"The largest cost in business is not labor, material, or overhead… it's unnecessary complexity."
Who said that? I did. I use it almost every time I'm asked to speak to industry groups, and even last week to a bunch of almost disturbingly smart CalPoly students. The students immediately understood, the business executives often don't.
Now we hear of another industry that is embracing time standards, looking for savings in one area while ignoring the impact in others. And most notably ignoring the unnecessary complexity all around them, thanks to the blinders of pathetic leadership.
Daniel A. Gunther has good reason to keep his checkout line moving at the Meijer Inc. store north of Detroit. A clock starts ticking the instant he scans a customer's first item, and it doesn't shut off until his register spits out a receipt. Each week, he gets scored. If he falls below 95% of the baseline score too many times, the 185-store megastore chain, based in Walker, Mich., is likely to bounce him to a lower-paying job, or fire him.
At least 14 major chains have sought bankruptcy protection over the past 12 months, and many others are struggling. With nearly all of them under the gun to cut costs and improve profit margins, "labor-waste elimination" systems like the one used by Meijer are sweeping the industry.
Now where have we heard of this before?
The approach is rooted in the time-motion theories of Frederick Taylor from the early 20th century, which were used to break down tasks into units to determine the maximum work a person could do. Harold B. Maynard, the company's founder, began his career in 1924 as a time-study engineer at Westinghouse, then formed his own company. For 70 years, that company worked primarily for manufacturers. In 2000, after demand from manufacturing industries declined, the company shifted into retail.
Of course it declined in manufacturing because factory managers woke up and realized that it didn't work. Sure, direct labor might become more efficient, but at what cost?
Interviews with cashiers at 16 Meijer stores suggest that its system has spurred many to hurry up — and has dialed up stress levels along the way. Mr. Gunther, who is 22 years old, says he recently told a longtime customer that he couldn't chat with her anymore during checkout because he was being timed. "I was told to get people in and out," he says. Other cashiers say they avoid eye contact with shoppers and generally hurry along older or infirm customers who might take longer to unload carts and count money.
Worker stress goes up, customer service goes down. Contrast that with the philosophy of Saishunkan, the cosmetics company in Japan that I wrote about a couple weeks ago. They go the extra mile to engage the customer, as happy customers both create sales and create ideas for improvement. But how about some more examples of the impact of a focus on labor productivity:
Linda Long, 58, who shops at the Okemos store weekly, says of the cashiers: "Everybody is under stress. They are not as friendly. I know elderly people have a hard time making change because you lose your ability to feel. They're so rushed at checkout that they don't want to come here."
So you're losing the elderly customer base. That's some nice brand image, not to mention lost sales.
Customers at several Michigan stores said managers appeared to be opening fewer checkout lines than before, relying on faster-moving cashiers and self-checkout systems to pick up the slack. "I do notice that the cashiers go a little faster, but it doesn't necessarily matter because there aren't that many cashiers," says Melissa Shoe, 20, a regular shopper at the Lansing store.
Faster cashiers, but the customer experience suffers as there are fewer cashiers. Don't forget, the purpose of an organization is to create value from the perspective of the customer…
At Bob's Stores, a Northeastern clothing and footwear chain, the software revealed that shaving one extra second from the checkout process for each shopper would produce $15,000 in annual labor savings across its 34 stores, according to Kevin Campbell, assistant vice president for store operations.
How does that $15,000 compare to the lost sales from customers that used to appreciate a more friendly attitude, or the improvement suggestions that used to be created by interaction between the cashiers and the customers? I bet one small suggestion could offset that $15,000 pretty easily.
Two shoppers interviewed in front of the Okemos store said they were told by cashiers that they were being timed. "There was one particular cashier that was in so much of a hurry," recalls Ms. Long, the regular customer at that store. "And he was saying, 'When you're afraid you're going to lose your job, you're going to make more mistakes.' "
Saving a second by adding a mistake will wipe out $15,000 pretty quick as well.
Ms. Barry, the DeWitt cashier, who says her weekly score usually hits or exceeds the baseline, admits to using a few tricks to improve her times. She makes heavy use of the register's "suspend button," which stops the clock. The system detects when remote scanning guns are used, automatically allowing slightly more time to scan big items that stay in the cart. Ms. Barry sometimes uses the remote scanner for nonbulky merchandise.
Gaming the system always happens when there are unreasonable requirements.
This myopic nonsense needs to stop, and the absurdity of Taylorism put in the grave once and for all.
Adam Zak says
It’s almost sad how some of these former and long-dead “efficiency gurus” and their discredited ideas continue to haunt modern management from their graves. And to think Maynard actually built a business around implementing this stuff. Did any of the management teams which adopted these “solutions” ever think to ask their team members for suggestions on how to improve performance? Not likely.
