Another view on personnel management in retail: the experience of ZOZO RCAM
The statistics of failed projects for the implementation of employee time-planning systems (WFM, Workforce Management) in retail exceeds the limit. That's because, instead of honest WFM, they create a planning system that is divorced from real tasks and processes in stores. This often leads to an increase in the cost of unjustified processing, the emergence of excess personnel and a decrease in revenue due to a fall in conversion or a deterioration in the level of service. For 5 years, we have been deeply studying the market in order to deal with the needs and demands of retailers and begin to change the concept of the failure of WFM projects.
“Pilot” solutions we implemented in the Inventive Retail Group
The staff of most network retailers exceeds 1000 people. These are the people who work directly with customers and on which the effectiveness and success of the retail business depends. Managers constantly have questions: how many staff do you need, how to make sure that the shift schedule is optimal for achieving business goals, how to respond quickly and effectively to changes? In this article, I will talk about how ABC Solutions (in 2017 joined the LANIT group) began its journey from finding a human resources management system for retail, and as a result developed its own solution - ZOZO RCAM .
We took on our own development in 2016, when, after a thorough study of the market, we realized that there was no platform for solving the complex task of managing the front-line personnel of medium and large retailers - simultaneously increasing the level of service and cost optimization. In addition to large trading companies, banking retail and service organizations with a large number of front-line personnel also fall into this segment. Even the “Mail of Russia” and the Russian Railways in their essential part work as front retailers.
')
IT products of two directions are massively represented on the market. The first group consists of brigade and work shift planning solutions for field services (field services). The main task of such systems is to provide the necessary speed of service and the required level of quality of services, depending on incoming requests. In the company, for example, there are also engineers who provide households access to the Internet and specialists who eliminate the consequences of accidents. The system will set priorities depending on the specifics of applications and solve a range of additional tasks: from planning routes to the recommended list of tools in the wizard’s backpack.
The second group of software - solutions for call centers, for example, banks and telecom operators. The architecture of these IT products reflects the peculiarities of building processes in the center of remote work with clients. It is possible to limit the incoming flow of requests taking into account the service agreement (SLA) and depending on the average monthly revenue per subscriber (ARPU).
Retail also needs a human resources management platform that offers management solutions, builds dynamic forecasts and has deep analytics across all stores of the chain. IT products of global vendors do not respond well to such requests, since they were developed for other tasks.
Now there is a situation where IT market players, who are not always honest, offer trading companies one of the two options listed above for IT solutions. However, the real needs of the retail business are much broader and the approaches used for service companies and call centers do not get along well with important business indicators for trading.
After examining the needs of the retail business (telecom, fashion, digital, grocery, retail banking, professional services, etc.) and trying to “pull” the ideal, from the retailer’s point of view, process onto existing solutions, we realized that the platforms lacked flexibility and in some cases and sane prices. In the end, we decided to develop our own IT product, the basis for which would be a symbiosis of business modeling, mathematics, BigData, scalability and flexibility.
Planning staff loading is beneficial not only to companies, but also to employees themselves. Flexible schedules provide work-life balance, as well as the opportunity to work in the most successful hours for earnings.
Retail has a number of key features. Regardless of whether the call center client managed to resolve the issue with a single call or had to call several times, he will still return. In retail, everything is more complicated. The seller communicates with the buyer "face to face."
The technology of retail stores can be completely different. A case in point is the differences in food retail and electronics stores. No one goes to the grocery store to take a look at croissants, but cases when customers visit the trading rooms with TVs and refrigerators to kill time or ask the price (and warm up in winter :), is not uncommon.
Retail also differs according to business drivers, which dictate the need for personnel at a particular time at a specific point. For the grocery chain, it will be important: no queues at the cash desks, timeliness of delivery (logistics), number of items sold per hour, redistribution of employees inside the salesrooms or zones during the day (delivery arrived - we accept the goods, accepted - we work on display). For non-grocery stores, traffic is important and the presence of more staff in the halls is typical. Conversion depends on the effectiveness of the consultants in the room (the buyer will reach the cash desk or limit the study of the assortment) and the average bill.
