HonestPrice is an imaginary supermarket chain based in Singapore. The CEO finds that there are always queues forming on a checkout line when others are completely empty. Also, he finds that sometimes there are too many checkout lines opened while not many customers and too few when customers have to form a long queue. Even with the new self-service checkout system, these problems are still happening everyday because he notices that customers prefer using the human checkout lines.
Problem
Nobody likes to wait in lines to pay your groceries. But it is a necessary and inevitable part of daily life for urban citizens. With a population of 5.6 million people, Singapore is a country which is best described as being urban and wealthy. The retail foods sector in Singapore is one of its most mature market segments. It is diverse, competitive, and highly dynamic, with several highly-developed market segments. Along with the continuous development of market economy, more and more supermarkets appear in cities and towns. In the fierce market competition, small margins cause lots of supermarkets give priorities to the maximum quick profits with fixed costs.
They examine every chain carefully, first the product procurement, second the warehouse entry inspection and third the quality of shelf products, excluding every unqualified products out of supermarkets. Secondly, supermarkets take the expansion of fields, the extension of scale, and the increase of sales as the key for survival and development. The first is to adjust commodity structure in time and enlarge business scope. The second is to explore business channels and promote chain business. With the precondition of insuring the quality of commodities and the base of optimizing commodity structure, how to improve enterprises’ business effect and how to absorb more customers arouse more attentions from supermarkets. Facing today’s serious market competition, supermarket should not only satisfy customers’ needs but also make best use of service sources. They understand that the overall service is the key for the success of supermarkets.
The total value of consumer-oriented foods in 2016 to the Singapore supermarket industry was valued at $6.22 billion. To service this large volume of business requires a large workforce. The check-out operators are often the only members of the store personnel to come in contact with the customers. For this reason, along with others, the check-out operation of the store should always be at its best in order to give customers a favorable impression of the store. This impression can be enhanced by proper scheduling of cashiers in order that customers can be serviced promptly or with a minimum time spent in check-out lines. Since more than 20 percent (%) of total man-hour labor requirements in supermarkets involve check-out operations, any improvement in efficiency in use of such labor should lead to significant savings and customer’s satisfactory. The standards for customers selecting supermarkets are not only qualified and inexpensive commodities but also service quality. The long queue waiting for check-out is not an ideal purchasing environment for people. Most people prefer to give up or go away instead of waiting in queue. With similar quality and price, service quality is the key for winning the competition. For supermarkets, more check-out lines mean more investments. Sometimes, it may cause waste of sources. However, few check-out stands may lead to serious waiting, affecting service quality, and causing loses of customers.
Recent studies have indicated that check-out operations are causing management at least as much concern as any other phase of supermarket operation. Because of rising labor costs, check-out operation costs have increased. Check-out lanes usually create the only customer bottleneck in the store during the rush periods of the week. It is not uncommon for supermarkets to handle 60-70 percent of their weekly sales volume on Friday and Saturday. These rush periods place a great strain on the check-out operations which, in turn, help create customer impressions. Industry accepts the fact that store sales volume is directly affected by the rapidity with which customers are accurately processed through the check-out operations.
In a perfect world, the supermarket would have an unlimited amount of budget, flexible employees who do not need supervision and enough hours in the day to complete every task. However, the supermarket industry is not perfect. The difficulty in scheduling employees will vary with the size of the supermarket, the average sales volume and the total number of employees. These are all factors that influence the payroll budget and the coverage needed of a supermarket. In order to make efficient check-out labor scheduling possible, it is necessary to determine considerable detail concerning the pattern of business and its own sales pattern of each store. The cashiers scheduling process can be time-consuming and frustrating.
Payroll dollars based on sales percent
The supermarket headquarter office may use retail industry standards to estimate and determine the employee budgets, during the business planning process. These payroll dollars will be generally vary from period to period as sales fluctuate, based on percent of sales. If a supermarket has an annual sales volume of 1,000,000 and its business plan recommends labor costs not to exceed 10% of sales, then the amount of payroll dollars is approximately 1,944 each week. As the sales increase, so will the need to increase the total dollars spent on payroll, not the percent. However, it is not advisable to sacrifice customer service to stay within the allotted payroll dollars.
