Technology Evaluation Centers (TEC) recently produced an in-depth series of blog posts on workforce management (WFM) platforms (Integrated Workforce Management (WFM) Platforms: Fact or Fiction) discussing the importance of flexibly managing labor based on fluctuating demand and seasonal requirements. And last year, TEC published Labor Management Systems: Optimizing Worker Productivity While Reducing Labor Costs, which looked at how labor management systems (LMSs) can benefit a distribution organization and provide the proper tools and training for its workers.
But while awareness and a sense of urgency have permeated service sectors, such as retail, wholesale distribution, utilities, government agencies, and health care, they haven’t had an impact on the manufacturing industry.
For example, case studies outlining the success of WFM vendors include those for Kronos in retail (see related article), RedPrairie in retail stores and distribution centers (DCs), and ClickSoftware in varied field service environments (see related article).
These vendors’ customers have seen drastic improvements in operational efficiencies, including reduced labor costs, and a more efficient and agile workforce that can respond to fluctuations in demand.
But the benefits can go beyond tangible cost savings to include intangible or “soft” benefits, such as improved employee satisfaction due to the application of fair scheduling rules across the organization and the ability for employees to have more visibility (transparency) and control (or at least input) over their schedules. But these vendors don’t yet have proven capabilities for designing preferred work methods and other complex scheduling requirements in manufacturing.
Manufacturers Need an Agile Workforce
Many executives of today’s manufacturing industry see the importance of achieving agility in their workforce. Their organizations are focused on responding to the needs of customers (who are increasingly positioned in the driver’s seat) while maintaining high-quality standards and controlling costs. Today’s supply chain management (SCM) has moved from simply automating to acutely detecting and then promptly responding to changes in demand or supply. Folks in manufacturing are now talking about “demand-driven supply networks (DDSN),” “real-time supply chain,” and “Lean 2.0.”
This trend has been captured in TEC’s previous series of articles, tools, and methodologies, such as those on sales and operations planning (S&OP) and advanced planning and scheduling (APS), which enable manufacturers to strive to become more dynamic and agile in today’s environment. Manufacturing executions systems (MESs) are also helping manufacturers obtain agility by supporting a tight integration between planning and execution at the plant level (see TEC’s blog post).
However, these systems support few capabilities in workforce planning, scheduling, and optimization. These tools mostly focus on scheduling and optimizing machine operations (see related article series). But wouldn’t a successful S&OP implementation (with a balanced as well as financially reconciled demand and supply) benefit from an optimized workforce with the right number of people that have the right skills to produce according to plan at the lowest possible cost?
Most manufacturing organizations do not yet understand the strategic value of workforce scheduling. Manufacturing companies (complacently and/or ignorantly) often think that the labor scheduling system they have in place is “good enough” or that their workforce scheduling is so unique and complex that it cannot be properly captured and automated.
The incremental improvement in labor utilization or productivity with WFM has only recently motivated manufacturing executives to invest in the use of sophisticated WFM systems. Labor has been customarily viewed as a constraint (not to say a necessary evil) to the successful movement of goods through the supply chain.
Changing Manufacturing Mindsets
What a difference in attitude a protracted economic downturn can make! Because labor represents a large percentage of any organization’s controllable costs, many manufacturing companies have recently realized the significant benefits of implementing automated workforce scheduling. For many companies today, small variations in labor performance can have a dramatic impact on the profitability and ultimately the viability of the company.
If an enterprise has undertaken the effort and cost to implement an S&OP, MES, and/or APS, why would it not optimize its labor resources at the same time? While organizations can readily see the importance of predicting what customers want and when, they can gain a competitive advantage by having the right labor resources (in addition to machines and materials) to deliver desired products and services.
As organizations strive to achieve a real-time supply chain, the tools for managing and executing the changes in demand become more critical. Detecting changes in demand and supply is only useful if manufacturers can promptly respond and change the production schedule and corresponding workforce schedule.
The bottom line is that there are many methodologies, tools, and processes to help organizations become competitive, but if the workers executing these plans can’t respond to abrupt changes, such as supply shortages, plant breakdowns, and other unexpected disruptions, a manufacturing operation will be less than optimal.