If there is one sales consultant and a queue of five people in the cellular phone salon, the probability that the buyer leaves is high. You can try to put five sales assistants. This will solve the problem at a particular moment. But later it turns out that so many people are not needed. With five sellers, the level of service will be redundant, and the company will pay for the “simple” part of employees. This is only one point. Imagine that you have a thousand of them, and about 10,000 employees who have different work schedules, vacations, and sick days. Add to this the turnover of staff at 50% and the need for planning for 365 days. Excel is hardly suitable for this.
In addition to this, there is a set of specific indicators determined by the micro-industry (food / fashion / FSI) and strategic goals. Someone needs to keep the conversion, someone - to reduce costs. It happens that different strategies are needed simultaneously for different formats or brands within the same network. All this is further complicated by the situations when they changed the format of the network, closed / opened a retail outlet (including a competitive one). The life of a trading network is always dynamic, changes sometimes occur several times in a quarter. Therefore, it is quite difficult to “hands” in retail to assess the dynamics of changes in staffing requirements during a month, season, year or several years.
Most retailers are now placing staff at static points calculated at a specific point in time. The practice is quite common when the staff is placed by the manager of the outlet. And then it remains only to rely on his experience, consciousness and impartiality. Often, everyone works according to the “how convenient” and “how they are used” schedules, not taking into account the features described above.
Having studied the problem, we identified a number of features of the retail business:
In order to increase the level of service, the retailer needs to understand how many people, with what skills and at what time they should work in the outlet.
The main thing that WFM systems ( Workforce Management ) can do is to plan the workload of employees for a specific period of time and on the basis of this, schedule work (in the international classification of systems this is called scheduling). An indispensable thing for call centers and customer services, under whose needs and developed.
For example, with a certain call center budget, the WFM system will help to build the operator’s schedules so that one target group can be served by live people, and the other part of the clients instead of “wait for the operator’s response” will offer an interactive voice menu (IVR).
The methodology used in standard systems for planning team work schedules (field services) is also not suitable for retail. These solutions should ensure planning of logistics, materials and the implementation of SLA, and for retail business driver another is revenue, which depends on conversion, article retirement, service time, customer loyalty.
The basis of WFM solutions is the process of static workforce planning. They lack forecast models, analytics on business indicators, the ability to draw up a long-term strategy for personnel and ensure the balance of personnel and profitability over time. For retail, planning the work schedule of employees is only a point solution to a specific task.
Having introduced the WFM system, the retailer can plan the work schedule of employees, but there will be no connection with the issues of fulfilling strategic goals, managing the level of service, profitability, dynamic management of staff load, and distributing employees among several zones or outlets. That is why there are few successful implementations of WFM systems in retail.
Business consultants can make measurements, carry out rationing of operations, draw an ideal model and build a process for planning a shift schedule for it. It seemed that the problem was solved. But one season will replace another, the market, product mix or services will change. The ideal static model of last year will stop working, and the happy and proud old results will have the manager to contend with his own regulations and systems.
You don't even have to go for examples. There is an electronic queue in almost all branches of banks, but managers often control the flow of customers manually and play on the queue control panel like a piano when a new visitor enters. What for? To perform KPI on the level of service set above. As a result, the information seems to be as it is, but the data is not consistent, it is not clear what kind of service the visitor chose, what question he addressed, what kind of operation was performed, who performed it, etc.
It becomes obvious that the methodology incorporated in the standard systems for managing human resources is not suitable for retail.
Competent front-line management allows you to increase the level of service. Buyers do not have to stand in line to the box office.
For five years, we have been part of the ABC Consulting team and implemented talent management projects. We have experience with such companies as United Metallurgical Company, Uralchem, Kaspersky, Bashneft, Rostelecom, Inventive Retail Group, MTS, STS Media, Sberbank, Dekatlon, GK "Megapolis", "Evraz", "Gazpromneft" and others. In total more than 20 large companies. All the projects that we implemented were different in terms of both the subject matter and the prerequisites for finding solutions.
We came to the conclusion that there is no universal system of business indicators in retail, and in 2016 we started developing our solution. You should always seek a balance between the economic efficiency of the outlet, the network and specific business drivers that are embedded in the strategy or are the result of the segment in which the company operates. Often, these indicators and strategies are repeated, but they have different weight in assessing the success of a business.
