Time for Trigger-Based Operations
What if you could allocate your resources to execute activities when they are needed and not just blindly following a fixed schedule? Could this slash the amount of activities or time spent?
Yes, it can. That’s the essence of ‘trigger-based operations’ compared to traditional plan or schedule-based operations. Trigger-based operations utilize smart technology to create an assessment of a need (the trigger). These can be used to automate various tasks, leading to increased efficiency and reduced labor costs.
The concept applies to a pretty broad range of operations, e.g. running logistical operations, maintenance or store operations. In maintenance, you might know these concepts as ‘condition-based or predictive maintenance’, replacing the mix of plan-based preventative maintenance & reactive, unplanned maintenance by some intelligence to deploy actions where the need or risk is greatest.
For store operations there is a similar mechanism applies, if triggers can be generated from shelves. Our MOOS system can help generate the require triggers and realize time savings.
Triggering time saving in your store operations
Our MOOS system to continuously monitor the status of inventory across shelves can be used to generate different types of triggers. For instance:
- Sensors on the smart shelves detect that the stock level of a particular item is low, requiring an additional replenishment action. An optimization can be made based on the criticality.
- An alert is sent to the store's inventory management system, notifying staff or triggering an automatic reorder from the warehouse or supplier.
- Counting & checking can be triggered for high-risk only, minimizing efforts vs periodic counting
- Corrective actions can be triggered, e.g. by misplacement, spillage or
- Smart shelves can also improve security and reduce shrinkage (theft). A trigger can be generated for manual customer checks, rather than spot-checks
- For food retailers, or retailers with on-site preparation, the prep batches can be triggered by actual demand signals. Think of a baking or ready-to-eat station
- If, fully integrated, the shelves can add a picking event to a basket and support cashier-less checkout operations
By leveraging smart shelves and trigger-based operations, retailers can significantly enhance their operational efficiency, reduce costs, and improve overall store performance.
Here’s an estimation of what types of activities in a typical store operations could be optimized:
| Activity | Percentage of Time | Detailed Tasks | Potential Time Savings with Trigger-Based Operations | Saved Time in Percentage Points |
|---|---|---|---|---|
| Customer Service | 20% | Assisting customers, answering questions, resolving complaints, providing product information, and handling returns. | Minimal (direct customer interaction required) | 0% |
| Stocking Shelves | 15% | Restocking shelves, rotating stock, checking expiration dates, organizing displays, and replenishing produce. | Moderate (shelves notify when restocking is needed) | 5% |
| Cashier Duties | 10% | Operating the cash register, processing transactions, handling payments, and assisting customers with their check-out | Significant (automated checkout systems) | 7% (*) |
| Inventory Management | 10% | Conducting inventory counts, ordering stock, receiving deliveries, and checking inventory levels. | High (real-time inventory tracking and automatic reordering) | 8% |
| Food Preparation | 10% | Preparing fresh food items, packaging ready-to-eat meals, maintaining food safety standards, and labeling products. | Minimal (manual process, although prep notification can help) | 1% |
| Cleaning and Maintenance | 10% | Cleaning floors and surfaces, sanitizing equipment, maintaining restrooms, and disposing of trash. | Minimal (cleaning is manual) | 0% |
| Merchandising | 10% | Setting up promotional displays, arranging seasonal items, and ensuring product visibility. | Moderate (data-driven merchandising) | 3% |
| Administrative Tasks | 5% | Handling paperwork, scheduling staff, managing payroll, and coordinating with suppliers. | High (automated scheduling and inventory reports) | 4% |
| Breaks and Meals | 10% | Taking scheduled breaks and meal times during the shift. | Minimal (breaks are necessary) | 0% |
| Training and Meetings | 5% | Attending training sessions, participating in staff meetings, and completing required certifications. | Moderate (training on automated systems) | 2% |
| Online Order Fulfillment | 5% | Picking and packing items for online orders, coordinating with delivery services, and managing curbside pickups. | Moderate (automated order processing) | 2% |
| Total Savings | 25% - 32% |
By adopting trigger-based operations and automation, the total potential time savings for store personnel in a food retail environment is estimated to be 15-32 percentage points.
That’s a significant saving, creating the room to reallocate resources to improve other aspects of store operations, enhancing overall efficiency and customer satisfaction.
Creating an investment case
While it is difficult to assess the actual impact will be on a store P&L. We do now that personnel cost is typically the largest bucket in their operating expenses. Let’s take an example P&L from a mid-sized inner-city food retailer:
| P&L Item | Schedule-Based Operations | Trigger-Based Operations |
|---|---|---|
| Revenue | Eur 2,000,000 | Eur 2,000,000 |
| COGS | Eur 1,200,000 | Eur 1,200,000 |
| Gross Profit | Eur 800,000 | Eur 800,000 |
| Personnel Costs | Eur 400,000 | Eur 272,000 |
| Rent and Utilities | Eur 100,000 | Eur 100,000 |
| Marketing and Advertising | Eur 50,000 | Eur 50,000 |
| Supplies and Maintenance | Eur 30,000 | Eur 30,000 |
| Depreciation and Amortization | Eur 20,000 | Eur 20,000 |
| Other Operating Expenses | Eur 30,000 | Eur 30,000 |
| Total Operating Expenses | Eur 630,000 | Eur 502,000 |
| Operating Income | Eur 170,000 | Eur 298,000 |
In this example, the store profitability can jump from 170k to almost 300k, which is a whopping +75%
Converting an outlet to trigger-based operations will require a certain coverage of shelves. Surprisingly enough, this does not have to be the full store and complete set of shelves, but a smart sample to cover the high-risk areas. In certain areas, the trigger-based operations have a huge benefit compared schedule-based operations, but not everywhere. In certain cases, with very predictable operations, the fixed schedule of replenishments, checks and actions works just fine. While an exact perimeter is hard to assess, our experience shows that typically 1/4th of the operations can delivery nearly the complete benefit case for the whole store.
Let’s consider the medium-sized inner-city store again form our example. Let’s round their operations to 10,000 SKU across 2000 shelves. With a 25% coverage, we aim to connect 500 shelves. Together with installation, integration services, training, this can be estimated at a 100k one-off investment (largely capitalized). With the profitability jump that we showed the example this would already be recouped within one year. Off course, this won’t be realized instantaneously, but needs some time to materialize. Our estimate will naturally vary based on the size of the store, the number of items, the characteristics of the operations. While the upfront investment might be significant, the potential savings in operational efficiency, reduced labor costs, and improved inventory management can lead to even bigger long-term benefits and increased profitability. Payback times of <1,5 year are highly feasible.
We can help you assess the potential and ROI in your operations.