedicated labor scheduling solution we use in our DCs (distribution centers) allows us to pay incentives to DC workers. We studied what the average rate of activity should be for certain DC functions. We had process engineers watch the process and determine the average. We now pay incentives against that average. This labor scheduling system gets a lot of attention because this is a unionized DC. A labor scheduling application in this environment has to be very accurate and well audited.

Our stores are somewhat self-governing, so to speak. In-store labor scheduling systems at Jos. A. Bank are used differently from store to store at the manager and RSD (regional store director) level.

4. What are the features any retailer should look for in a dedicated labor scheduling solution?

Orr: It should offer flexibility and resiliency without the burden, delay, and expense of custom code. It should feature annualized or seasonal period scheduling for recruitment planning and labor budgeting. Finally, performance monitoring is important.

Merry: Labor scheduling solutions have to be open to communicate with other systems. Openness is first and foremost to allow communication and customization.

Ease of audit is important. We need to be able to go out and understand what we're paying employees, and how reasonable that is. We must see that our labor expenses are reasonable in both directions, to the employees working at a per-piece [commission] rate, and to the payer of those commissions. In our DC, we pay incentives based on product movement. In the stores, we pay commission based on product sales. We don't want to find ourselves paying employees too much for something that could be done at a much lower rate. Audits ensure employees that the system is honest.

5. With what other retail systems should a dedicated labor scheduling solution integrate?

Orr: For the purpose of budgeting, planning, and forecasting, labor scheduling software should integrate with the POS to get actual business volumes, traffic counters for traffic flow, and inventory management systems or SCM (supply chain management) for actual shipment detail. For the purpose of integrating employee life cycle processes and processing, it should integrate with HRMS, recruitment, and benefits systems.

Merry: Our store labor scheduling solution is built-in to our Tradewind POS software from Datavantage (Cleveland). This data is fed directly back to an application we use to cut paychecks. It's the same scenario with the labor scheduling system in our DC.