The management of a telecom company can set a goal for the year to reduce the costs of the wage fund and, at the same time, increase the indicators of service and sales volumes. At the same time, as the experience of our communication showed, three telecom operators with similar retail networks actually have absolutely unique sales models and business performance evaluations. And for banking retail, for example, the ratio of operating expenses to income (CIR) will be important.
The conclusion that suggested itself - we need a modern system and methodology that can be used:
and yet remain flexible and dynamic.
The model that we developed had to take into account different input indicators and parameters, while maintaining the stability and accuracy of the forecast. To do this, we methodologically divided the mathematical apparatus of the system, while maintaining its universality, and a preliminary analysis of client processes. The latter is needed to identify drivers and obtain data for filling and customizing the model.
In the framework of the transformation project for a specific retail business, we first examine current client processes, examine possible data sources, choose a strategy and indicators, on the basis of which we find problem areas and offer optimization points in order to achieve goals. Further, together with the customer, we form a new approach to the management model. This is necessary to reduce the economic losses from mistakes in the planning of labor resources.
On this basis, we described the ideal approach and methodology for building the process of managing the level of service and profitability of a Russian retailer. Schematically and simplified, it looks like this (some elements are deliberately hidden).
The principal difference between our solution and the WFM systems was the possibility of balancing between the cost of staff and the revenue it brings. This is a kind of scales: on one side is a complex indicator of the level of service (sales, conversion, loyalty), and on the other - costs (direct, indirect, outflow). Our ZOZO RCAM (Revenue & Costs Assurance Management) solution, using dynamic models, answers the question of which strategy is more profitable during a specified period of time: reducing costs or increasing the level of service.
ZOZO team at work
We did not reinvent the bicycle. All solutions use the same math functions. The question of innovation is which algorithm for their interaction to choose. Since we built the balancer, it was important to find the optimal relationship between the processing algorithms for internal and external (BigData) data sources, business constraint models, forecast block and the possibility of its adjustment with respect to the data. From the point of view of mathematics, this function is not perfect. However, we managed to find the necessary ratio of indicators and get the desired mathematical model.
The mathematical component of ZOZO RCAM consists of two parts (modules): driver prediction, affecting the number of personnel and the shift, as well as the calculation of the optimal number of personnel and the construction of effective schedules. There are several classic forecasting models. We tried to bring experience from other industries: machine learning, genetic algorithms, pattern recognition. The result of the work of standard models is represented by a data set, we looked at it not as a system of values, but as their pictures, arising in response to changes. We needed to find only necessary patterns in which these pictures would keep within. We got a mathematical model that worked quickly and provided good accuracy. She formed the basis of the “predictive” module of our solution.
While working on the shift planning module, we looked at the decisions of various vendors. All of them turned out to be inflexible, slow in processing the given data sets and, as a rule, solved other tasks in strictly regulated parameters, which led to the need to think about workaround options and “patches”. Assessing the risks and tormenting the team fairly, we chose to write our own algorithms, taking into account all the experience gained. As a result, ZOZO RCAM has its own “engine”.
In our solution, we use a combination of algorithms that allow the system to work quickly.
The result of our work was the decision of ZOZO * RCAM (Revenue & Costs Assurance Management) - a system for managing profitability and the level of service of trade organizations, based on the optimization and forecasting of the need for labor resources. A team of business analysts, specialists in mathematical modeling and programmers worked and continues to do it. Only 21 people.
ZOZO RCAM solution architecture
ZOZO helps the management to solve a number of questions: what should be the adequacy of the staff, how to build quality shifts, how to quickly respond to changes. In the annual horizon, you can plan vacations, the number of personnel on points, the budget for the wage fund, manage strategies at the level of the outlet and the company as a whole.
ZOZO helps the management plan the number of personnel by points on an annual basis.
According to the results of the pilot project at 20 outlets of a large telecom operator, we managed to free up additional labor hours to increase conversion and service level. The first implementations in 5 electronics retailer stores showed that it is necessary to redistribute vacations over different periods than the managers of retail outlets plan. The result of testing ZOZO in a financial institution was a 3% savings in payroll and the ability to plan a group of personnel reserve for the horizon for more than a month.