Let’s say we have four salaried cashier making 300/week and three part-time hourly associates who make 6/hour. Working with our labor budget of 1,944 as listed above, we can determine that we have 744 to spend on our hourly cashiers. It gives each part-timer approximately 40 hours each week, and we can now schedule accordingly. For the sake of simplicity, these figures do not include payroll taxes or benefits.
Revenue is a sensible criterion for scheduling, but it’s an insufficient one because customers’ buying patterns (average basket size, average purchase price per item, and so on) can vary by hour and day.
Peak sales period that needs extra cashiers
Many supermarkets are the busiest just when the doors open, during the lunch hour, around 4pm when the school ends and then again 7pm as people leave work. Besides these common times of day when supermarket are facing with the most customer traffic, other times which may need an increase in the number of scheduled employees are during special sales, special events, holidays, paydays and weekends.
For the supermarkets that are using manual cash register, especially those without reporting system, it will be harder to determine exactly when are the times and days with most sales or customer traffic.
Inflexible employees
Making sure you have enough lanes open doesn’t mean just looking at the number of customers standing in line. There are other variables to consider—like how long the average wait time is in each line or what happens if one of the cashiers gets distracted.
By gauging the peak sales period and scheduling the right amount of the employees based on the budgets, the supermarket checkout manager is still facing a big problem, which is if the employees could follow the schedules made. Sometimes, the employees will be late to work or absent, due to unreliable transportation, illness or personal issues. The ability and responsibility of each employee will definitely affect the scheduling process.
Typical cashier productivity is 16 items per minute and 50 seconds for customer to pay. Productivity is lower when there are promos on big items (domestic electrical devices) and when shifts change (just after lunch).
Customers’ Behavior
The queue always accumulates close to the exit points, like parking. These cause queues forming on a register while others are completely empty. Not all customers are the same. Some customers get a lot of groceries. Some just get a few groceries. The old people buy small baskets, prefer day time and human only checkout lines. The young people buy large baskets on Friday night, saturday and sunday morning.
Solution
Queuing theory deals with problems which involve queuing (or waiting). Supermarket cashier scheduling and dimensioning is a typical example of waiting for service. As we know queues are a common everyday experience. Queues form because resources are limited. In fact it makes economic sense to have queues.
The basic formula behind queuing theory is Little’s Law. MIT defines it as “the average number of items in a queuing system equals the average rate at which items arrive multiplied by the average time that an item spends in the system”. The basic model includes the input process, the service time, the service institution, and queuing rule. The supermarket service system is an M/M/C model (customer source, capacity are unlimited. And C service stands are connected together). The input process is a Poisson distribution. The service time is negative exponential distribution. The service institution means lots of service stands. The queuing rule is for service institution. The waiting system means customers have to wait if the service stand is in busy.
Whenever customers arrive at a service facility, some of them have to wait before they receive the desired service. It means that the customer has to wait for his/her turn, may be in a line. Customers arrive at a service facility with several queues, each with one server (sales checkout counter). The customers choose a queue of a server according to some mechanism (e.g., shortest queue or shortest workload)
Two important results need to be known from the data collected in the supermarket by the mathematical model: one is the ‘service rate’ provided to the customers during the checking out process, and the other is the gaps between the arrival times (inter arrival time) of each customer per hour. In order to get an overall perspective of the customer’s quality of service, the questionnaires which indicate the result in percentages, are also used to get the evaluation from the customers directly.
In these scenarios, there’s a queuing system full of:
- Arriving customers
- Waiting customers
- In-service customers
- Departing customers
With each queuing system, there are things to measure like:
- Number of arriving customers
- Number of departing customers
- Time the server was busy
- Total time for each request
And with queuing theory, we can make them as short and efficient as mathematically possible. This helps grocery store managers understand if you have enough people working the check-out lines. It also determines at which point the queuing system will get backed up—and how to catch up.
