Labor Optimization Solutions Make Best Use of Human Capital
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In the past decade, manufacturers have adopted software to manage many processes, from supply chain management to enterprise resource planning to power consumption. But when it comes to the largest organizational expense and arguably the most critical component of supply chain management – human capital – many companies are still playing catch-up.
Today’s multisite and multichannel operations are spread out nationally or even globally. Combined with the drive to reduce overhead and shield from market volatility, labor management has become trickier. Overstaffing and understaffing have broad implications on cost, speed, and quality. Companies live and die by their efficiency, and optimal utilization of labor is critical for the delivery of the right components to the right place at the right time and at the right cost for customers.
More manufacturing organizations today are turning to 21st century labor optimization solutions that not only keep track of operations but use predictive models and algorithms that enable them to determine their future labor needs. Software analyzes orders and resources to predict warehouse throughput. Then, it automatically schedules the right balance of full-time, part-time, and temporary workers to meet demand. Mangers receive alerts when labor levels don’t meet requirements.
Workforce optimization solutions have been used successfully for years in operations such as call centers, which need to examine historical call patterns to predict future call volumes and ensure they have the right people with the right skills (language, customer conciliation, etc.) in the right communications channels, such as phone or web chat. Such intelligent technology has enormous potential in a manufacturing setting, helping companies do more with less.
According to research group IDC, labor management solutions, coupled with desktop or mobile device alerts, allow managers to discover small problems before they become big ones and act on them quickly. Keeping on top of issues assures optimal operations through continual minor adjustments.
“Closely monitoring and analyzing workforce activities can help your leaders identify where tasks are not efficiently executed and better understand where the most productive people in the organization can be best employed,” wrote analyst Lorenzo Veronesi, in an IDC Manufacturing Insights Perspective. “At the same time, visibility and intelligence of workforce behavior enable managers to pinpoint where recurring problems are and take corrective action aimed at optimizing people allocation and processes.”
Labor optimization solutions can help overcome an enormous challenge in manufacturing by automatically recalculating the production schedule when one or more factors change. When something happens – an employee leaves sick, a machine breaks down, etc. -- the schedule, including changeover times, is re-optimized so that bottlenecks aren’t created elsewhere.
Productivity is a key metric but not an easy prospect; not all employees can be measured the same way for productivity, and the number of variables often renders misleading or completely useless performance indicators. As the saying goes, “If you can’t measure it, you can’t manage it.”
Labor management systems let manufacturing organizations create, measure, and manage more key performance indicators, providing facility management with a better idea of how their workforce is performing against goals, as whole and by teams, groups, and down to individuals. They also can integrate with human-resource performance management systems.
For manufacturing organizations, a robust solution is also about ensuring compliance with safety rules – keeping exposure to chemicals within the margin of safety, for example, or keeping operations aligned with corporate, state, and federal regulations. Eligibility criteria for the federal Family and Medical Leave Act (FMLA), for example, are complex, particularly for workers who do not work regular schedules. Many labor management systems can automatically calculate worker eligibility while simultaneously preventing unnecessary overtime.
Solutions can help enforce attendance policies in a fair way, manage time off and vacation schedules, and allow employees to check their own earned time off, freeing up human resources personnel from constant requests for updates. Some even allow automated shift-swapping and vacation bidding, granting time off based on employee seniority or other factors set by the employer. Essentially, they take the tasks out of the hands of human managers and prevent the sense of favoritism or unfairness.
While premise-based labor management solutions once meant that each physical facility ran its own software and was generally able to keep track of just its own resources, today’s systems help companies manage labor as a collective whole across multiple sites and even distribute resources among sites – and they are enhanced by cloud-based applications. Companies using cloud-based solutions pay for only what they need and can add or eliminate features or licenses as required. Cloud-based systems also minimize IT management and can be implemented more quickly than traditional software setups.
Over the last few years, economic challenges meant that companies cut all they can without affecting their ability to do business. With many organizations still running at their leanest, optimal labor capacity utilization can be the difference-maker in keeping the doors open for business.