The system developed by us has two control loops. Operational, incorporated in the ZOZO WFM block, corresponds to the classical approach: it allows you to create and manage personnel work schedules taking into account the requirements of the Labor Code of the Russian Federation, qualifications and skills. The system takes into account the location of the store and its format. The efficiency calculations for a supermarket in the center of the capital and a hypermarket in one of the sleeping areas will be different.
ZOZO RCAM allows you to strategically manage your workforce. The system will show bottlenecks and offer optimization options depending on the business drivers and the external environment of the business.
Operational control embedded in the block ZOZO WFM, corresponds to the classical approach.
ZOZO RCAM is not a personnel service tool, it is rather a solution for a retail manager. It allows you to understand how to cover traffic flows, how to benefit and increase the quality of service, how to optimize processes when you see their dynamics. If during the day there is a rise and fall in traffic in the store, the system will recommend flexible schedules or four-hour shifts. The shift or state requirements can be dynamically rebuilt in response to changes in business drivers at the point of sale. It is easy for the HR department to manage the budget and report to management, understanding how the need for personnel changes.
The system allows you to build a transparent model of motivation, planning an employee at a time when you can earn, and not just be present. Taking into account the needs and potential benefits for employees within the company affects their involvement, loyalty and motivation.
The flexible parameterizable model of the ZOZO engine allows you to set different goals and connect any external data sources. Even the weather forecast: warmer - expect growth in sales of sundresses, heavy rainfall and temperatures around zero - process traffic to pharmacies.
Companies can calculate business indicators when changing development strategies. Today you are a discounter and compete at the level of the number of stores, and tomorrow you decide to open a new format with a high level of service - the system will tell you how to plan the number of personnel and show the possible consequences of the decisions made.
According to the results of the pilot project in the telecom sector, only due to the balance of deficiencies / processing, we achieved salary fund savings of 20-22% while maintaining the SLA. An additional effect can be obtained from the centralization of processes.
To increase profitability, the management of banks is expanding its portfolio of services to attract new customers. And in order to control costs regulates many maintenance procedures in offices. All this, as a rule, leads to an increase in queues, a decrease in the level of conversion and the efficiency of the branches. The results of our “pilot” in the banking sector showed that such consequences are mainly due to errors related to the unreliability of data from the electronic queue system, when the customer flow is controlled manually, problems with forecasting vacations and timely registration of sick leave, as well as large time costs for performing such non-core tasks like scheduling and agreeing monthly schedules. According to our estimates, the planning of the schedules by the system would allow reaching the required level of conversion and freeing at least half a month for additional offices.
Thanks to the accelerator system, our solution allows us to build part-time models and distribute employees between offices, and most importantly, to receive operational reports. Part-time employees can be used during the period of least traffic to give basic staff a rest.
A scenario of balancing employees between several sales offices is also possible, depending on the needs of offices and the geography of employee availability. This reduces the need for staff by 10-20% while maintaining the level of service. After all, employees often work out the standard time regardless of whether it is needed at this time or not. At the same time, people may not be enough at the neighboring point, but for such short periods no one will recruit new people.
ZOZO takes into account changes with a raster up to 15 minutes, and the accuracy of forecasts is more than 80%. And this is not the limit. We continue to work to improve these indicators.
In less than a year, our team implemented successful pilot projects of ZOZO RCAM in such companies as MTS Retail, VimpelCom, Inventive Retail Group, VTB24. According to the results of some projects, the circulation of the system is already underway. We will tell about the results later.
We successfully started working on the ZOZO system, and it is too early to finish. There are many interesting tasks ahead.
“Pilot” solutions we implemented in the Inventive Retail Group
The staff of most network retailers exceeds 1000 people. These are the people who work directly with customers and on which the effectiveness and success of the retail business depends. Managers constantly have questions: how many staff do you need, how to make sure that the shift schedule is optimal for achieving business goals, how to respond quickly and effectively to changes? In this article, I will talk about how ABC Solutions (in 2017 joined the LANIT group) began its journey from finding a human resources management system for retail, and as a result developed its own solution - ZOZO RCAM .
