WHSmith News
"We chose BusinessObjects Profitability and Cost Management not only because it provides the flexibility to gain the deliverables required, but also because it’s an easy-to-use application that’s quick to implement."
David Weller
Stores Efficiency Manager
WHSmith
Challenge
WHSmith High Street is one of the UK’s leading retailers, selling a wide range of newspapers, magazines, stationery, books, and entertainment products. Covering over 3 million square feet of selling space, WHSmith has 542 High Street stores in the UK and employs over 20,000 people.
A benchmark study that compared the staff costs and trading patterns of comparable stores revealed that there was a large variation in the amount of operational resources between WHSmith stores. The company realized that a more scientific approach to resource planning was required to reduce these controllable costs. It needed a solution to enable its finance and operational teams to forecast the resource requirements of each store, allowing the chain to better align staffing requirements with trading patterns.
Approach
Through its own research, WHSmith established that the amount of staff time required to support category-specific processes within a store varied according to such drivers as the number of units sold, the number of deliveries received, and the number of stock-keeping units. In addition, other noncategory-specific in-store activities—such as checkout and customer service—were driven by the number of transactions, the floor area, and the number of employees in each store. To produce the projected amount of operational resources required, WHSmith modeled the category-specific and noncategory-specific drivers with standard cycle times. It then calculated this with standard salary costs to give the projected staffing budget for the store.
This modeling was initially performed at a high level, but with over 500 stores organized into regions, working on a 52-week cycle, it became apparent that a scalable resource planning and budgeting application was required to deploy the staff budgeting model across the company. After short-listing prospective providers, WHSmith realized that the BusinessObjects™ Profitability and Cost Management application would fulfill all of its requirements.
"Our traditional budget for staffing costs by turnover ratio did not provide accurate enough figures for us to base resource capacity decisions upon," says David Weller, stores efficiency manager at WHSmith. "The turnover analysis did not take into account the mix of products sold or individual store characteristics."
The web-based application from Business Objects, an SAP company, provides WHSmith with rapid, flexible, and more accurate staffing budgets. By incorporating nonfinancial data with activities such as deliveries received, stock handling, pricing, and customer service into the budgeting process, BusinessObjects Profitability and Cost Management enables WHSmith to model the drivers of resource consumption and then quickly and accurately predict staffing requirements and their costs.
Results
BusinessObjects Profitability and Cost Management has enabled WHSmith to provide store managers with fair and equitable budgets, based on the resources required to support the mix of product categories carried by individual stores. The application is also being used to generate an annual staffing forecast for each store by month. This allocation of staff to departments and product lines—based on a better understanding of what resources are needed to support them—enables managers to increase efficiency in-store.
"A store that predominately sells high volumes of low-value items, such as newspapers," says Weller, "clearly has different staffing requirements than a store that predominately sells lower volumes of higher-value items, such as books. By allowing us to work at a more detailed product category level, BusinessObjects Profitability and Cost Management brings all this information together and increases transparency."
In addition, WHSmith uses the menu-driven cost and profitability analytics functionality within the application to monitor the cost of each product category. This is combined with supply chain costs and sales information to gain a clearer view of product and store profitability—providing managers with the detailed information they need to make more informed decisions and improve business performance.
Quick Facts
- Industry:
Retail - Challenge:
WHSmith discovered that there was a large variation in operational resources between each store—and that it needed a more scientific approach to resource planning. - Why Business Objects
Business Objects, an SAP company, offered a rapid and flexible way for WHSmith to create accurate staffing budgets. - Business Objects Products and Services:
BusinessObjects Profitability and Cost Management