Variable Labour Strategy Will Save Money

If you are an employer, in order to compete in today’s cut-throat marketplace, you have two choices. You can improve your internal processes or you can look externally to find lower cost sources. Gregg Gordon, author of Lean Labor: A Survival Guide for Companies Facing Global Competition, wouldn’t advise you to chase lower wages from country to country; what he would suggest is using Lean strategies to transform your workplace.

“Companies that practice Lean rely on their employees who know the process best to identify unproductive activities and replace them with productive ones. This additional productive time results in higher output with the same pace of production using the same capital investment,” Gordon explains.

The efficiency of your workforce is challenging to measure. Machine speed and output, and material inputs are easily quantifiable. The variability in your labour force makes accountability in this area more difficult. Though difficult to do, those companies that look to reduce the variability of their workforce will see more cost benefit than those companies that do not.

By extending lean concepts into your organization’s workforce, you can quickly begin to understand where savings can be found.

Here are some examples of how applying lean principles can make you think differently about your workforce.

  • Transport: Unnecessary movement of people such as call-ins.
  • Inventory: More people than required for current order.
  • Motion: Manual paper processes than can be automated, such as timekeeping.
  • Waiting: Unplanned absenteeism.
  • Knowledge: Too few skills or experience to efficiently perform a process.
  • Resource Allocation: Using a person too highly skilled for a specific role.
  • Discretion: Providing too much information to individuals, causing them to search through this detail for the information they require.
  • Over Processing: Entering data multiple times into different systems
  • Clarification: Decisions that are made, questioned, and then reviewed against because of ambiguous supporting information.
  • Defects: Payment to employees that is not intended
  • Experience Deficit: Expired or missing employee skills and certification that causes quality and performance issues, safety hazards or regulatory infractions.

Overproduction is one of labour inefficiency that is being addressed by smart plant managers. Organizations looking to save on their labour costs are creating a separate labour pool to deal with unskilled tasks that are not efficiently performed by highly skilled employees. It makes absolutely no sense to have a trained equipment operator that comes with a $35/hour price tag engaged in unloading materials or cleaning up the grounds of debris. If these unskilled tasks cannot justify a full-time position, costs can be controlled by outsourcing daily needs to a temporary agency.

By outsourcing unskilled work to temporary agencies, a plant manager can reduce costs and create a variable labour component to account for bulges in productivity or seasonal fluctuations.

All organizations experience fluctuations in production and activity throughout the annual cycle, which cause staffing challenges. Too many workers in an area create waste, and too few can lead to delayed fulfillment or costly overtime. Having a variable strategy in place to deal with these constants can have a positive effect on your labour costs.