Execution
The process involved in supermarket cashier scheduling and dimensioning:
Collecting data/input (high quality)
We need to first capture the data properly and electronically.
- Point of Sales (PoS): past sales, number of customers, articles, cash and queue per 15 minutes per checkout line.
- Management data : sales forecast, Peak sales reports, employee productivity, employee names, contracts (SAP, Oracle, IBM, Microsoft, … )
- Swiping (TMS = Time Management System, T&A = Time & Attendance) : when employees arrived and left
- Business monthly calendar (usually printed and put on the wall) : what promo and events were planned
- Past schedules… when employees are planned to work
- Notes from employees asking for time off
- Statistics over existing data
- Sit all business users and ask them to fill in a form with the required data.
Analysis
We need to understand and analyze the data collected to get business insights, answering questions as below:
- Does my queue accumulate on some specific lines?
- Does my queue accumulate on some specific days or hours?
- How is the productivity of the cashier?
- How long does a customer wait in average?
- When do I have customers buying small or large baskets?
- Are the weekends being properly granted?
- What employees are always late?
Cross Analysis
We need to cross analyze to get deeper business insights:
- Do I have more queue on some promo events?
- Does productivity reduce drastically on some events?
- Is the forecasting sent by headquarters correct?
- Are employees planned when they are needed?
- Are my employees absent more often during some calendar events?
- on winter because kids are ill, women are more absent
- on summer because summer jobs pay more than being a cashier, specially close to beaches
Comparison
We need to compare the data and insights between stores:
- Is the productivity of different stores similar?
- Is the forecast quality of different stores similar?
- Are some stores using the workforce more efficiently?
Why Software?
Using spreadsheets, documents, online calendars, or paper to schedule retail workers may be familiar. Perhaps it’s the way your organization has always done personnel scheduling. While these methods may lack the capabilities and features needed to increase efficiency, reduce labor costs and promote employee work-life balance, however they will be still sliding by for small supermarkets.
Some disadvantages of manual scheduling:
- Store by store arrangement
- Checkout managers don’t want to fight with the crew so they give them the schedule they want that schedule is usually not aligned with the customer flow
they do that in the back of management so management is usually not aware - Store politics: senior employees just want to work during non-peak hours
- Law mandates a certain number of weekends off per year
- The company doesn’t want to give peak weekends of (Christmas, Summer) because extras are expensive and during Christmas time everyone needs more workers so there is shortage
- Weekends off have to be planned to fall on low season / weekends with low sales
Just a few extra minutes here and there of poor usage of workforce can really destroy a budget.
Store Strategic Planner
Store Strategic Planner is your digital analyst for retail. It collects and analyses data across all your stores to identify mistakes in customer forecasting, queue management, employees planning or improper budgeting. Store Strategic Planner will send alerts to all relevant employees, suggest improvements, help disseminating best business practices and facilitate exchanges with management. Deploying Store Strategic Planner SaaS platform is simple and fast. As a result, Store Strategic Planner is the ideal partner for retailers to continually improve their efficiency in all their stores.
Store Strategic Planner helps monitoring the performance of 300 hypermarkets of Real in Germany, and check if they are properly scheduling their cashiers (too many, too few, too much overlap during lunch time, too slow, etc).
- It helps management levels take the decisions in terms of dimensioning of the workforce and investment in checkout hardware (checkout lines).
- It guides cashier leads, store managers and regional managers through an analytic process that includes forecast, dimensioning of needs, analysis of performance, identification of mistakes and definition of an improvement plan.
- Regional managers can view the performance of all stores in their region, how they rank on different KPIs, get alerts and leave comments and tasks.
- Stores can see the evolution of their performance on the “top10” ranking.
- It provides a support for 1-to-1 discussions to set analyse milestones and set targets.
If you’re interested to learn more, please go to Retail Workforce Scheduling to view the demo and contact us.
