Andrés Felipe Porto ^1,2, Amaia Lusa ², César Augusto Henao ³, and Roberto Porto Solano ¹

¹ Corporación Politécnico de la Costa Atlántica, Barranquilla, Colombia.

² Universitat Politècnica de Catalunya, Barcelona, Spain.

³ Universidad del Norte, Barranquilla, Colombia.

aportos@pca.edu.co

Keywords: Labor flexibility, Annualized hours, Multiskilling, Overtime, Retail, Uncertainty.

1. Introduction

For industries, especially those in the service sector (e.g., call centers, hospitals, transportation, retail), maintaining a high level of service for customers while maintaining or improving their profits is not an easy task. In addition, the personnel planning is affected by external and unpredictable factors in their environment. As a sample of these factors, the uncertainty in demand (e.g., unexpected increases or decreases in the staff demand) and the unscheduled staff absenteeism stand out. These unpredictable factors produce mismatches between the staff supply and the demand for personnel, ultimately resulting in an increase in labor costs [1,2]. In the personnel planning problems, these mismatches between supply and demand are known as overstaffing and understaffing (i.e., staffing level higher or lower than required, respectively), and have been studied in the operations management area, for a long time [3,4]. The personnel planning problems constantly prompt industries and economic sectors to define new and better labor flexibility strategies [1,5]. In an uncertain context such as the one described above, the retail industry stands out for its constant and rapid growth worldwide, in addition to its intensive use of personnel [6,7]. Henao et al. [1] listed a set of restrictions that hinder proper personnel planning: (i) Contracts with fixed daily working hours, typically full-time; (ii) Legal restrictions, such as the regulated amount of weekly working hours, ordinary or overtime; (iii) Institutional restrictions, regarding shifts and their duration; (iv) Personal employee’s preferences; and finally (v) Single-skilled personnel, that is, they can perform a single task type.

2. The problem

Service industries have used traditional flexibility strategies for the personnel planning, such as varying lengths and number of shifts, as well as overtime. In addition, the literature on labor flexibility shows that there are typically four flexibility strategies that are individually implemented, these are: (i) Flexible working time, allows to relax the shifts length and the number of weekly/annual working hours of the employees [8,9]. (ii) Multiskilled staff, employees trained to work on multiple task types [1,7,10]. (iii) Teamwork, groups of employees who carry out the tasks together, and not individually [11]. (iv) Temporary workers, are those employees who are hired to work short periods of time in pressing situations [12].  Oriented to the service sector, and particularly for a retail store under uncertain demand, the problem consists in planning a flexible workforce, through a Mathematical formulation, which minimizes the expected costs of over/understaffing for a one-year planning horizon. Thus, we propose a triple strategy of labor flexibility that considers: (i) Annualized hours’ schemes, which allow to contract an employee for a fixed number of working hours per year, and then, these hours can be assigned irregularly over the weeks and months; (ii) Multiskilled staff; and (iii) Overtime.

3. Methodology

In short, the solution to the problem seeks to answer the next three strategic decisions: (i) how many staff is required in the store; (ii) number of weekly working hours, ordinary and overtime, that must work each employee for a one-year planning horizon; and (iii) how many employees should be multiskilled, and in which departments they should be trained. We propose, as a mathematical formulation, a two-stage stochastic optimization (TSSO) model to explicitly incorporate the uncertain demand on the annual staffing problem. The methodology was applied a case study associated with a retail store in Santiago, Chile. We consider a retail store with five departments, and it was also assumed a minimal training cost. This last assumption allows to obtain an upper bound for the multiskilling requirements. In addition, we use historical data to obtain 10 scenarios for the weekly demand in each department. Finally, we proposed four test scenarios to measure the benefits of our triple labor flexibility strategy. Note that, Scenario 1 represents an individual labor flexibility strategy, Scenarios 2 and 3 represent a double strategy, and Scenario 4 represents our proposed triple strategy.

1. Annualized hours’ scheme with single-skilled staff.
2. Annualized hours’ scheme with multiskilled staff.
3. Annualized hours’ scheme with overtime.
4. Annualized hours’ scheme with multiskilled staff and overtime.

4. Conclusions

Preliminary results showed a reduction in the costs of understaffing and overstaffing, as well as a reduction in the total annual salary cost. Scenario 1 was the most expensive. This result is intuitive since this scenario considered a single labor flexibility strategy (i.e., an annualized hours’ scheme). Regarding Scenario 2, which includes multiskilled employees and an annualized hours’ scheme, it was observed a minimal decrease in the total annual cost. Regarding Scenario 3, which includes overtime and an annualized hours’ scheme, the total annual cost decreased at 63% compared to Scenario 1. This last result showed the complementarity between overtime and annualized hours’ scheme. Regarding Scenario 4, which includes overtime, multiskilled employees, and an annualized hours’ scheme, savings of 69% were achieved in relation to Scenario 1. This showed that the proposed triple strategy (Scenario 4) was superior to an individual strategy (Scenario 1) and the double strategies (Scenarios 2 and 3). Finally, our formulation can be extended to other industries in the service sector, being useful for decision makers regarding their personnel planning problems.

References

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