Jeff Seitz says
I love this post! There are two “efficiency” examples that have affected my choices when deciding where to shop. 1st-a giant discount retailer near my house never has enough checkstands open so the lines are always long and the employees are visibly miserable and don’t give a thought to customer service. 2nd-a large home improvement store nearby has installed automated checkout lanes that don’t work at all and have one person manning the central station to push through all the error messages the customers butt up against. There are usually no lanes open with actual people to ring up purchases. These are such customer-unfriendly practices! I’ve talked to managers and sent feedback to corporate centers and nothing has gotten better so I don’t shop at these stores anymore. I wonder how much these efficiency tactics are costing them in lost business?
Stan Heard says
In 30 years of consulting, I’ve watched the same cycle repeat a number of times. Taylorism, Quality Circles and Six Sigma are all misused and someone notices managers aren’t practicing good people skills. Leadership courses are instituted to “deal with people” and then no one pays attention to time and motion practices.
Businesses fail when managers fail to plan; fail to organize; fail to lead; or, fail to control waste. If you don’t do them all, you don’t win. Unfortunately, very few people do them all.
I love this site. I visit every other day and always find the best thoughts and comments. Keep it up.
thanks,
Mark Graban says
How funny that your google ads to the right include one for “Meijer Career”.
Jason Morin says
Whoa. Let’s not be so quick to denounce labor standards because some U.S. retail chains have hastily implemented them as a knee-jerk reaction to the economy. I wholeheartedly agree that customer service is vital to any industry and the draconian approach of whipping labor to work faster is absurd. But labor standards, when designed carefully and tied to other business measures such as quality/customer service, play an important role in operations.
You mention that “purpose of an organization is to create value from the perspective of the customer.” Agreed, and for many retailers (esp. grocery), there is a segment of customers that base their buying decisions on price, selection, AND speediness of service You conveniently forgot to leave out the quote from Meijer customer Barb Bush who values quick service from the cashiers.
Meijer and the other chains should have spent more time designing and studying the impact of their “workforce management system” before rushing to install it. It sounds like the edict to cut cost NOW came thundering down from the ivory tower, and management quickly latched on to “workforce management software” as a panacea. They slammed in the software, set the standard to “Superman”, and hit “Go”. No consideration for the human element. No incentive. No input from employees. Nada.
Ultimately I would have looked at simple ways (such as layout) to improve efficiency and evaluate other technologies first to make the cashier’s job easier and thus more efficient. For example, it amazes me that grocery chains haven’t installed 4 sided omni-directional scanners at checkout stations. POS laser scanners have gotten better over the years, but every once in a while, you find the cashier turning an item around, searching for that hidden UPC. And why not put a ID sticker on every fruit and vegetable so the cashier doesn’t have to flip through a guide to find the code before weighing? Why not add a small OCR scanner to every checkout line so the customer can insert their coupons while the cashier rings up the items, rather then having the cashier manually look at and scan each coupon at the end? Until item-level RFID reaches maturity, small, incremental technology enhancements will have to do.
Good article Kevin, but it was a little one-sided. Hopefully my comment made it “fair and balanced”. :-)
Dan Markovitz says
I’m interested in how much the consulting contract cost Meijer or Bob’s. I’m guessing that it was at least $15K, and probably much higher — perhaps equivalent to a year or 18 months’ savings. So: more stress, unhappier customers, disgruntled employees, minimal financial improvements that won’t be realized for at least a year or two. . . sounds just great.
Jason Grijzen says
Components of Time and Motion must be put into the grave. That I agree with, but don’t throw out everything Fred did, some of it had its up sides. The use of the scientific method and quantifiable data in management as opposed to managing by gut feeling was good. Time and motion was a precursor to the most basic of the 7 wastes – the waste of movement. As well, time and motion still has a lot to do with worker ergonomics (Stand up desks anyone?). Enforced standardized methods were a step towards standardized work (a bit totalitarian for me, but the posts on October 31st and November 4th are mentioning ruthlessness as a key step in a Lean transformation?) Not to mention that Taylor set in motion the likes of Gantt and Henry Ford. I don’t think it’s the fault of Taylor, it’s more the fault of those using Taylor’s techniques incorrectly (or in this case, using the techniques that we know are no longer valid.). At the time Taylor didn’t know everything, his work needed a tweak, just like Newtonian physics when Einstein came along. This example is no different than companies that start going lean and immediately jump into one piece flow. The system isn’t robust enough, the QA isn’t there and the workers don’t understand what they are doing so the system falls apart. The result is you get people saying “Lean doesn’t work here”. It’s not the fault of Lean, the people who implemented it just don’t know what they’re doing. I think this example is no different. The management wants to improve the checkout time, but they don’t know how, so they are taking the most simplistic approach, faster, faster, faster. It’s no different than when people want to increase production, so they buy a machine that can produce bigger batch sizes. People don’t understand value, they understand MORE.
JWDT says
Dan makes a great point, my guess is the branch of Accenture cost a lot more then the $15k or so savings. The link to the WSJ article was extremely telling…I am curious how they are going to ‘quantify and prove out’ the banana flipping savings.
Once thing that is missing with this myopic look at standards is those pesky customers….I wonder if the consulting company did a productivity analysis on how long they spent in the store and how they could put some sort of standard on them….or how they could actually assist the customer in finding the items they want…
david foster says
If retailers are so concerned about labor efficiency at checkout, why don’t they improve their point-of-sale systems? Almost all credit-card entry systems require excessive and poorly-designed customer interaction (an exception being Whole Foods, which proves a better system is possible.)
