BREAKING BARRIERS

MICHAEL GARRY

Four years ago, executives at Big Y Foods, a 48-store chain based in Springfield, Mass., decided that they weren't happy with the labor costs they were incurring in their in-store bakeries, and they decided to do something about it.

The chain came up with a way of forecasting sales based on individual item movement, and also developed labor standards for the activities associated with making and selling bakery products. The result: Over a one-year period, while bakery sales grew chainwide by $1 million, the labor required to support those sales dropped by 80,000 hours, which translated to an average per-store reduction of 34 hours per week.

"We knew we were on to something," said Jim Killian, labor planning manager for Big Y. The upshot of that success is that Big Y now plans a major rollout next year of a comprehensive, multi-vendor labor management system that incorporates its homegrown system to calculate labor needs and schedule employee hours for both front-end and perimeter departments. The chain intends to test the system in two stores, one in Massachusetts and one in Connecticut -- its two major market areas -- at the beginning of 2003, prior to a chainwide rollout expected to be completed by midyear, Killian told SN. The overall system incorporates a labor scheduling application from TempoSoft, Atlanta; a time-and-attendance/workforce management application from Workbrain, Alpharetta, Ga.; a biometric identification application from Control Module, Enfield, Conn.; and a workforce performance application from H.B. Maynard, Pittsburgh. "It will all be one massive rollout," said Killian.

In addition, about a month ago Big Y completed a chainwide rollout of a Web-based system from Unicru, Portland, Ore., that allows job applicants to apply for store and warehouse positions -- and be evaluated for those positions -- at kiosks in stores or from their home PCs.

Big Y, which has about 8,000 employees, is on the cutting edge of a supermarket industry trend to extend labor systems into new areas such as perimeter departments, while giving employees unprecedented access to corporate information via the Internet. As a result, both stores and employees are being empowered to be more productive and efficient, observers say. "We're stepping into the 21st century," said Killian.

Especially in its perimeter departments, Big Y has broken new ground. In bakery throughout the chain, and also in produce departments in eight stores, Big Y has developed its own forecasting system based on individual item sales data stored in its AS/400 server.

Labor forecasting systems applied at the front end for cashiers typically use gross point-of-sale data for forecasting, rather than individual item sales. So Big Y's bakery departments, prior to using the new system, would make more of a judgment call on labor needs, based on weekly sales.

But Big Y wanted daily item-based forecasting for its perimeter departments, explained Killian. "If we can get a handle on what's selling by item by day from POS data in the scales, we can apply the right amount of labor to help our customers," he said. In addition to the sales forecast, the company began incorporating a workforce performance modeling system from H.B. Maynard that assessed the time it takes to do actual tasks in the bakery (as well as produce and the front end) and came up with labor standards for each task.

"H.B. Maynard studies human motions and figures the built-in time it takes to do those motions," said Killian. "So a store that makes snowflake rolls from scratch gets different hours than a store that sells pre-made French bread. If we want to give employees the right amount of hours to handle a workload, this is the only fair way to do it."

By multiplying daily sales per item by the labor standards, "we came up with labor loads to schedule people at the right times," said Killian. But currently for the bakery and produce departments, Big Y is putting the labor requirements in a "scheduling matrix" and allocating time to employees manually. The TempoSoft system, when it kicks in next year, will automate that manual process, scheduling by half-hour increments in perimeter departments. At the front end, where TempoSoft will also do forecasting, scheduling will be managed in 15-minute increments.

When fully rolled out, the complete system will be applied to all perimeter departments and the front end. To get there, Big Y will bring in H.B. Maynard after the first of the year to calculate labor standards for other perimeter departments such as deli, said Killian. Labor forecasting will also have to be applied to the other perimeter departments.

On the time-and-attendance side, Big Y will be employing Web-based software from Workbrain called RetailERM (employee relationship management) that feeds all data into the payroll system at Big Y headquarters. Linked to the Workbrain system will be biometric time clock readers from Control Module that allow employees to clock in using their thumbprint as identification.

RetailERM also allows employees to invoke benefits, such as days off and vacation time, or request changes in their schedule. Schedule requests are routed to managers and, when approved, sent into the scheduling system, saving a lot of time and paper, said Killian. The system also alerts managers as overtime thresholds or hour limitations for minors are approached.

Big Y's Unicru job application system -- accessible via in-store kiosks or from home via Bigy.com -- is facilitating the processing of job applications for the chain in high-turnover positions. Applicants go through an initial screening; those remaining are then assessed for management and customer service skills as well as dependability, said Jack Henry, Big Y's vice president of employee services.

The data is transmitted to Unicru, applicants are scored and their applications are transmitted back to the store manager's desk in about 10 minutes.

Store managers can elect not to interview candidates, in which case their applications go into a pool shared by other stores. For those applicants who will be interviewed, the system suggests questions such as asking to explain gaps in job history.

While Unicru said the system can reduce employee turnover by up to 30% and reduce shrink, Henry said it is too early for him to say whether the chain is now hiring better people. He can say that the system is saving the chain's managers time. "It looks at the assessment and enables us to interview people most qualified for the job," he said. He added that the shared pool of applicants has been "very helpful." He also cited a "slight increase" in job applications.

One concern about the system is that it requires applicants to commit between a half hour to an hour to completing the application and assessment. But the chain decided that "if they can't put in more than a half hour, we probably wouldn't want to hire them anyway," said Henry. Applicants who are not computer literate can fill out paper applications without the assessment, though "we try to stick to the system," he added. "One of the most important things we can do is hire good people who are suited to their jobs."

The challenge Big Y has faced with all of its new technology has been getting people used to it, said Killian. "People are afraid to change."

