Author Archives: Garry Birkhofer

Market Data Graph showing rising inflation

Cost Takeout 2.0

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Cost Takeout and BCI go hand in hand.

For the last 25 years, BCI has had the honor of helping our retail clients overcome tough economic conditions. Today’s challenges facing retailers, while extensive, are not insurmountable. One way to overcome these is with Cost Takeout strategy, for instance. Last year when writing about Cost Takeout, our team focused on the $15 minimum wage increase and its predicted effects on the retail industry. In this blog, let’s zoom in on the most common issues facing retailers today and how BCI can help:

  • Ongoing inflation and the impact of those factors on pricing are not properly managed to prevent margin erosion
  • Increasing transportation costs and supply chain challenges impact product availability sales.
  • Merchandising and promotional challenges impact how well you can provide value to customers.
  • Assortment and space optimization driven by CPG and Wholesaler assortment decisions impact product offerings and retailers’ ability to optimize inventory.
  • Challenges of managing an online ordering program profitably requires difficult decisions to be made.
  • Labor force challenges, post Covid hourly rates and incentives to attract and retain high caliber team members are not considered. As a result, the cost of turnover, proper staffing models and scheduling is a daunting task for any HR department.
  • Physical location security challenges for customers and employees, internal and external theft, grab-and-go’s all present unique challenges for Operations and Asset Protection teams.
In the last three years, inflation has risen from 1.65% to 8.65%. For retailers without a Cost Takeout Strategy, rising inflation eats into their profit margin.
A look back on the last 3 years of inflation. When not properly managed and part of your Cost Takeout plan, the impact of inflation factors leads to margin erosion. (Source: Ycharts.com)

How effectively you manage, mine and utilize your data will determine your success in this high-risk environment

BCI believes the time is right for any retailer to consider a health check or diagnostic by an outside firm. We have conducted numerous diagnostics providing our clients with an unbiased assessment to identify areas of focus to improve performance, reduce costs and optimize staffing levels. Many of our clients have us complete an enterprise-wide review of their operation including all functional areas. Others have us focus on specific areas such as: Shrink, Labor Scheduling, Distribution Centers, and Merchandising. BCI can flex up or down supporting a variety of approaches.

What Does Our Diagnostic Entail?

In advance of our visits, we will provide a preliminary data request and based on our initial analysis of key data points we will prioritize key areas to investigate. This allows our teams to hit the ground running and focus where we believe there is potential for the greatest return on investment. During the diagnostic our team will spend time with key stakeholders and executives to get their perspective and expectations. At the same time other BCI team members will conduct store and field visits, where we will observation all processes that occur throughout the day and night. During those store and field visits we will interview key store management and team members that enables us to provide you with a true store level perspective. Many executives find what we uncover during those store visits to be eye opening and extremely informative.

The final report that comes out of our diagnostic does not pull any punches. We will provide a menu of initiatives that we categorize as quick-hit (3 to 6 months timeline), mid-range (6 to 12 month timeline with some technology enhancements), and longer-term (greater than 12 months and may involve technology support). Based on our data analysis we will also provide estimated benefits on each initiative and the level of effort to test and implement process improvements. BCI doesn’t just provide these recommendations, we work side by side with our clients to test and implement new initiatives.

Contact us to set up a discussion to determine if our Cost Takeout Diagnostic can provide value to your organization.

Direct Contact Details:

  • Garry Birkhofer – owner and CEO / garry@birkhoferconsulting.com / Cell – (612)-231-0152
  • Corey Birkhofer – COO / corey@birkhoferconsulting.com Cell / (619) 370-2777
  • Greg Sandeno – Principle / greg@birkhoferconsulting.com Cell / (541)-661-1976

People Analytics: BCI and Pegasus Team Up to Provide Powerful Approach

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Today we’d like to talk about People Analytics. People (or Workforce) Analytics methodologies come in many varieties. Specific to retail and in today’s challenging workforce environment, there are key questions retailers need to focus on. To achieve the highest level of results possible, Birkhofer Consulting Inc. has partnered with Pegasus Knowledge Solutions, Inc. to help retailers answer critical questions. Some of these include:

  • Do you clearly understand the root causes of turnover by age groups with your workforce today?
  • Have you calculated the actual cost of turnover for key roles required to run your business? 
  • Are you currently measuring the impact on employee turnover based on various signing and retention bonuses?
  • Would a more accurate cost of turnover by key positions be helpful to support a cost benefit analysis of your variable compensation programs and tactics?
  • What data and tools do you have in place to measure current employee engagement and satisfaction?

PKSI has developed People Analytics solutions that utilize internal and external data, supported by AI and ML to provide user-friendly visual analytics and dashboards. PKSI’s powerful tools provide insights that enable your HR and Operations team to make data-driven decisions to attract, train, and retain high-performance employees. These tools combined with BCI’s business process improvement service offerings make for a powerful collaboration.

Do you know how much Employee Experience (EX) can impact your company’s performance?

Shaping and People Analytics: Gartner study on Employee Experience

Gartner has found that only 13% of employees believe their employee experience meets their expectations. Organizations across all industries are recognizing the connection between employee experience and performance and are looking for ways to have a measurable impact.

