Imagine a large fresh foods
depot with up to 500 day and night truck
movements, each critically timed and
synchronised. Peak activity is 1pm, then
dropping to nearly half, only to rise again
by late evening.
That's a Thursday. Tuesday,
however, takes a quite different course. In
fact, each day differs, as do volumes
carried out and the labour needed to support
them.
So how does a retailer avoid
an unwanted surplus or being caught
short-handed?
This was the dilemma facing Tesco.
Behind it lay the decision
to switch food distribution from a
fragmented to a composite structure - with
all types of goods under one roof. The
ultimate goal is to run the stores with
minimal buffer stock. The economic
arguments were strong, but so too were the
risks. Stores working to a one day
turnaround (or even less), had to have a
fast and dependable supply. Likewise, the
depots had to be geared up for rapid,
just-in-time response. In labour terms it
looked a sure-fire recipe for over-manning.
If you are staffed for peak activity, then
low periods would carry a surplus.
The answer was annual hours.
Cumulative holidays amount
to eight or nine weeks. Salaries were
converted to a guaranteed rate, which meant
the employee wasn't dependent on overtime.
And having a crew that knew the ropes,
reported-in together and pulled
together worked better. Slip-ups became
fewer and loyalty improved. The scheme for
Hinckley and Harlow was based on a six-crew,
six-week repeating cycle. Each week had a
different schedule of rosters. Where they
overlapped there would
be a corresponding increase
in on-site labour.
In a crisis there would
always be one free, trained crew which could
be called in. By juggling the rosters, it
became possible to match the manning level
with the workload. Interspersed were a small
number of 'reserve' days that form part of
the yearly paid quota and are treated as
stand-by. But the planning didn't stop
there. Tesco's distribution works
around the clock. Just as goods were
streamed according to long or short life, so
too were the crews. Short life perishables
have to be pre-ordered daily by the store
and have a rapid, no-waiting despatch at
phased intervals after midnight. Longer life
items, like cereals and frozen foods, run a
complementary schedule and delivery is
during the day. The same truck that carries
chilled foods overnight is dovetailed with
ambient and frozen food during the day. This
brings down the volume of truck movements.
Tesco engaged consultants
Philip Lynch Associates who engineered the
scheme.
The plan was to mount the
scheme in two depots, at Hinckley and Harlow
whose subsequent evidence argued for its
implementation across the network.
This showed a 99.9% success rate for
deliveries and 98% of drops being made
within 15 minutes of the allotted time. For
Tesco, it brought high productivity. Labour
attendance was pinpointed to the times it
was needed, in the right quarter and in the
right quantity.
The target was an average
36.5 hour week, though in practice some were
more and some less. So a system of
double-bank flexibility was needed. At
critical times the company would be able to
call on 50% of the staff - without
dismembering the crews or over-reaching into
overtime.
This has been one of the
real advantages of the system, says Tesco.
Even at times of greatest pressure all
deployed staff are fully trained.
The company believes the
biggest hurdle is getting away from the idea
of 40 hours a week working. Once
you've breached the gap, it says, even major
changes seem manageable and that is a big
asset.
The consultancy work referred to in this case
study was carried out by Philip Lynch Associates.
incorporating
