Labour is one of the biggest and most flexible cost areas in any customer-facing operation. It is the first place many businesses look to for cost reductions, but getting it wrong can have big consequences for your staff, your customers, and your future sales trajectory.

Quick win: labour scheduling.

Getting the right rotas for your store teams saves money and improves service. The big players know this and have invested millions in centralised forecasting and labour scheduling systems like Kronos (Wal-Mart) and Red Prairie (Tesco, Mitchells and Butlers). But bigger isn’t always better, and SMEs can get significant benefits from adopting some of the simple principles without investing in big system solutions.

The basic principle is to provide time-slice activity information to the person who plans the staffing, in a way they can use to build their rota. The more sophisticated the information is, the better. That might be about detailed product areas, or taking historic values and turning them into a more accurate forecast for next week, or building in information about resource required per activity to provide a ready-made resource plan. But giving a manager a basic profile from similar weeks will give 80% of the benefit.

Most till systems can provide this data, and once this information is made available and managers are trained on using it, savings will come very quickly, mostly from cutting out “shoulder occasions” where shifts begin too early or finish too late, but peak-time service will almost always improve too. Here is a real example from recent work I did with a client, which illustrates the opportunity for this particular outlet.

Bottom Line:

For most retailers, a 1% reduction in labour ratio (the ratio of labour cost to sales) delivers as much profit benefit as a 10% increase in sales.

There are many levels of sophistication for labour scheduling, each one costing more, and each requiring a bigger scale of operation to justify. The biggest benefits await those who currently have little in this area. For those organisations, basic labour scheduling tools cost little and can be delivered quickly, and will undoubtedly be one of their biggest potential quick-wins.