Six root causes of poor labour productivity

Poor labour productivity rates are a growing concern for policymakers and manufacturers alike. Output per hour in manufacturing fell by 2% during the final quarter of 2015 but rose by 1% overall; the strongest increase since 2011, according to the Office for National Statistics (ONS).

“There are deep-rooted structural problems in our economy that have dampened productivity from skills shortages, to infrastructure bottlenecks and limited growth finance,” suggests Suren Thiru, Head of Economics at the British Chambers of Commerce. “Delivering solutions to these critical issues would go a long way to achieving the productivity gains we need.”

You may not be able to change the UK economy’s deep-rooted structural problems, but you can improve your own business’s labour productivity. The first step is to identify the root causes that are holding your labour productivity back.

Using the wrong measures

The ONS tracks figures for output per hour – fine for its economic reports, but inadequate when it comes to running a manufacturing operation because they won’t provide the level of detail you need to pinpoint performance issues. Other common measures that businesses use to track productivity include revenue and profit per full-time employee. Again, these provide no useful insight into labour productivity or how to improve it.

Overall labour effectiveness (OLE) and its constituent parts, including labour utilisation (direct hours versus attendance hours) performance (actual speed versus standard speed) and quality (labour hours lost to rework or scrap), should form the basis of your labour productivity metrics. Unlike high-level measures like profit per full-time employee, using OLE will provide you with detailed, actionable insights, such as why one cell is slower to perform a task than the others.

Lack of data

Only by collecting detailed process information, including specific task times by operation, product variant, individual operator, team, production line and so on will you have the basis and granularity of analysis that will give you the required insights to be able to accurately measure and subsequently improve labour productivity.

If you rely on paper-based timesheet trails to collect operator task times, it’s highly likely that your data will be inaccurate and not sufficiently granular to give you the information that you need. Furthermore, by the time that you’ve collated the data that you collect manually for analysis, it will be too old to inform the changes you need to make to improve productivity for your work in progress.

Inefficient processes

To improve labour utilisation (direct hours booked divided by available or attended hours), you need to increase the time that operators spend doing useful work. If operators are idle waiting for parts or sub-assemblies because of inefficient production schedules, direct hours booked (together with labour recoveries) will suffer and hence will productivity.

Efficient planning and scheduling of anything other than a simple serial production line can quickly become complicated. You need to know exactly how long each task takes and where production is up to every minute of the day. Using real-time work-to lists, which only show jobs that are ready because the pre-requisite operations have been completed, will ensure that the shop floor has a clear list of prioritised jobs and will minimise the time that operators waste trying to find out what they should be working on next.

Not showing operators what good looks like

If an operator doesn’t know what constitutes a good level of productivity and how they compare against the benchmark, it’s likely that he/she will continue to work at the same level as they always have done. In order to be able to set expectations and provide real-time performance feedback, you need to know how your best operators perform.

Our customers tell us that providing real-time feedback to operators is one of the quickest ways to improve labour productivity, and can help to drive cultural change across the shop-floor. For example, alerting a supervisor in real-time to the fact that an operator is waiting for material or a piece of equipment will enable you to fix the problem while there is still an opportunity to improve today’s performance.

Poor quality

If your workforce is highly productive making goods that are of poor quality and need to be reworked, your OLE, which is a function of the percentage of saleable product produced, will suffer.

Many factors affect quality, amongst them the use of poor materials and operator errors. For production managers, the challenge is to maintain high quality standards without compromising productivity. One way to do this is to use quality alerts to help identify potential issues as early as possible – whether those issues are with poor materials, flawed processes or inadequate operator skills. Highlighting process steps that require more careful attention can help improve quality without slowing production down.

Inadequate skills

Over a fifth of current vacancies are due to skills shortages, according to the Commission for Employment and Skills. This makes life especially difficult for manufacturers who want to recruit experienced staff, but end up either taking people on who are overqualified for the positions on offer, or having to invest heavily in training inexperienced operators.

Even with trained operators, you need to ensure that they perform tasks to the required standard and work in the most productive way possible. If your production tasks change frequently, having to retrain people and wait for them to get up to speed with a new process can negatively affect labour utilisation.

Having operators follow step-by-step instructions at their workstations will enable you to capture and replicate best practice across the shop floor. Presenting unambiguous instructions using diagrams, photographs and video will enable operators to see at a glance what they need to do at each stage in the production process, helping inexperienced operators to improve their skills and minimising errors.

Boosting Labour Productivity with MESTEC

MESTEC’s factory recording and analysis solutions address the critical skills and production issues identified by the British Chamber of Commerce, helping you tackle all six root causes of poor labour productivity. Our all-inclusive pricing plans – based on a simple monthly rental payment with no upfront costs, also enable businesses with limited access to growth finance to adopt our solutions.

Ready to find out more?

Please contact us as we would be delighted to discuss your manufacturing challenges and demonstrate how our rapid, low-risk solution could bring major cost savings and performance improvements to your business.

You might also find these posts useful: