SCDigest Editorial Staff
Flessas says he has seen real example of companies that have closed down US factories and moved them to Mexico because those plants were viewed as no longer cost competitive, when in fact by optimizing factory labor the plant could have easily remained profitable..
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When it comes to the supply chain for manufacturers, is labor – human capital – the key piece often absent from the discussion?
Factory labor deployment, it seems, is often not a core part of the manufacturing supply chain dynamic – yet how well it is deployed can often be a huge determinant of a factory’s ability to deliver the right product, at the right time, at the right cost to its customers.
While there is frequent attention on optimizing such supply chain elements as inventory, transportation, and the factory schedule itself, the labor needed to support all those other plans is often simply taken as a given. In the end, however, labor optimization can be just as important as those other factors in supply chain efficiency, and even determine whether a factory can remain viable in the hyper-competitive global environment.
“For years, factory labor was thought of not only as inflexible, but as not being in need of flexibility,” Greg Flessas, CEO of ScheduleSoft, said in a recent Thought Leaders discussion on The Supply Chain Television Channel. “(To see the video interview, go here: The Overlooked Role of Manufacturing Labor in Supply Chain Performance.)
This has to change, he says, for manufacturing supply chains to reduce costs and smooth the flow of product to consumers.
There are a number of dynamics impacting the role of labor in manufacturing today, including increasingly volatile demand, a focus on reducing inventory buffers at the same time, and the growing use of temporary labor at many manufacturers, which further complicates scheduling.
“What’s happening is that companies, especially in the process manufacturing and consumer packaged goods sectors, are under-staffing, over-staffing, they don’t have systems to efficiently put people into productive positions to make the product consumers want to buy,” Flessas says.
Flessas adds that the trend for more frequent changeovers in the factory to meet volatile demand and reduce finished goods inventories is another complicating dynamic. That puts an increasing burden on labor scheduling, especially to make sure the minimal amount of unproductive labor hours are incurred during changeovers and schedule changes.
In many process and consumer goods plants, he says, the pressure to meet unexpected demand and achieve fill rate targets often means that it costs more to make the product than it is being sold for, especially if companies can’t optimize the labor plan to support these schedule changes dynamically.
Manufacturers Underestimate the Opportunity
Many manufacturers sense they have a problem with labor scheduling, and can see the challenges even very good schedulers have keeping up the complexities of today’s factory schedules when using largely manual, spreadsheet type approaches.
(Manufacturing Article - Continued Below)