The origin of the idea
We took on our own development in 2016, when, after a thorough study of the market, we realized that there was no platform for solving the complex task of managing the front-line personnel of medium and large retailers - simultaneously increasing the level of service and cost optimization. In addition to large trading companies, banking retail and service organizations with a large number of front-line personnel also fall into this segment. Even the “Mail of Russia” and the Russian Railways in their essential part work as front retailers.
')
IT products of two directions are massively represented on the market. The first group consists of brigade and work shift planning solutions for field services (field services). The main task of such systems is to provide the necessary speed of service and the required level of quality of services, depending on incoming requests. In the company, for example, there are also engineers who provide households access to the Internet and specialists who eliminate the consequences of accidents. The system will set priorities depending on the specifics of applications and solve a range of additional tasks: from planning routes to the recommended list of tools in the wizard’s backpack.
The second group of software - solutions for call centers, for example, banks and telecom operators. The architecture of these IT products reflects the peculiarities of building processes in the center of remote work with clients. It is possible to limit the incoming flow of requests taking into account the service agreement (SLA) and depending on the average monthly revenue per subscriber (ARPU).
Retail also needs a human resources management platform that offers management solutions, builds dynamic forecasts and has deep analytics across all stores of the chain. IT products of global vendors do not respond well to such requests, since they were developed for other tasks.
Now there is a situation where IT market players, who are not always honest, offer trading companies one of the two options listed above for IT solutions. However, the real needs of the retail business are much broader and the approaches used for service companies and call centers do not get along well with important business indicators for trading.
After examining the needs of the retail business (telecom, fashion, digital, grocery, retail banking, professional services, etc.) and trying to “pull” the ideal, from the retailer’s point of view, process onto existing solutions, we realized that the platforms lacked flexibility and in some cases and sane prices. In the end, we decided to develop our own IT product, the basis for which would be a symbiosis of business modeling, mathematics, BigData, scalability and flexibility.
Planning staff loading is beneficial not only to companies, but also to employees themselves. Flexible schedules provide work-life balance, as well as the opportunity to work in the most successful hours for earnings.
Business with special needs
Retail has a number of key features. Regardless of whether the call center client managed to resolve the issue with a single call or had to call several times, he will still return. In retail, everything is more complicated. The seller communicates with the buyer "face to face."
The technology of retail stores can be completely different. A case in point is the differences in food retail and electronics stores. No one goes to the grocery store to take a look at croissants, but cases when customers visit the trading rooms with TVs and refrigerators to kill time or ask the price (and warm up in winter :), is not uncommon.
Retail also differs according to business drivers, which dictate the need for personnel at a particular time at a specific point. For the grocery chain, it will be important: no queues at the cash desks, timeliness of delivery (logistics), number of items sold per hour, redistribution of employees inside the salesrooms or zones during the day (delivery arrived - we accept the goods, accepted - we work on display). For non-grocery stores, traffic is important and the presence of more staff in the halls is typical. Conversion depends on the effectiveness of the consultants in the room (the buyer will reach the cash desk or limit the study of the assortment) and the average bill.
If there is one sales consultant and a queue of five people in the cellular phone salon, the probability that the buyer leaves is high. You can try to put five sales assistants. This will solve the problem at a particular moment. But later it turns out that so many people are not needed. With five sellers, the level of service will be redundant, and the company will pay for the “simple” part of employees. This is only one point. Imagine that you have a thousand of them, and about 10,000 employees who have different work schedules, vacations, and sick days. Add to this the turnover of staff at 50% and the need for planning for 365 days. Excel is hardly suitable for this.
In addition to this, there is a set of specific indicators determined by the micro-industry (food / fashion / FSI) and strategic goals. Someone needs to keep the conversion, someone - to reduce costs. It happens that different strategies are needed simultaneously for different formats or brands within the same network. All this is further complicated by the situations when they changed the format of the network, closed / opened a retail outlet (including a competitive one). The life of a trading network is always dynamic, changes sometimes occur several times in a quarter. Therefore, it is quite difficult to “hands” in retail to assess the dynamics of changes in staffing requirements during a month, season, year or several years.
