Productivity Management in retailing

Retailing has always been a competitive and challenging industry characterized by fierce competition. There is a need to heavily invest in Information Technology to boost margin, improve customer satisfaction and reduce operating costs. Retailers in recent years have made major investments in improving the supply chain management in order to maintain focus on store operations. Among these investments include modern warehouse management systems (WMS); replenishment systems and inventory management; new processes and technologies for supporting cross-dock and flow-through distribution center operations and recent initiatives such as collaborative planning, forecasting and replenishment (CPFR).

Since retailing is mainly focused on distribution, a retailer's distribution efficiency level is usually an important determinant in measuring its success in the market. And because distribution and tight margins generally play a critical role in the retailing industry, retailers have seen the importance of distribution as a key core competency measure in maintaining low costs as well as distribution control.

However, despite retailers' significant investment in Information Technology and the important role of distribution efficiency in measuring overall competitiveness as well as physical assets and material handling systems to support retail distribution operations, many retailing companies are still missing yet another important opportunity to reduce distribution costs, and that is productivity management.

Modern productivity management systems incorporate sophisticated software support with enhanced operational methods and engineered goals settings and standards. This results to productivity management that helps retailers to achieve a simultaneous and significant increase in labor and equipment efficiency, better quality and employee retention.

Productivity management can significantly provide end-line benefits, which are accomplished with accelerated return on investment (ROI) and lesser implementation risk. Retailers today can increase productivity, reduce costs, improve quality and achieve higher operator retention and satisfaction through advanced productivity management solutions.

Productivity management systems are simple to understand. A basic component in productivity management is management buy-in, in which companies should drive lead efforts from the top of the organization and that this should be more than just a mere engineering project in order to maximize success.

Understanding, involvement and support of management are critical in order to eliminate the barriers for improving productivity and establishing an environment where productivity management methods can work effectively.

Labor productivity improvements should be derived from the basic platform of best practice, which is the most ideal overall distribution center process and material flow and preferred approaches, which is a highly favorable way to do a particular task. Most retailing companies recognize the best practice concept but may not be familiar with preferred methods. This results to warehouses having multiple workers doing a specific task in different ways, thus there is inefficiency and low optimal performance.

Setting preferred methods can boost productivity and create a benchmark upon which to base time calculations. The focus in distribution is often on what is being accomplished and not necessarily how it is done. Development of preferred methods involves identifying the most effective approach to do the job within constraints of keeping quality and worker safety overall.

In addition, little ergonomic improvements can also contribute to productivity gains with many workers constantly doing the same task.