How to manage traffic and variability to create good jobs.

Hey there!

Welcome to this month's super exciting newsletter, where we dive into the wild world of retail and explore the magic of cross-training! Get ready to unwrap the mysteries of traffic variability, learn how to juggle customer demands, and discover how cross-training is the secret ingredient to happy employees, satisfied customers, and thriving businesses. So, buckle up, and let's embark on this incredible journey together! 🚀🎉

estimated read time: 5 minutes 30 seconds

🍫 Traffic Variability: Like a box of chocolates, you never know what you're gonna get.

🔧 Managing Variability: Two approaches: altering customer demand and controlling the supply of service.

🎢 Managing Capacity: Borrow strategies from the manufacturing sector: level strategy and chase strategy.

🌟 Virtuous Cycle Retailers: Invest in cross-training, promote effective communication, and adopt a flexible approach to labor allocation.

🤹 Cross-Training Enables Good Jobs: Increases productivity and improves customer service without raising costs.

Let’s Roll!

Variability

Traffic variability in department stores is like a box of chocolates: you never know what you're gonna get. Hourly traffic varies not only day by day but also throughout each day. This fluctuation challenges operations, as more customers mean more work and potential problems.

Although some variation is predictable, the other 20% can be influenced by unpredictable factors like a surprise concert or a change in the weather. Managing traffic variability requires the right data and local knowledge. Relying on store managers' intuition alone isn't enough – as shown by the department store manager in Figure 7.1 who thought the busiest times were late afternoons, but the data revealed it was actually after 6:00 p.m.

Local knowledge comes into play when considering different customer needs. A Family Mart store manager in Japan understood her customers so well that she scheduled her staff accordingly: younger employees worked during busy morning and evening shifts, while older employees chatted with housewives during the day.

In short, understanding and managing variability is essential for smooth operations and providing good jobs. Cross training enables this by equipping employees with the skills to handle different tasks, making them adaptable to the ever-changing retail landscape.

Managing variability

There are two main approaches for managing customer variability: altering customer demand and controlling the supply of service. Altering demand involves stimulating demand during non-peak periods or requiring reservations. Controlling supply can involve customers delivering some of the service themselves or managing the company's capacity to handle variable workloads.

Altering demand in retail is challenging, as most customers prefer to shop at their convenience. Asking customers to participate in the production process, like self-checkout, has limitations as it can lead to inefficiencies and confusion.

Therefore, the primary method retailers use to manage traffic variability is by altering labor capacity. Manufacturing industries use two main strategies for managing demand variability: level strategy and chase strategy. Level strategy maintains constant production, while chase strategy varies production with demand. However, service companies, including retailers, need to follow a chase strategy since labor capacity cannot be stored in inventory.

Model retailers and those operating in a vicious cycle differ in their chase strategy implementation. Vicious cycle retailers match store labor to traffic in short increments, while virtuous cycle retailers cross-train their employees to perform different tasks throughout the day based on customer demand. This allows for better management of arrival variability and a smoother retail experience for customers.

Managing capacity

Managing capacity is an important aspect of retail operations, as it helps businesses address demand variability and maximize efficiency. Strategies for managing capacity are often borrowed from the manufacturing sector, where businesses primarily use two approaches: the level strategy and the chase strategy.

In the level strategy, production remains constant throughout the year, regardless of fluctuations in demand. This approach results in inventory accumulation during periods of low demand, which can then be drawn upon during peak seasons. However, this strategy can be expensive if inventory-carrying costs are high or if demand forecasting is inaccurate.

In contrast, the chase strategy involves varying production levels to match demand. While this approach eliminates the need for large inventory stocks, it can be expensive due to the need to constantly adjust capacity, particularly when it comes to specialized or costly equipment.

In retail settings, most companies follow a chase strategy to manage labor capacity, as labor cannot be stored like inventory. This approach minimizes idle employees during slow periods and ensures adequate staffing during peak times. However, the extent to which retailers follow the chase strategy varies depending on their operational model.