Most retailers are now placing staff at static points calculated at a specific point in time. The practice is quite common when the staff is placed by the manager of the outlet. And then it remains only to rely on his experience, consciousness and impartiality. Often, everyone works according to the “how convenient” and “how they are used” schedules, not taking into account the features described above.
Having studied the problem, we identified a number of features of the retail business:
- companies always lack staff, which is the norm (overstuff is an evil that companies struggle with within the network, but there can be a surplus of personnel at trade outlets from time to time and it is logical to distribute it to where it is not enough);
- top management always asks to reduce the number and costs, but at the same time to fulfill the plan to increase sales and / or maintain the level of service / conversion;
- retail at the outlet level always asks for more personnel to carry out KPIs;
- HR service balances between top management, retail and restrictions, including the wage fund budget and the Labor Code of the Russian Federation;
- there is no tool that methodologically and systemically combines the processes of staffing planning and dynamic forecasting of indicators affecting the number.
In order to increase the level of service, the retailer needs to understand how many people, with what skills and at what time they should work in the outlet.
Why WFM was out of business
The main thing that WFM systems ( Workforce Management ) can do is to plan the workload of employees for a specific period of time and on the basis of this, schedule work (in the international classification of systems this is called scheduling). An indispensable thing for call centers and customer services, under whose needs and developed.
For example, with a certain call center budget, the WFM system will help to build the operator’s schedules so that one target group can be served by live people, and the other part of the clients instead of “wait for the operator’s response” will offer an interactive voice menu (IVR).
The methodology used in standard systems for planning team work schedules (field services) is also not suitable for retail. These solutions should ensure planning of logistics, materials and the implementation of SLA, and for retail business driver another is revenue, which depends on conversion, article retirement, service time, customer loyalty.
The basis of WFM solutions is the process of static workforce planning. They lack forecast models, analytics on business indicators, the ability to draw up a long-term strategy for personnel and ensure the balance of personnel and profitability over time. For retail, planning the work schedule of employees is only a point solution to a specific task.
Having introduced the WFM system, the retailer can plan the work schedule of employees, but there will be no connection with the issues of fulfilling strategic goals, managing the level of service, profitability, dynamic management of staff load, and distributing employees among several zones or outlets. That is why there are few successful implementations of WFM systems in retail.
Business consultants can make measurements, carry out rationing of operations, draw an ideal model and build a process for planning a shift schedule for it. It seemed that the problem was solved. But one season will replace another, the market, product mix or services will change. The ideal static model of last year will stop working, and the happy and proud old results will have the manager to contend with his own regulations and systems.
You don't even have to go for examples. There is an electronic queue in almost all branches of banks, but managers often control the flow of customers manually and play on the queue control panel like a piano when a new visitor enters. What for? To perform KPI on the level of service set above. As a result, the information seems to be as it is, but the data is not consistent, it is not clear what kind of service the visitor chose, what question he addressed, what kind of operation was performed, who performed it, etc.
It becomes obvious that the methodology incorporated in the standard systems for managing human resources is not suitable for retail.
Competent front-line management allows you to increase the level of service. Buyers do not have to stand in line to the box office.
What to do?
For five years, we have been part of the ABC Consulting team and implemented talent management projects. We have experience with such companies as United Metallurgical Company, Uralchem, Kaspersky, Bashneft, Rostelecom, Inventive Retail Group, MTS, STS Media, Sberbank, Dekatlon, GK "Megapolis", "Evraz", "Gazpromneft" and others. In total more than 20 large companies. All the projects that we implemented were different in terms of both the subject matter and the prerequisites for finding solutions.
We came to the conclusion that there is no universal system of business indicators in retail, and in 2016 we started developing our solution. You should always seek a balance between the economic efficiency of the outlet, the network and specific business drivers that are embedded in the strategy or are the result of the segment in which the company operates. Often, these indicators and strategies are repeated, but they have different weight in assessing the success of a business.
The management of a telecom company can set a goal for the year to reduce the costs of the wage fund and, at the same time, increase the indicators of service and sales volumes. At the same time, as the experience of our communication showed, three telecom operators with similar retail networks actually have absolutely unique sales models and business performance evaluations. And for banking retail, for example, the ratio of operating expenses to income (CIR) will be important.
