Wal-Mart Worships the False God

It seems like every day another company decides to genuflect before the false god of the almighty algorithm.  Regular readers know this is one of my pet peeves.  Not that I'm necessarily against the use of software tools... they can definitely be an enabler.  But just like motorized accumulation conveyors, software has a nasty habit of simply automating a wasteful process.  And in most cases it isn't "simply"... it is an endless costly hell of trying to force the software to work the way you want it to.

Wal-Mart is poised to introduce a rather phenomenal piece of software that will match labor (err... sorry... "associates") schedules with store sales.  Sales are analyzed over a rolling period of time, employees are scheduled to support variations in those sales to ensure appropriate coverage, then the whole convolution is optimized over time to presumably increase sales while applying labor only where it produces optimum value.  And yes, that value can be said to be from the perception of the customer, as a primary component of the system is to measure and optimize customer satisfaction.  Employee work schedules are individualized, constantly changing, and can bear no relationship to traditional shifts. 

So since the system is to ostensibly increase value to the customer via increased satisfaction, is it lean?  Of course not.

The other, hidden, assumption in Wal-Mart's new software is that the value of labor is purely what it costs, or delivers, in absolute dollar terms.  Dollars that are measured on traditional balance sheets.  There is some adjustment for experience... a buck or two an hour perhaps... but in the end an "associate" is simply a pair of hands to stock a shelf or a mouth to say "Welcome to Wal-Mart."  Just as with Whirlpool, the value - or cost - of labor is simply what shows up on the P&L.  This ostrich thinking is confirmed with a statement in the WSJ article that the new software "helps transition labor from being a fixed cost to a variable cost"... the exact opposite direction from what lean and lean accounting tell us to do.

Yes Wal-Mart should optimize customer satisfaction by ensuring an optimum number of "associates" are available.  But if you remove the requirement for the other side of the equation - reducing the number of associates to a bare minimum when sales dip - then the management problem becomes fairly simple.  Complex enterprise-wide opimization software to create unique individualized schedules probably isn't needed... just traditional systems and perhaps even a whiteboard.

Wouldn't this add cost by having too many associates at a store when they aren't needed?  Not if you take advantage of the minds, creativity, and experience of those employees.  Learn more about the customer experience by having someone personally help a customer, have someone map process flows, have someone improve their language or math skills... there are many options.  All also create value.  And Wal-Mart enjoys a potential advantage that most companies don't have: its employees are often also customers.  They could turn that into a unique ability to view the business through the eyes of the customer... through the eyes of employees.

Instead Wal-Mart is spending millions to implement a complex piece of software designed to reduce the opportunity to take advantage of employee knowledge and creativity.  And while doing it they are making the schedules, and lives, of their employees far more complex.  Employees who already have difficult lives.  Nice job, Wal-Mart.

Update: Mark Graban at the Lean Blog coincidentally blogged on the same WSJ article, and came to the same conclusion.  Jon Miller at Gemba Panta Rei also agrees.

Comments

[Mark Graban]

Here's my post on this topic.... I'll link to your post from my blog also.

[Mark Graban]

Oops link is here

http://kanban.blogspot.com/2007/01/wal-mart-scheduling-and-respect-for.html

[Ralph Bernstein]

Forbes.com is featuring an article, Wal-Mart: Back To Basics, which (not suprisingly) defends what Wal-Mart is doing.
However, the Forbes article points out something much of the discussion overlooks: Target and Lowe's are already doing the same thing.
Whatever criticism Wal-Mart deserves, these two other retailers deserve it as well.

[Michael Askwith]

To be upfront, I happen to be associated with Asgard Systems, who are publishers of employee scheduling software. We are not the suppliers of Wal-Mart’s employee scheduling software and are unaware of what product they are using.

Even if Wal-Mart (0r any employer) used a pencil and paper to produce their employee schedules, they might still implement policies and procedures that could be viewed as promoting their own corporate interests. The promotional literature that we provide regarding our product, does directly address organizational scheduling needs. However, such needs include taking the employees personal life into perspective as well. An example is the priority given to personal conflicting events such as night school, taking care of sick parents, weddings etc. Such issues are promoted at our website (www.asgardsystems.com), in our free trial version and our instructional movies. I am very pleased to say that, most employers express the need of having to contend with the humanistic aspects of managing an organization. Their needs dictate our products.