Labor Optimization: Discover the Demand Signals in Historical Data and Improve Forecasts
Hiding beneath the trends in your historical transaction data is a powerful source of intelligence for labor optimization. Once you exclude cyclical trends such as seasonal or weekly trends from your data, you’ll see an interesting pattern of surges and spikes.
Some of these may be from successful marketing campaigns but most will be due to events. Events are responsible for the vast majority of demand anomalies so understanding their impact by correlating them to your demand enables you to include impactful events in your demand forecasts for better workforce optimization.
Know impactful events in advance to stop losing money under or overstaffing
Understaffing costs businesses billions every year. Research by the Massachusetts Institute of Technology’s Sloan School of Management found properly staffing retail stores led to a 10% increase in sales. Understaffing leads to at least 6% loss of sales and unhappy customers with a third of customers needing assistance being unable to access it, according to research by MIT.
It’s not just the retail industry making labor optimization a top priority. In the hyper competitive world of delivery, rideshare and on-demand, one lagging arrival can send customers to a competitor.
With today’s many robust demand forecasting practices and tools, the question is how can so many businesses be caught off guard so frequently? The answer is simple – events drive demand and were nearly impossible to reliably track and predict before we built PredictHQ to do exactly this for you.
High impact events for staffing strategies
PredictHQ covers 19 categories of events and some will be higher impact than others for your business. Let’s dive into a recent example of an event’s footprint.
An annual conference of 25,000 people is taking place in May in San Diego. It’s the American Society of Hematology Annual Meeting, a professional medical conference that few people outside of hematology industry know about. Like 85% of recurring events, it changes date and location each time it occurs. In this case, it took place in Orlando in 2019. Relying on historic data alone, companies would be preparing for additional demand in Orlando that will not eventuate, while missing out entirely on the surge of demand in San Diego.
With at least 75% of conference attendees coming from out of town, the event will cause spikes in aviation and accommodation bookings long before the influx of people arrive in town. Let’s imagine you run a national chain of coffee stores and you’ve correlated this conference with an increase in orders.
This means in San Diego 2020 you will need both enough stock to meet demand and not sell-out as well as enough staff both to take and fulfill all the additional orders at the stores closest to the conference venue and accommodations. Not preparing well will lead to lost customers to competitors and poor customer experiences.
Factoring demand intelligence into your labor forecasting strategies
Understanding the impact of events and investing in demand intelligence will improve three common labor optimization processes.
Strategic workforce forecast
Being able to identify demand anomalies directly informs the scale and skill range your company needs. Unlocking the events that are driving your demand means you can better understand what a normal allocation of staff is, by filtering out event impact.
Once you have created your baseline, you will also be able to identify how many additional or fewer staff you need for each kind of event. This enables you to identify how many staff you require, what skills they will need and what the best ratio of staff to managers is. You may find you need fewer staff but more managers to lead teams through high-stress busy days. Or that you have more managers or specialist staff to meet peaks in demand that only occur a few times a month.
These insights will inform your annual workforce budget, your upcoming staff requirements as you grow, as well as your training and progression plans for team members. If your business is opening more locations, it will also improve estimates for planning workforce capacity.
Workforce schedule optimization
The most obvious impact of demand intelligence around events is the ability to optimize your scheduling. Unexpectedly long lines will be a thing of the past, as you’ll know when events from a major sports game through to a small community event around the corner are taking place, and how they impact your business.
Not only will events inform which days will be unusually busy or quiet, they are also an important lens for understanding each employee’s productivity and which teams are performing best.
Demand surge optimization
Once your workforce and your schedules are optimized, there are still more opportunities to make the most of each demand surge. While these will often be managed by other teams such as pricing or supply chain management, demand surges are also an opportunity to invest in more staff to ensure great customer experiences and as much market share as possible.
Retail and transport stores can increase the volume of staff they have involved in promotional activities in the lead up to major events.
Accommodation providers can increase the amount of front-of-house staff to up-sell customers on additional opportunities or services.
Use demand surges as a way to train up new managers or past-probation staff.
Start by correlating your transactional data with reliable event data
Once a company correlates their historical demand with verified event data, teams will be able to identify which events are catalysts of their demand.
This new context leads to better labor optimization in two ways:
It ensures you can have the right amount of staff ready before demand kicks in. This includes having the right ratio of managers to staff, and gives you the ability to train up team members for particularly busy periods.
It minimizes overstaffing to meet historical demand spikes that do not re-occur. Many large events such as conferences and expos recur, and 85% of recurring events change date or location each time.
To effectively use events in your labor forecasts, you will need more than just a few feeds of events from different providers. You will need to standardize, cleanse, de-duplicate, and verify every event, as event data is notoriously dirty and complex.
Your event data source must also rank events by impact so machine learning models and teams can tell which events matter most, quickly. Ranking is crucial to turn event data into demand intelligence. PredictHQ manages this entire process for our customers through our data processing pipeline, so their data scientists can stop losing time finding and cleaning data, and can focus on their core business.
Many of PredictHQ’s customers use our intelligent event data to optimize their workforce. Explore how our verified and ranked event data will unlock more accurate demand forecasts and labor strategies.