The conclusion that suggested itself - we need a modern system and methodology that can be used:
- various business strategies and models for forecasting indicators on which the need for personnel depends;
- big data and machine learning opportunities;
- technologies and methods for proper balancing of factors, proactively responding to changes,
and yet remain flexible and dynamic.
The model that we developed had to take into account different input indicators and parameters, while maintaining the stability and accuracy of the forecast. To do this, we methodologically divided the mathematical apparatus of the system, while maintaining its universality, and a preliminary analysis of client processes. The latter is needed to identify drivers and obtain data for filling and customizing the model.
In the framework of the transformation project for a specific retail business, we first examine current client processes, examine possible data sources, choose a strategy and indicators, on the basis of which we find problem areas and offer optimization points in order to achieve goals. Further, together with the customer, we form a new approach to the management model. This is necessary to reduce the economic losses from mistakes in the planning of labor resources.
On this basis, we described the ideal approach and methodology for building the process of managing the level of service and profitability of a Russian retailer. Schematically and simplified, it looks like this (some elements are deliberately hidden).
The principal difference between our solution and the WFM systems was the possibility of balancing between the cost of staff and the revenue it brings. This is a kind of scales: on one side is a complex indicator of the level of service (sales, conversion, loyalty), and on the other - costs (direct, indirect, outflow). Our ZOZO RCAM (Revenue & Costs Assurance Management) solution, using dynamic models, answers the question of which strategy is more profitable during a specified period of time: reducing costs or increasing the level of service.
ZOZO team at work
We did not reinvent the bicycle. All solutions use the same math functions. The question of innovation is which algorithm for their interaction to choose. Since we built the balancer, it was important to find the optimal relationship between the processing algorithms for internal and external (BigData) data sources, business constraint models, forecast block and the possibility of its adjustment with respect to the data. From the point of view of mathematics, this function is not perfect. However, we managed to find the necessary ratio of indicators and get the desired mathematical model.
The mathematical component of ZOZO RCAM consists of two parts (modules): driver prediction, affecting the number of personnel and the shift, as well as the calculation of the optimal number of personnel and the construction of effective schedules. There are several classic forecasting models. We tried to bring experience from other industries: machine learning, genetic algorithms, pattern recognition. The result of the work of standard models is represented by a data set, we looked at it not as a system of values, but as their pictures, arising in response to changes. We needed to find only necessary patterns in which these pictures would keep within. We got a mathematical model that worked quickly and provided good accuracy. She formed the basis of the “predictive” module of our solution.
While working on the shift planning module, we looked at the decisions of various vendors. All of them turned out to be inflexible, slow in processing the given data sets and, as a rule, solved other tasks in strictly regulated parameters, which led to the need to think about workaround options and “patches”. Assessing the risks and tormenting the team fairly, we chose to write our own algorithms, taking into account all the experience gained. As a result, ZOZO RCAM has its own “engine”.
In our solution, we use a combination of algorithms that allow the system to work quickly.
What got on the way out
The result of our work was the decision of ZOZO * RCAM (Revenue & Costs Assurance Management) - a system for managing profitability and the level of service of trade organizations, based on the optimization and forecasting of the need for labor resources. A team of business analysts, specialists in mathematical modeling and programmers worked and continues to do it. Only 21 people.
ZOZO RCAM solution architecture
Why Zozo?
Having started work on the solution, we took up the strategy, which was drawn in the presentation entitled “ABC Solutions. Strategy 2020 ". In the title of the presentation, the font was accidentally changed, and the number 2020 visually turned into ZOZO.
Everyone liked the idea of ​​such a name. It also turned out that the acronym ZOZO in the United States means Zombie Zone, which is very suitable for potential optimization objects that the company deals with. No more zombies in retail! So the funny word ZOZO has become a brand.
Everyone liked the idea of ​​such a name. It also turned out that the acronym ZOZO in the United States means Zombie Zone, which is very suitable for potential optimization objects that the company deals with. No more zombies in retail! So the funny word ZOZO has become a brand.
ZOZO helps the management to solve a number of questions: what should be the adequacy of the staff, how to build quality shifts, how to quickly respond to changes. In the annual horizon, you can plan vacations, the number of personnel on points, the budget for the wage fund, manage strategies at the level of the outlet and the company as a whole.