The Employee Experience (EX) Advantage

PKSI’s data indicates that 64% of executives are increasingly focusing their attention on the employee experience. As a result, Employers who are focused on EX achieve better revenue, profit, productivity, and Earnings Per Share. Furthermore, increases in Employee Satisfaction have led to Productivity increases of 21%, or more. In this Post-COVID world the focus will be even greater on employee experience and new approaches to its management.

The Danger of Disengaged Employees

In the fight against employee dissatisfaction, retailers need every tool available. To this end,Disengaged employees take 15 more days off every year and cost organizations an extra $3,400 on every $10,000 of salary. To improve employee experience, companies on the cutting edge are applying lessons learned in Voice of the Customer (VoC) to Voice of the Employee (VoE). If you want to produce a more holistic VoE, VoC concepts and services are a great option.

In conclusion, if you are a retailer with large volumes of written or unstructured content, Data Mining, Natural-Language Processing (NLP), semantic analysis and Machine Learning are among the emerging techniques that Pegasus can provide to help yield new insights into employee sentiment, behavior and predictive actions. To learn how Pegasus’ tools and BCI’s proven Strategic Process Improvement approach can help you, drop us a line at either of the addresses below:

Contact Larry Hall at PKSI: lhall@pksi.com

Contact Garry Birkhofer @ BCI: garry@birkhoferconsulting.com

Cost Takeout in 2021 and Beyond

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BCI has for many years utilized cost takeout best practices. You may remember that $15 minimum wage Federal mandate issue earlier this year. This has since gone by the wayside and the law of supply and demand in the labor market has driven wages well past the $15 threshold. Unfortunately, it doesn’t appear to be slowing anytime soon.

Is your organization currently tackling issues such as the following?

  • Product availability issues
  • Fluctuating supplier service levels
  • The need to optimize product assortment and space planning based on a data-driven approach
  • The need to increase product costs and maintain pricing to prevent margin erosion
  • Inflation and its impact on stale key performance metrics
  • Lack of interested candidates to fill part-time, full-time and management positions
  • Stores run with less-than-optimal staffing levels that impact customer service and create excessive overtime
  • Employee turnover and call-offs
  • The need to determine the root causes of turnover by the various age groups

Cost takeout can be approached in a variety of ways

It is important to take a step back and look at opportunities to revise your current operating model. There are a variety of approaches to consider:

  1. Review your current operating processes determine what changes can be made to run your business with less hours (without impacting customer service)
  2. Look for tasks that are transparent to your customers that can be streamlined or eliminated
  3. Look for opportunities for automation (self-checkouts and automation of store-level production planning)
  4. Investigate centralized production (commissary or 3rd parties) to reduce required hours and store level staffing
  5. Review your HR processes to attract, hire, on-board and retain key team members

How our diagnostic can help you with cost takeout

Our team has helped countless retailers identify process improvement opportunities to drive efficiencies and reduce operating costs. In addition, our diagnostic utilizes interviews, observations, and data analytics to quantify and qualify potential benefits and the level of effort required to implement.

What our diagnostic is not:

  • A “cookie cutter” approach that uses recommendations from past projects
  • We understand our clients have a unique business model and brand image that requires informed recommendations

What it provides for your company:

  • An outside perspective on process improvement opportunities to increase store level productivity and efficiency (without impacting customer service)
  • Determines both quantitative and qualitative potential benefits
  • Categorizes recommendations as quick-hit, mid-range and long-term

Contact us to set up a discussion to determine if our diagnostic can provide value to your organization.

Space Optimization

How is your Assortment and Space Optimization?

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COVID-19 and the pandemic shined a spotlight on key opportunities to improve Assortment and Space Optimization. Panic buying emptied store shelves faster than retailers could keep up. Because of product shortages that occurred during the pandemic, store level assortments and planograms that have not been optimized are in desperate need of refreshing.

panic buying emptied shelves and heavily influenced store assortment
In 2020, panic buying and emptied shelves faster than retailers could keep up

During 2020 it also became obvious that there were products on store shelves that didn’t sell, even during a global pandemic. It also highlighted the need to refresh assortments to meet changing customer demands. CPG companies and distributors are doing their own assortment optimization. This is not always the best approach. Refreshing your planograms based on data analytics will enable your space management team to properly allocate shelf space based on customer demand and achieve the following:

  1. Optimize shelf holding capacity
  2. Minimize out of stocks
  3. Drive sales
  4. Reduce store labor required to replenish key demand items (and much more!)

Now is the time to do an in-depth category review to optimize your range of products and right size your planograms. Birkhofer Consulting, Inc. has partnered with SAS to help our clients with this challenge. Our combined team can quickly complete a complimentary assessment of your current category management processes and data analytics program. This assessment will allow your team to quickly prioritize where to focus effort to have maximum impact.

With our experience and SAS’s analytic solutions we can augment your team to accelerate your assortment and space optimization program. This approach will provide reports and dashboards to help your team make data-driven decisions.

Click here to indicate your interest and we will be in touch.