WFM has become as much of an execution issue as it is a planning issue. Without an agile workforce that can flex with changes in demand, unexpected production glitches, and shortages of materials, even the best laid production plans can be rendered virtually useless.
Conversely, organizations with workforce agility can gain a strategic advantage. An agile workforce can bring a significant value to a manufacturing organization in the following ways:
- improve profit margins through human resources (HR) benefits absorption (e.g., no unnecessary overtime, proper headcounts, etc.), reduced inventory carrying costs, and reduced labor costs
- manage fluctuations in demand and allow organizations to produce or deliver only what is required at the best possible cost
- reduce risk by staffing only qualified personnel and work within the constraints of complex labor agreements
- reduce turnover and improve employee satisfaction due to fairness of scheduling practices; schedule employees for the best available job; and provide more control and visibility over schedules
What Is Tricky in Scheduling Manufacturing Staff?
Large retailers of many consumer product goods (CPG), particularly frozen foods, frequently offer promotions in their stores thereby creating major fluctuations in demand. This practice makes it more difficult for large CPG manufacturers to efficiently prepare for and respond to these fluctuations in unit demand. This is exacerbated by seasonal fluctuations in demand, which typically hover around 20 to 30 percent.
In addition, for a CPG organization utilizing a large direct store delivery (DSD) sales organization to deliver, sell, and merchandize its products, direct exposure to actual customer demand and consumer sales can lead to frequent sales-driven disruptive adjustments to production schedules.
To gain visibility, staff appropriately, and ultimately control labor costs, manufacturers must optimize their workforce utilization and production planning with fine granularity. Labor scheduling complexities in these environments typically include the following:
- handling full-time, part-time, temporary, and seasonal employees
- handling voluntary and involuntary overtime
- handling a multiplicity of unique job descriptions and required qualifications (including certifications) throughout the manufacturing (i.e., food processing), assembly, and warehousing
- handling complex base schedules (e.g., 8-hour schedule with 12-hour flexibility; 2 days off in 7 days; 10-week cycle)
- handling varied departmental and shift practices
Moreover, environments with a unionized workforce must adhere to working within the constraints of complex collective bargaining agreements (CBAs). Last but not least, CPG manufacturers need to adhere to industry-based regulations as well as municipality, state, and/or federal labor laws (in mandatory breaks after certain numbers of hours worked).
What Are the WFM Choices for Manufacturers?
Astute WFM solutions allow manufacturers to generate an optimized, flexible workforce schedule that automatically adjusts to changes in production demand. Such solutions can provide the following:
- improved operational efficiency and employee satisfaction
- enhanced transparency to the scheduling process and consistency in interpretation of work rules
- improved timeliness of weekly schedule releases
- increased ability to adjust production schedules based on market-driven demand changes and supply chain disruptions
- better visibility to near-term and long-term labor demands
- greater labor efficiency
In the early 1990s, time and attendance (T&A) and labor scheduling were commonly deployed as point solutions. Now they’re becoming the exception, and are usually a trade-off to the complexities of developing custom scheduling functionality versus custom integration. In other words, the need for vertical-specific functionality drives either complex customization from a WFM platform vendor (e.g., Kronos) or complex integration from a point-solution scheduling vendor (e.g., ScheduleSoft).
An integrated WFM platform with workforce scheduling provides a higher quality of information and consistent user experience. With a single database system, all changes to schedules, time cards, accruals, and leave are updated in real time, so there is always only one version of the truth. With a number of point solutions needing integration to T&A and back-office accounting and HR systems, there is always the question of whether everything is up to date.
For example, a point workforce scheduling system typically requires its own employee information. That means that a large manufacturing customer would be maintaining this information in one system and updating at least two others (i.e., ERP/accounting/HR and T&A).
On top of that, schedule updates must be passed back to T&A to validate the schedule hours against the hours punched in. Then, actual hours worked need to be passed back to scheduling to determine critical factors, such as approaching overtime, employee availability, compliance rules, etc.
Not surprisingly, the manufacturing WFM arena is replete with a number of best-of-breed solution providers, some coming from the WFM platform play and others from the point-solution forum. ScheduleSoft, Kaba, Infor Workbrain, CyberShift, TimeLink, Workforce Software, Dayforce, Kronos, and others have competitive offerings. Look for future articles from TEC that dig deeper into some of these offerings.