ZOZO helps the management plan the number of personnel by points on an annual basis.
According to the results of the pilot project at 20 outlets of a large telecom operator, we managed to free up additional labor hours to increase conversion and service level. The first implementations in 5 electronics retailer stores showed that it is necessary to redistribute vacations over different periods than the managers of retail outlets plan. The result of testing ZOZO in a financial institution was a 3% savings in payroll and the ability to plan a group of personnel reserve for the horizon for more than a month.
The system developed by us has two control loops. Operational, incorporated in the ZOZO WFM block, corresponds to the classical approach: it allows you to create and manage personnel work schedules taking into account the requirements of the Labor Code of the Russian Federation, qualifications and skills. The system takes into account the location of the store and its format. The efficiency calculations for a supermarket in the center of the capital and a hypermarket in one of the sleeping areas will be different.
ZOZO RCAM allows you to strategically manage your workforce. The system will show bottlenecks and offer optimization options depending on the business drivers and the external environment of the business.
Operational control embedded in the block ZOZO WFM, corresponds to the classical approach.
ZOZO RCAM is not a personnel service tool, it is rather a solution for a retail manager. It allows you to understand how to cover traffic flows, how to benefit and increase the quality of service, how to optimize processes when you see their dynamics. If during the day there is a rise and fall in traffic in the store, the system will recommend flexible schedules or four-hour shifts. The shift or state requirements can be dynamically rebuilt in response to changes in business drivers at the point of sale. It is easy for the HR department to manage the budget and report to management, understanding how the need for personnel changes.
The system allows you to build a transparent model of motivation, planning an employee at a time when you can earn, and not just be present. Taking into account the needs and potential benefits for employees within the company affects their involvement, loyalty and motivation.
The flexible parameterizable model of the ZOZO engine allows you to set different goals and connect any external data sources. Even the weather forecast: warmer - expect growth in sales of sundresses, heavy rainfall and temperatures around zero - process traffic to pharmacies.
Companies can calculate business indicators when changing development strategies. Today you are a discounter and compete at the level of the number of stores, and tomorrow you decide to open a new format with a high level of service - the system will tell you how to plan the number of personnel and show the possible consequences of the decisions made.
What tasks can be solved
According to the results of the pilot project in the telecom sector, only due to the balance of deficiencies / processing, we achieved salary fund savings of 20-22% while maintaining the SLA. An additional effect can be obtained from the centralization of processes.
To increase profitability, the management of banks is expanding its portfolio of services to attract new customers. And in order to control costs regulates many maintenance procedures in offices. All this, as a rule, leads to an increase in queues, a decrease in the level of conversion and the efficiency of the branches. The results of our “pilot” in the banking sector showed that such consequences are mainly due to errors related to the unreliability of data from the electronic queue system, when the customer flow is controlled manually, problems with forecasting vacations and timely registration of sick leave, as well as large time costs for performing such non-core tasks like scheduling and agreeing monthly schedules. According to our estimates, the planning of the schedules by the system would allow reaching the required level of conversion and freeing at least half a month for additional offices.
Thanks to the accelerator system, our solution allows us to build part-time models and distribute employees between offices, and most importantly, to receive operational reports. Part-time employees can be used during the period of least traffic to give basic staff a rest.
A scenario of balancing employees between several sales offices is also possible, depending on the needs of offices and the geography of employee availability. This reduces the need for staff by 10-20% while maintaining the level of service. After all, employees often work out the standard time regardless of whether it is needed at this time or not. At the same time, people may not be enough at the neighboring point, but for such short periods no one will recruit new people.
ZOZO takes into account changes with a raster up to 15 minutes, and the accuracy of forecasts is more than 80%. And this is not the limit. We continue to work to improve these indicators.
In less than a year, our team implemented successful pilot projects of ZOZO RCAM in such companies as MTS Retail, VimpelCom, Inventive Retail Group, VTB24. According to the results of some projects, the circulation of the system is already underway. We will tell about the results later.
We successfully started working on the ZOZO system, and it is too early to finish. There are many interesting tasks ahead.
Source: https://habr.com/ru/post/331820/
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