The hidden cost of time

Author: Ruslan Al-Dahleh

In retail, there is a reason why Christmas is referred to as the ‘Golden quarter’. Not only do retailers collect on average 12%[1] of their yearly revenue from the month of December alone, which is a 52%[1] increase over a standard month, but they also set a precedent for the following year. If a customer has a positive experience over the festive period, then a retailer can comfortably plan for that customer to be locked in. Within the Grocery sector, these statistical figures are starker. Due to the nature of the products, a customer cannot buy fresh meat and produce in advance, therefore on average grocers experience an increase of 70% in sales the week leading up to Christmas. With all this comes one question – how can a retailer throughput the increased sales volume while retaining customer experience? In part, the answer lies in time.?

Downtime – this is a concept that everyone within the manufacturing industry is aware of. On a production line, it is easy to see - if the production line is down for a period of time and the line does not produce 50 packs of a specific product - that is 50 packs that cannot be recouped. Within the retail environment, the concept of time becomes evident when shops begin to fill up and ques start forming at checkout counters. It is important to understand the difference between two types of downtime:

-???????Planned: Accounted for in the overall throughput and capacity calculations. Any decrease in planned downtime will provide additional revenue. Some examples are cleaning, shift change and replacement of till rolls

-???????Unplanned: Unexpected and occurs during the main process and can last for any length of time therefore creating backups. Any decrease in unplanned downtime will allow an organisation to hit their pre-determined targets and to add additional capacity. Some examples are missing labels, unreadable barcodes and damaged packaging at checkout that requires replacement

Downtime can and will be detrimental to the store sales and customer experience if it is not tackled ahead of time. For example, a conventional high street clothing retailer working 10 hours per day and servicing each customer for 2 minutes, can potentially service 300 customers per day. However, it would only require a 20 second increase in transaction time per customer to reduces the overall capacity of that store by 15%. That is 15% fewer sales a store will be able to carry out at the peak of their trading period and all it takes is for a label to be damaged.

Usually, the root cause of unplanned downtime are events that are brushed past as insignificant, however once added up, produce a statistically significant impact on the operation. Another example which can be looked at are checkout counters in stores. If the product has an unreadable barcode or the product is damaged, it will take time to substitute the product for a different one from the shop floor. Likewise, at self-checkout counters, having to wait for an employee to enter their credentials to approve the correct product weight due to the scales having a low margin of error, creates downtime that can otherwise be used to service other customers and therefore increase the throughput of a store.

From a customer’s perspective, the 10 seconds they lost is not significant, but their customer experience is. Apart from direct costs associated with decreased customer throughput, a retailer will also experience indirect costs which will inevitably be felt by the customer. The three main indirect costs are:

-???????Responsiveness: When there is an issue in the store, employees focus on resolving the cause of downtime as it is inevitably not allowing the sale to go ahead. Therefore, customer service and responsiveness fall as priorities are redistributed

-???????Stress: Employees will feel the heat from all the customers that are waiting to be serviced, this in turn will increase the pressure and it can get overwhelming for both customers and employees

-???????Quality: Downtime can be very time consuming, this takes time away from other important tasks such as checking quality of produce on the shelves or making sure that the right amount of stock is available. If the stock is not in the right shape, form or quantity, a customer will be let down

Based on the examples above, it is evident that downtime can have a significant impact on the operation of a store during peak trading periods. So, what can be done to get ahead of the problem? Predictive maintenance and root cause elimination should be front and centre.

The three simple steps are: Information gathering, Analysing & Prioritising and Implementation. First and foremost, an investment of time is necessary to follow the process numerous times step by step to gather data to highlight specific scenarios. If IT equipment can automatically record downtime then the process will be significantly simpler. Once these scenarios are captured, it is critical to record the duration and frequency of such incidents. In the second step, data should be agglomerated and prioritised from most impactful to less impactful in relation to total time. In the third step, the gathered information should be used to expedite the implementation of a predictive maintenance and root cause elimination strategy by empowering teams to make the right changes when and where needed. ?

Some change may take time and results will not become evident without the right investment in people, ways of working and processes. Transformation towards a more streamlined organisation with focus on productivity and customer experience can mean the difference between a retailer struggling to survive and one that gains genuine business success in the critical trading periods of the year.

Disclaimer: All views expressed in this article are of my own professional opinion and research, and do not represent the opinions of any entity whatsoever with which i have been, am now or will be affiliated.

My recent article “Why micro-fulfilment is the future of e-commerce operations “ can be found here: https://www.dhirubhai.net/pulse/why-micro-fulfilment-future-e-commerce-operations-ruslan-al-dahleh/?trackingId=mkPH1fTySAmtHHAsEjKmjQ%3D%3D

References

[1] https://www.statista.com/statistics/287867/retail-sales-total-value-monthly-great-britain-gb/