Vicious-cycle retailers tend to follow the chase strategy in short increments, forecasting customer traffic in fifteen-minute intervals and adjusting staffing levels accordingly. This approach aims to closely match the number of employees to customer traffic, minimizing wasted labor capacity.

Virtuous-cycle retailers, on the other hand, rely on cross-training employees to manage capacity more efficiently. By teaching staff to perform multiple tasks, they can allocate resources more flexibly throughout the day. Instead of matching labor to traffic in short increments, virtuous-cycle retailers determine the number of employees needed for a given day or shift and have them perform various tasks depending on customer traffic.

In summary, managing capacity is crucial for retailers to address demand variability and optimize store operations. While most retailers follow a chase strategy to manage labor capacity, the degree to which they do so varies depending on their approach to employee training and resource allocation. Cross-training employees can provide greater flexibility and efficiency in managing capacity, allowing retailers to better meet customer needs and maintain a competitive edge in the market.

Virtuous cycle retailers

Virtuous-cycle retailers handle traffic variability by investing in cross-training, promoting effective communication, and adopting a flexible approach to labor allocation. Cross-training enables employees to perform a variety of tasks, ensuring they remain productive even during off-peak hours. This investment in employee skill development contributes to efficient store operations, as staff can shift between tasks as needed.

Effective communication among employees and management is also crucial. This ensures everyone is aware of the store's performance and can adjust their tasks accordingly. If an employee notices a particular section of the store is not getting enough traffic, they can communicate this to their manager, who can then reallocate resources to better meet customer needs.

A flexible approach to labor allocation allows virtuous-cycle retailers to manage variability in customer traffic without sacrificing employee or customer satisfaction. When traffic is lower than expected, store managers can offer time off to employees who are well-compensated and appreciate the opportunity to tend to personal errands. If no one wants to take time off, the cost of having extra employees on hand is manageable due to their cross-training and ability to perform other tasks during quiet periods.

By employing these strategies, virtuous-cycle retailers can adeptly manage traffic variability, maintain high customer satisfaction, and create a positive work environment for their employees. This approach mitigates the challenges of dealing with unexpected fluctuations in demand and helps these retailers maintain their competitive edge in the ever-changing retail landscape.

How cross training enables good jobs

You know what's really cool about cross-training? It's a crucial part of the Good Jobs Strategy, and it helps create a work environment that makes everyone happy – customers, employees, and investors! By teaching employees to do a bunch of different tasks, cross-training increases productivity and improves customer service without raising costs. That's a win-win-win situation!

Think about start-ups for a second. They're usually buzzing with excitement because everyone's responsible for a little bit of everything. Now, cross-training in larger companies can give you that same feeling of teamwork and engagement that people find super rewarding. This way, employees feel like their jobs are meaningful since they get to use a variety of skills, be part of the whole process, and make a difference.

Another awesome thing about cross-training is that it helps break down barriers between employees and managers. When managers roll up their sleeves and work side-by-side with their team, everyone feels a sense of unity and purpose. This leads to increased job satisfaction, and guess what? Lower employee turnover!

Let's not forget that cross-training also provides more stability in work schedules, which makes employees happier overall. And when employees are happy, they're more committed to their jobs. That means fewer mistakes, shortcuts, or people quitting. The result? Fewer operational problems, lower costs, and a better experience for customers. Sweet, right?

By making jobs more enjoyable, companies can attract a bigger pool of potential employees. This means businesses can be pickier when hiring, making sure new recruits fit the company culture and the job requirements. Plus, the synergy between cross-training and other operational choices – like offering fewer products, setting high expectations, and investing in recruitment – creates a powerful effect that drives business success.

So, in a nutshell, cross-training is a game-changer that enables the Good Jobs Strategy. Companies that embrace cross-training and its potential to create a more versatile and motivated workforce are better equipped to tackle the challenges of today's competitive market. It's like having a secret weapon for business success!