The encyclopedia · Engineering & Operations · Operational decision · 1988–1998
Taco Bell scheduled crews with OR, saving over $53 million in labor.
Taco Bell linked forecasting, simulation and optimization so each store staffs to predicted arrivals, cutting labor cost by more than $53 million.
Taco Bell
the move
In 1988 Taco Bell launched a value menu and free drink refills, which raised traffic and forced a cheaper, more efficient operating model.
The company built an integrated labor-management system: forecasting to predict customer arrivals, simulation to find the labor a store needs, and optimization to schedule and allocate crew to minimize payroll.
Across roughly 6,490 US locations with about $4.6 billion in yearly sales, the models saved over $53 million in labor cost through 1997.
why it works
- A value menu raised traffic and labor cost together
- Forecast arrivals to know when to staff the store
- Simulation set the service level a store should hit
- Optimization assigned crew to the minimum payroll
what transfers
When a strategic move raises volume, the labor plan has to be rebuilt around predicted traffic; integrating forecasting, simulation and optimization controls cost without cutting service.
what came after
The labor-management system became the model Taco Bell used nationwide to keep its value strategy profitable, and it stands as a classic applied-OR workforce case.
references
- An Integrated Labor-Management System for Taco Bell
- An integrated labor-management system for Taco Bell
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