Greg Glockner says
I fully agree with Kevin, but I think you could go much further: the real question for Meijer isn’t efficiency. Improved efficiency is merely a strategy that may or may not help achieve a higher-level goal such as profitability. And stressed cashiers are going to hurt profits since they provide a poor customer experience. I wrote more about this on our corporate blog: http://www.dwaffler.com/blog/entry.php?id=220
And Dan is right: Meijer clearly overpaid Accenture for this consulting project.
Keerthi says
Time Study is vital and continue to do so in industries where a value stream is flowing through an assembly line in apparel or car manufacturing, since the group work schedule need to be synchronized.
Single tasking jobs like checkout counters, may end up being automated or self serviced similar ti the gas pump.
martinb says
I’m glad FW Taylor got support in the comments above — he’s been given a bad rap by management writers.
The cashier working against the clock is not an example of Taylorism, it’s an example of Microsoftism. MS rates its employees once a year, and fires the bottom-ranked 5%, I hear. This is management by fear, as opposed to management by training and motivation.
Taylor was all about applying the best minds to determine the best methods and equipment to do a task, training the most suitable workers in those methods, and monitoring the workers’ performance. Toyota does the same thing, only more input is expected from the workers, but then they are better educated than the workers in Taylor’s day.
It reminds me of when I started out in construction. A major concrete pour was scheduled, and I watched the workers jostle in the queue to get their shovels from the store. The foreman with me chuckled, “They fight to be first so they can get the shovels with the blades worn down. It’s easier for them, the lazy bastards.” Only later, when I had read Taylor and his experiments in shoveling materials, did I realize the workers were actually looking for the most efficient shovels, and we would get better production by grinding the shovel blades smaller. But try telling that to an old-school foreman!
John Crossan says
The article about the timing of cash register performance at Meijer, and a few months back, the Ann Taylor sales associate timing article, brings up a whole variety of issues for me. I remember early in my career (too many years ago) as an Industrial Engineering Manager in a plant with a very large number of manually controlled operations, stand alone operations, not timed to any particular heartbeat system. This was also an incentive based system where individuals were responsible for a certain minimum quota, but could make well beyond that for producing more.
I was, without a doubt, the most unpopular person (well, maybe not the most) in the plant because of my job. Every day we looked at the daily outcomes, and if a job made an undue high percentage output, we had to go back in and re-examine the job and potentially revise the rate.
It was amazing to me then, and still is now, how creative people can be in their abilities to game the system, and to make improvements that were quickly hidden when we showed up.
I know I wasn’t nearly smart enough to keep up with all the tricks people had.
But it was a really valuable learning experience for me, realizing the tremendous opportunity there is in channeling that incredible creativity and capability into making productivity improvements. Obviously back there, nobody was about to suggest any kind of productivity improvements to the company, it wouldn’t make sense, and also would be pretty actively discouraged by your coworkers.
And that’s the piece is missing from any single-minded program like the Meijer approach as presented. But I do have hopes that there’s a lot more to it than the article portrayed.
Single-minded approaches to reducing direct labor cost, to the exclusion of other less visible costs and opportunities in the system, are always seductive due to the unfortunate reality that it is relatively easy to measure direct labor and equipment utilization. And that’s the trap cost minded managers just continually fall into.
But looking at it the other way, what’s a better approach? How can you gain productivity and realize all the other opportunities that come from a position such as a cash register check out individual. Smart store managers realize that person is a great point of contact with the customer, and is in a position of tremendous power in being able to influence that customer. Similarly with the previous story a few months back about Ann Taylor timing customer contact time. That seemed to be a similar, apparently myopic, approach.
I’ve had cashiers, looking at what I’m buying making observations like “Buy one more of these and you get them for half price”. Asking questions about some of the products. “Do I like this? or do like this other brand better?”. Or commonly “Look you’re smushing your bread”. Those are the things that bring me back to particular stores.
And guess what? Those folks know what packages are always difficult to scan. And some have developed great ways to help older folks deal with their change and coupons to make it quicker, without making them feel badly. You just have to involve them in the improvement process, and then recognize their contributions.
Of course it’s a struggle managing large groups of people like a large store check out operation and maintaining and raising productivity. But which managers are the most effective? Those who sit in their offices analyzing data? Or those who spend time on the floor actually observing what’s going on, talking to people, really assessing the value of an individual’s contributions, and determining where they need help. Make no mistake the data is very useful, but it’s always secondary information.
Great managers focus mostly on growing the business, selling more of better, cheaper products, using and developing the potential of the folks who work their. Poorer managers focus mostly on controlling seemingly obvious costs.
Meijer30Plus says
I am a cashier at on of the Detroit Metro stores. I took your article to work today and it was a hit! We want to get in touch with you, as we have a lot more inside information on whats going on. We have a Union, UFCW, believe it or not, and 90 people got fired for this last year. (storewide). Thanks for saying what we feel!