Why Optimizing Labor Forecasting and Scheduling is the Key to Retail Success

Intelligent workforce management and prescriptive analytics solutions can help retailers better balance available labor with operational demands.

A woman looks at a spreadsheet on her desktop computer monitor
by Kevin Tapscott
April 29, 2021

The last year has brought more disruption and uncertainty to the retail industry than we’ve seen in decades. Even before the pandemic, retailers were contending with rapidly changing shopper behavior, fueled by consumers who were either purchasing more online or using smartphones to conduct product research both inside and outside the store. Today, variables such as the severity of the pandemic and the distribution of vaccines are changing when and how customers choose to shop in stores.

These changes have brought outdated labor operations processes to their breaking point. Manual labor scheduling takes hours every week to accomplish; hours that store managers barely had before the pandemic. Now, with managers having to spend more time supervising pandemic-related procedures like cleaning, social distancing and capacity limits, it’s more likely that they’ll have to rush through the scheduling process, increasing the likelihood of mistakes.

While some of these oversights and errors can be fixed by modifying the schedule, these modifications are often done at the last minute, which can be a serious problem in areas that have predictive scheduling laws. In Oregon, for example, a large retail employer must provide employees with a work schedule at least 14 days in advance and pay out penalties if schedules are changed without advance notice. This can add up for a retailer that utilizes manual scheduling processes and has to regularly fix inaccurate schedules across thousands of stores for tens of thousands of employees.

Unstable work schedules can also lead to higher levels of anxiety for front-line associates. They can make it difficult for associates to arrange proper care for their children, as well as elderly or disabled relatives. This frustration increases turnover rates, depresses productivity, and ultimately hurts employers’ bottom lines.

In fact, numerous studies have shown the immense benefit of providing consistently flexible and optimized schedules. Stores can see a sales lift of up to 7% and an increase in labor productivity by up to 5%. Employees often experience improvements to their mental health, as well, such as an up to 8% boost in sleep quality and a 15% reduction in stress for those who have children. In other words, there are numerous incentives to improve labor forecasting and scheduling capabilities.

The Power of AI-Enabled Forecasting and Dynamic Scheduling

Investing in intelligent workforce management solutions is a powerful way to improve the quality of your labor forecasting and scheduling. These solutions utilize algorithms powered by artificial intelligence (AI) to quickly detect changes in data patterns, simulate important scenarios, and create best-fit forecasting models. In doing so, these intelligent solutions account for far more variables, such as geographic region and sales data, than traditional forecasting models. They can provide specific recommendations based on an analysis of these variables, identifying when and where you should increase or decrease staffing at your stores. This makes it easier to forecast staffing needs while adapting to unforeseen changes in customer traffic and product demand. As a result, labor forecasts can be better aligned with in-store workload, ensuring that labor schedules accurately reflect the optimal staffing level for each store across all shifts.

Intelligent workforce management solutions can also automate the labor scheduling process, simplifying work for your store managers while accounting for the variables that matter most at your stores. More specifically, they can generate optimized schedules in a matter of minutes, freeing up hours for managers every week to focus more on training and guiding front-line associates, assisting customers, and responding to unexpected events. Instead of hoping that your managers remember and account for every employee’s availability, work preferences, and specific scheduling needs, this information is automatically factored into schedule generation based on previous manager and employee inputs. Ultimately, you’re in a better position to give front-line associates schedules that work for them.

AutoZone is one retailer that successfully utilized these solutions to optimize its labor forecasting and scheduling. Its scheduling needs are very complex, as stores vary in size, operating hours, labor standards, and functionality. But it had difficulty managing this complexity using its legacy workforce management platform, composed of several standalone systems, and a labor model developed and maintained by its IT department.

By implementing an intelligent workforce management solution, AutoZone was able to refine its labor model to meet the needs of its different store types and locations. It was also able to quickly generate flexible and accurate labor schedules across thousands of stores, better align labor forecasts with demand, and easily account for federal, state, and local labor laws. AutoZone also had an easier time ensuring that more experienced associates are scheduled during peak sales hours in a fair and equitable manner to help boost sales.

All of these benefits have added up to a significant return on investment (ROI). AutoZone has saved $100 million over the course of seven years by implementing these software solutions, and it continues to see cost savings as a result of optimizing labor spend and streamlined labor operations processes.

Augmenting Your Labor Forecasting and Scheduling with Prescriptive Analytics

You can give your workforce management solution’s forecasting capabilities an added boost by augmenting them with a prescriptive analytics solution. Prescriptive analytics is a software solution that also leverages AI and machine learning algorithms to analyze data and tell you:

  1. What is happening
  2. Why it happened
  3. How much it’s costing you
  4. What to do about it
  5. Who should take steps to address it

In a labor forecasting/optimization context, prescriptive analytics can be thought of as an execution tool to complement forecasts with added precision. It’s important to remember that some forecasts may fall a bit short, simply because it’s impossible to flawlessly predict the future.

As the great Master Yoda would say, “Always in motion is the future.”

With prescriptive analytics, you can identify and consider factors that might affect your forecasts. For example, imagine that your workforce management tool advises you to schedule 18 associates on a given day. Throughout that day, prescriptive analytics will be monitoring real-time execution and determine how closely it is aligned to the execution plan. It will later feed this data back into your workforce management tool to help you refine future forecasts:

  • A long lapse between transaction headers (the time that occurs between the end of one customer’s order and the start of the next one) at a certain time of day could indicate too many cashiers were on duty then and fewer should be scheduled next time.
  • An above-average number of out-of-stocks in the dairy department could indicate too few dairy workers were on duty to keep the shelves stocked and more should be added in the future.
  • A cashier showing an abnormally high number of voids could indicate he or she should be retrained on ringing accuracy to avoid stretching supervisors too thinly. (At many retailers, a manager must authorize every void.)

This closed-loop workflow leads to better forecast accuracy, improved labor efficiency, increased compliance, simplified training and other benefits.

Optimizing labor forecasting and scheduling is key to ensuring you have enough associates scheduled to adequately staff your stores and the right staff to achieve peak productivity levels. With intelligent workforce management and prescriptive analytics, you can meet today’s most difficult staffing challenges head on, getting the most out of your labor spend while providing customers with an excellent retail experience.

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Kevin Tapscott
Kevin Tapscott is Vice President of Solution Consulting for the Americas at Reflexis, which is now part of Zebra Technologies. He leads a team of retail operations experts who help retailers simplify their operations and optimize their labor with intelligent task management and workforce management software solutions.
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