Having Your Forecast and Meeting Your Labor Budget, too Part 4: Advance your capabilities and collaboration with an end-to-end toolset

by | Dec 16, 2018

In last month’s blog, we continued our series on aligning “top-down” financial budgets with “bottom-up” operational forecasts by focusing on the need to establish a continuous forecast process. This month, we drill into the fourth and final topic of how workforce management (WFM) solutions can play a role in integrating these processes, and where they sometimes fall short.

Part 4: Advance your capabilities and collaboration with an end-to-end toolset
With the continuing growth of mobile capabilities, improved forecasting through artificial intelligence and ever more embedded analytics, retailers are taking advantage of more WFM modules than ever. Yet, WFM budgeting modules remain significantly underutilized. The breadth and depth of functionality in even the most advanced WFM budgeting modules falls short of most retailers’ end-to-end requirements. That shouldn’t stop them, however, from considering WFM as a potential piece of the overall budgeting process.

Most WFM budgeting modules offer the inherent ability to reference the same underlying configurations as the WFM forecasting module. And so, using WFM to generate labor demand for budgeting can help retailers avoid having to duplicate business rules like hours of operation, staffing min/max requirements, and labor standards calculations in another system or model. Some vendors also provide functionality to manage budget versioning and enable the release and collection of field edits. Budgets can generally be made available in key reporting and are sometimes used to constrain weekly schedules. All that sounds pretty good, right? So what’s keeping more retailers from taking advantage of these modules?

Most WFM systems were designed with algorithms to effectively forecast a few weeks or months out for scheduling, however they tend to fall short when attempting to project six months or more in the future. Additionally, the user interface of these tools tends to either be too rigid to support the kinds of adjustments and business logic that managing a corporate budget requires. As discussed in this series, the process to optimize “top-down” financial budgets with “bottom-up” labor demand requires a bit of art and science, and most WFM solutions aren’t flexible enough in the UI to address all the art, or robust enough in terms of forecast algorithms to address all the science.

Even so, we’ve seen and partnered with many retailers who have taken advantage of what the WFM systems do well in an “integrated” solution. For example, corporate sales and other volume driver forecasts can be fed into WFM to more accurately distribute higher level forecasts down to the week, store, and sub-store level in order to generate the projected labor need. That process can negate some of the forecast inaccuracy concerns and align the key driver inputs used for both “bottom-up” forecasts with “top-down” planning. This provides a very solid starting point for budgeting and can generally be either exported to an Excel-based model or fed into a separate budgeting application. When properly engineered, this process can be used to support multiple iterations, “what-if” planning scenarios, or assessing the impact of operational changes (e.g. hours of operation) or new initiatives (e.g. omnichannel).

Off-the-shelf budgeting applications can go beyond what the WFM vendors provide but can also be expensive to implement and present challenges to maintain. Some tools are developed with enterprise financial planning in mind. They often require customizations to meet the needs of individual retailers, specialized skillsets to administer, and new integrations with your WFM system and/or labor model. Other tools are more free-form and thereby are more complex to design and costlier to keep up to date with operational changes. While we’ve seen some retailers successfully customize external budgeting solutions to support store/job/activity level planning, none inherently come with the needed configurations like WFM.

When we work with clients to develop a strategic solution roadmap, we assess your end-to-end process of labor modeling, budgeting, forecasting, and scheduling. Depending on the complexity of the requirements, we sometimes recommend investing in budget software solutions that go beyond the capabilities of traditional WFM. But sometimes, we’ve found that an “integrated” solution involving the WFM budget model is the most efficient and effective way forward. Ultimately, utilizing WFM as a source for longer range labor demand projections and a collaboration tool with the field can be boiled down to two main benefits: a single source for labor forecast configurations and a single user experience for field and store managers for both forecasting and budgeting processes.

Contact Us
Our series has now concluded, but the conversation can continue. Should you have any questions about this post or the services we provide, please reach out to Al Asgarian at aasgarian@axsiumgroup.com or Luke Muellerleile at lmuellerleile@axsiumgroup.com.

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