Your people are your most important assets; change the way you manage your manufacturing workforce’s performance and you’ll start to notice your operational key performance indicators (KPIs) falling into place.
Jeremy Harford, Managing Director of MESTEC, outlines three key workforce performance strategies that will drive your overall business results forward.
Your human capital, or workforce, is the most expensive and variable aspect of your manufacturing operations, so anything that you can do to improve its performance will pay dividends. Improving workforce productivity will drive improvement in your business-level key performance indicators (KPIs) such as product cost, profitability, lead times and actual product quality. Recent research suggests that companies that adopt and integrate their automated workforce management processes tend to see between 5% and 20% improvement in productivity metrics.
However, before you can improve the performance of your human capital, you have to be able to measure its current levels of performance. Today, the most common metric used to measure employee productivity within manufacturing businesses is revenue per full-time equivalent (FTE).
While revenue or profit per FTE might be good enough to give your board of directors a warm feeling about any performance improvements across your overall workforce, it won’t help you to drive performance improvements on the factory floor; for that you need a far more detailed understanding of exactly where operators are spending their time.
Calculating precise labour content isn’t easy though, especially without access to detailed data. To be able to improve workforce productivity, you need to be able to track multiple variables across products, teams, shifts, individual operators and their precise activities. This will enable you to ascertain and address the areas that will deliver the biggest performance improvements.
So what workforce strategies can you put in place that will ultimately drive forward your business results?
The three most important strategies for improving workforce performance
Collect sufficient granular data – automatically
You need as much insight into the activity of your workforce as possible, so detailed data is imperative – you’ve got to know exactly where labour hours are spent. High-level stats are useful as a snapshot but when it comes to driving improvements you need data for individual employees, down to the task level.
With technology such as touch screens and bar code scanners readily available, collecting data manually is unnecessary today. It’s also inaccurate, too slow and will increase costs by creating overheads for those collecting and entering the data.
Analyse the data in real time
Once you have collected the data, you need to analyse it and act on it as quickly as possible.
57% of companies already employ automated labour analytics to keep an eye on key metrics. If you aren’t using an automated process to gather labour data you are at risk of being at a competitive disadvantage.
Feedback information to staff to drive an improvement culture
A key part of driving an improvement culture is in feeding back performance analytics to staff. Dashboards can be used to communicate the importance of key metrics. When staff know that their productivity and the quality of their work is being monitored they feel more accountable for their outputs. Having the data alone isn’t enough – you must feed it back to help operators to improve the way that they work.
Measure what matters
When it comes to gathering the necessary data there are three key workforce metrics you need to take into account to get a true understanding of overall labour effectiveness (OLE).
- Utilisation (direct hours vs attendance hours)
- Performance (actual speed vs standard speed)
- Quality (percentage of labour hours lost to rework or scrap)
- These metrics will give you insight into how well your manufacturing workforce is performing, and in contrast to revenue per FTE, what actions you can take to improve it. The changes you make will provide a foundation for improvements in your operational KPIs – not just in terms of productivity, but across a whole range of critical business metrics including quality and customer service targets.
- For example, if your employees are finishing more tasks on time, it will reduce lead times, leading to more reliable product delivery. If employees are helped to improve the quality of their output, customer returns and reworks will reduce and with it the overall labour time per product.
How MESTEC can help
MESTEC’s specialist workforce management platform collects and analyses real-time detailed information on factory-floor staff productivity and quality, giving you all the data you need to start pinpointing areas for improvement.
Some of our recent projects have seen our clients improve their workforce performance and utilisation dramatically – typically achieving 60% on first deploying our systems, which rises to 80 – 90% within three months.
Looking for a step-change in your KPIs?
Workforce management is key to your overall manufacturing operational performance. If you’d like to find out more, get in touch today.