Whole Foods' New Inventory-Management System Hurting Employee Morale

A new inventory-management system is apparently causing unrest among Whole Foods Market employees, who are reported to have “crushed morale” and in some cases have been reduced to tears, Business Insider has reported.

The new system, Order-to-Shelf (OTS), relies on scorecards that evaluate everything from signage accuracy to shrink, using a “strict set of procedures for purchasing, displaying and storing products” on shelves and in back rooms, BI reported. In addition to reportedly causing a decline in morale, employees to openly cry and associates to seek employment elsewhere or quit outright, OTS is said to have led to food shortages across stores.

Whole Foods instructs store managers to walk through store aisles and storage rooms regularly with checklists called “scorecards,” making sure every item is in its appropriate place, BI reported. If managers find anything amiss, they dock points, and employees are quizzed on the spot regarding sales goals, top-selling items, the prior week's sales and more. Scores below 89.9 percent can result in firings.

Whole Foods' decentralized approach prior to its purchase by Amazon was complex and costly, Jim Holbrook, CEO of Stamford, Conn.-based consultancy Daymon, a partner of Whole Foods, told BI. The old system gave buyers at store and regional levels more power to decide what to put on shelves, while OTS brings more of the decision-making to Whole Foods' corporate office in Austin, Texas.

OTS has reportedly helped cut costs, reduce shrink, clear storage and allow more employee-customer engagement, BI stated, and a spokesperson told the news site that “team members are really excited about” the system. But labor cuts and what appears to be insufficient training reportedly have left employees confused by and working longer hours to deal with OTS.

Whole Foods' introduction of OTS to its stores follows reports made at the time of the acquisition that Amazon and the grocer's technology teams have plans to invest over time in various areas, including merchandising and logistics, to enable lower prices for Whole Foods customers.

This is not the first time people working with or for Whole Foods have complained about changes since Amazon's purchase of the chain. For instance, as Amazon seeks to lower prices at Whole Foods, it has placed limits on how products are sold in stores and asking suppliers to help foot the charges, thus upsetting smaller brands, which had an easier time getting into and staying in Whole Foods stores.