CSA Exclusive: Labor productivity boosts enterprise performance

By automating labor management, retailers can dramatically improve front- and back-end operations.

Chain Store Age recently interviewed Karl Swensen, associate partner, consumer products, retail and logistics for Infosys Consulting, about how intelligent usage of technology to automate routine workflows can create value throughout the organization. Swensen is a 30-year retail and CPG industry veteran whose experience includes leading store operations at The Home Depot for business and IT processes.

What types of technology solutions should a retailer implement to maximize labor productivity?

“To maximize labor productivity, a holistic approach should be considered that incorporates having a team of people focused on process improvement, a data model to understand how changes to operations impacts not only labor but also customer satisfaction and employee inputs, and a collection of tactical workforce systems to implement the change.

“I would not be so focused on one type of technology as much as the impact it and the resulting process changes can have to the customer experience and ability to simplify operations in a store. Improving labor productivity in complex geographically dispersed customer-facing organizations is difficult but not impossible.

“A holistic approach needs to include organizing for success with a team focused on labor productivity/operational excellence that engages the entire organization to identify ideas for constant improvement. There needs to be a proactive “labor” team to drive the agenda and solicit the entire organization for ideas, and a workforce management team to implement and codify improvements.

“Retailers also need to fully leverage existing technology to automate redundant tasks, meet the needs of customers and associates, and implement the improvement ideas that impact the labor model. Then, retailers should create data-led insights from their labor model. Develop the labor model of your operations to provide the basis for ongoing improvement in operations and customer/associate satisfaction. This is where newer technology and analytics capabilities are having an impact.

“Once you have this labor model I described (a mathematical construct of your operations), you can add customer service survey data as well as employee satisfaction data to provide more insights as to the impact to changing your operations. You can have this data model help you identify what I call ‘peer groups’ or clusters of stores with similar characteristics. This can help you with in fine-tuning your labor model for scheduling employees.

“It can also be used to help you run pilots in a group of stores against a control group of stores to help you identify improvements in customer service or new businesses – not only in revenue but also in customer and associate satisfaction.

Savings from automating and streamlining tasks can be used for these pilots and make sure there is a good return in terms of ROI or customer satisfaction. This data model can also help you identify “outliers” in outstanding performance and to understand why and adopt through all parts of the organization.”

“This process is never over – it is ongoing. Having worked and lived in Japan for several years, I like the term ‘kaizen,’ which is a word for continuous and ongoing improvement in a process even at the smallest level – over time these all add up to big improvements!”

What manual tasks should a retailer automate when possible?

“When we look at how labor is used in a retail environment, you can summarize it in terms of tasks and customer service activities. Tasks that do not impact the customer or customer experience should be considered for elimination, streamlining, or automation to help simplify running and operating the store.  

“These savings can be reinvested to improve the customer experience, new service offering, or new business models run by the leadership and team at a retail store. However, these need to be thoughtfully and carefully considered and evaluated to ensure they do indeed get the intended outcomes.

“If you look at labor in a customer-facing operation, like a store, you have two types of tasks – physical activities that have to occur – open a store, clean the store, stock the shelves, close the store, etc.; and customer service activities – engaging customers to help them find what they want or engage them in a consultative manner.

“This ‘labor model’ can be represented mathematically in terms of time needed to run an operation and can be ascertained through time and motion studies, labor standards software, sampling, etc. The goal of this labor team is to eliminate, streamline, and automate the tasks in store and some aspects of the customer engagement where customers desire it – one good example is self-checkout – some people love it and others not so much, but give them the choice. 

“As you save time through streamlining tasks and other activities, then you have two options: put the savings in your pocket and reduce time to a store through that is scheduled, or reinvest them in new customer service activities, new business opportunities, or in-store services.”

What types of data/metrics are most important to measure to track labor productivity growth?

“In retail, and overall at the store level a good metric is dollar sales per labor hour.  Of course, certain roles in the store that are not customer-facing or that are task-based may have more appropriate ones that are not based on sales, for example checkout and stocking shelves. 

“When you identify labor standards for scheduling and your workforce management system, you can use multiple variables so that they not just tied to one of these and can more accurately capture how much time is required for various activities and at various volume levels.”

How can you organize your staff to help ensure maximum productivity?

“At the end of the day, an engaged, motivated, and knowledgeable staff at your retail store is the key to a great customer experience. If you can delight the customer in terms of the shopping experience as well as the knowledge of the products and services you represent, that customer will choose your brand as they have put trust in you. If you set expectations with your staff, how they fit into the overall experience, and provide positive feedback on a job well done, then the outcomes will manifest themselves.”