While the investment in the labor technology has been considerable, Killian said that Big Y has estimated a return on investment for some of the systems. "There's a return, though I don't know how fast, but we do believe this is the way Big Y needs to go into the future," said Killian. "It's been supported by management up and down the line."

Hy-Vee Web-Enables Employees

Another food retailer making significant use of the Internet to empower its employees is Hy-Vee, West Des Moines, Iowa. The 216-store chain does this through a two-year-old Web portal called Hy-VeeNet that can be accessed at store kiosks, manager workstations or home PCs.

Plumtree Software, San Francisco, provides the framework for the portal's security and management, leaving Hy-Vee to develop it according to company needs. The system has allowed Hy-Vee to reduce paper and e-mail communications, as well as labor costs, and to "get information out sooner and faster" to its 45,000 employees, said Brad Styve, systems analyst for Hy-Vee.

Hy-VeeNet uses 50 templates for employees based on position, location and hours, and employees can further customize their particular page. In addition, the company has static community sections that provide broader information sets. Hy-Vee makes 118,000 documents available to employees through Hy-VeeNet.

Store employees, for example, can access reports based on their job position, as well as corporate postings such as benefit forms, job opportunities, phone listings and newsletters. "We're allowing employees to serve themselves regarding HR matters instead of going to a store manager or HR coordinator," said Styve. "They have instant access to forms rather than wait for truck deliveries of paper forms." The system does not provide access to payroll or hours, though those options have been discussed, he said.

Hy-Vee's portal combines HR information with business functions, and also provides information to some vendors; for example, Catalina Marketing, the electronic coupon marketing company, has access to store requests for specific coupons. Stores can use the system to compare their expenses and inventory with those of other Hy-Vee stores, noted Styve. Managers have access to performance review forms, wage information and product catalogs. The system keeps an 18-month archive of reports.

Styve said that 20% of full-time employees have used the portal in the past month, 30% in the past six months. Some use it every day for their jobs; others use it to obtain a particular form. Since its inception, the portal has had over 300,000 documents opened, he said.

Faster Payroll at Redner's

Technology improvements have also made their way into the payroll area. One company leveraging such technology is Redner's Markets, Redding, Pa., which operates 35 warehouse supermarkets and 11 convenience stores and employs 3,700.

Redner's decided to upgrade its payroll system prior to 2000 to address the so-called Y2K bug. Redner's DOS-based legacy payroll system had made it "a nightmare to separate categories" like part-time, full-time and various salary levels, said Rose Conville, Redner's payroll manager.

So in early 1999 Redner's transitioned to a Windows-based payroll and employee management solution, UltiPro, from Ultimate Software, Weston, Fla. With Web-based UltiPro, which Conville said is easy to learn, the chain saved about 11 weeks over a year in time spent managing the payroll process, she said. Under the old system, she along with four employees took from Monday to Wednesday to do payroll; snags were often encountered, requiring calls to stores. Now Conville said she can handle it alone and get it done in less than a day.

Among its benefits, said Conville, the UltiPro system readily tracks employee data like wages and vacation time; can easily replace a lost check, something the legacy system did with difficulty; is better at producing W-2 forms; uses a faster process for new hires; and disseminates reports on labor usage to store managers. Its Web platform gives Redner's easy access to system support and upgrades, she said. Ultimate now offers UltiPro on a hosted basis.

The Science of Bagging

These days, technology can be applied to practically any labor issue, even training employees on how to bag groceries. For example, Sack-Saver, a new company based in Overland Park, Kan., is offering a training system designed to reduce bag usage and supply costs.

Sack-Saver believes it has a better way to teach bagging, hosting an interactive, Web-based process that challenges baggers to demonstrate their prowess in a bagging "game." By playing the game, called the Loading Zone, eight or 10 times, baggers become "unconsciously competent" at bagging, "like putting a seat belt on in a car," said Bill Hatcher, vice president of sales for Sack-Saver, and one of its two co-founders.

Hatcher, who spent 23 years selling packaging materials, including bags, in the food business, formed the company this year with Roger Ruetten, its vice president of system administration, a 28-year veteran of food retailing who worked for Cub Foods.

In the Sack-Saver game, players observe products coming down a conveyor belt and have to decide which product goes where. Players are judged by standards used in the National Grocer Association's annual bagger contest, such as item count, position and weight distribution as well as speed, said Hatcher. As in conventional video games, players can advance to higher, more demanding levels.

Sack-Saver monitors baggers' activity on the system and provides results to the stores. He believes the Web-based game approach is more effective than other bagging instruction based on videotapes or computer-assisted training, especially for teaching high school kids weaned in a video game culture.

One retailer who has reported positive results from the system is Country Mart, a three-store independent operator based in Atchison, Kan. Co-owner Dennis Garrett tested the system in July and August, and reported that one store reduced its paper and plastic bag costs by 45% compared to May and June levels, a savings of $1,774. While cautioning that the store didn't track bag inventory before and after the test, he said "it looks like a big savings" and is continuing to use the system. By reducing costs, the program would "allow us to go to a heavier bag," thereby improving service, he added.

Though his stores continue to train baggers on customer service and keeping chemical products separate from non-chemical products, Garrett is using Sack-Saver to teach speed, how to divide orders and "fill bags better." The system also gives baggers a sense of the cost impact of bags, something most of them tend to ignore, he said.

To motivate baggers to play the game during off hours, Garrett is offering prizes, such as free products in the store (a 12-pack of soda, for example), and plans to do a contest with bigger prizes. The real savings, he said, will come when baggers become more proficient through continuous time on the system.

Sack-Saver's fee starts at $100 per month per store, plus a $200 set-up charge.