Supply Chain Comment

By Shawn Lane, Vice President, Discrete Manufacturing, RedPrairie

October 27, 2011

Discrete Manufacturers Focus on Labor to Become High Performance Operations

A Successful WFM Implementation will Take into Consideration the Interplay of People, Process and Technology

The need to achieve high performance and productivity is in the DNA of every discrete manufacturer.  In industries ranging from automotive to high tech to apparel, the desire to be a highly productive, lean organization is second nature to the manufacturing community.

Yet, while manufacturers are willing to invest billions of dollars in technology investments that help to optimize their production, manage their inventory, or better route their fleet, manufacturers often overlook an aspect of business performance that can have the most dramatic impact on their overall supply chain costs – labor.

Lane Says: It is critical to realize that a successful labor initiative must recognize the human element of a WFM roll-out and communicate the benefits to the impacted workforce. What Do You Say? Click Here to Send Us Your Comments Click Here to See Reader Feedback

Experts estimate that a formal workforce management program can reduce overall labor costs by as much as 30 percent.  If an organization is tired of squeezing pennies out of typical lean initiatives, here are factors to consider when looking to cut costs and increase revenue from one of a company’s most costly fixed expenses – the human workforce.

You Can’t Manage What You Can’t Measure

The old adage, “You can’t manage what you can’t measure” can be applied to nearly every aspect of effective management – including labor. However, when implementing Workforce Management (WFM), too few organizations fully understand the importance of setting up the right metrics in the first place. Using the wrong  metrics in a WFM roll-out can provide a distorted view of productivity that can lead to incorrect decisions, and detract from the goal your organization originally set out to accomplish – becoming a high performance operation through optimized labor. 

When it comes to managing workforces, the right information is an accurate picture of performance against the true potential performance, as defined by engineered standards.  These standards are best developed by well-trained Industrial Engineers who can create standards which represent a fair and reasonable performance level for the workforce.  Unfair or improperly created standards will only demoralize the workforce, resulting in failure for the labor optimization project.

A Successful Implementation is Not Based on Software, but on People

Of course, most labor optimization programs start with the selection of a WFM software provider, as well as determining the types of standards that will be implemented.  However, the task does not stop there.  It is critical to realize that a successful labor initiative must recognize the human element of a WFM roll-out and communicate the benefits to the impacted workforce. A successful WFM implementation will take into consideration the interplay of people, process and technology that need to be working together to realize the full potential of the system, the cost savings, and the eventual Return on Investment (ROI).  

At RedPrairie, the need to get people, process and technology synchronized for maximum WFM performance is addressed by leveraging the following six-step methodology: 

1. Identify your goals;

2. Assess current operations and identify best practices for meeting your goals;

3. Develop a corporate vision for labor improvement as it applies to the benefits of the entire organization, including the impacted employees;

4. Deploy all aspects of the above-mentioned initiatives including communication, training, and technology roll-out;

5. Measure  your performance - Gather, analyze and act on performance information by using the defined engineered standards developed by an Industrial Engineer to optimize labor resources across the organization;

6. Reward employees based on fair and accurate incentive programs that encourage the productivity attained through WFM adoption.

Realizing the Benefits of a Highly Productive Workforce in a High Performance Operation

High performance manufacturers are those that can sense, respond and react, in real-time, to relevant performance information, to continually improve operations and customer service.

Perhaps there is no greater opportunity for competitive advantage in discrete manufacturing than in optimizing the labor force, as human resource expenditures can often account for 50 percent of distribution costs.