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Lean Labor In Manufacturing

Many manufacturing leaders are applying lean principles to the way they manage their workforce.

Mnet 48304 Gregg Gordon

Razor-thin margins. Pressures to cut costs. Increased competition from existing vendors as well as new players in the market. It is tough to be in manufacturing today, especially when it comes to gaining a true competitive edge.

This is why it is important for manufacturers to increase productivity, control costs and optimize labor resources and align them to the most important project or goal. Conceptually, all of this sounds good, but for many manufacturers, the question remains: How?

Lean Labor can be an extremely effective way to achieve all of these objectives. Most manufacturers are familiar with the concept of Lean — as it applies to managing manufacturing equipment and processes — but now, many manufacturing leaders are applying Lean principles to the way they manage their workforce.

The concept is gaining popularity and building momentum, to the point where the American Payroll Association is now offering a dedicated Lean Labor educational course as part of its overall curriculum. And as manufacturers embrace Lean Labor, many are finding that it is helping them gain a new competitive advantage. For example, Lean Labor methodologies are helping them align labor with actual demand, which leads to shorter lead times, reduced costs, and a stronger bottom line.

Lean Labor in Action: The Perfect Paycheck

To get a closer look at Lean Labor, consider the example of the “perfect paycheck,” or the idea of providing the right pay at the right price at the right time. Most manufacturers strive to deliver the perfect product or service to their customers, and delivering the perfect paycheck to your employees should be just as important. But it’s not always that easy. Most often, the culprit is manual, error-prone process, such as timekeeping or payroll. But when manufacturers must also factor in variables such as overtime, leave, shift differentials, vacation time, union agreements, and state, local, and federal labor laws and regulations — delivering the perfect paycheck gets a lot harder.

But with Lean Labor, providing a perfect paycheck — each and every time — doesn’t have to be an impossible task. First, automated workforce management solutions can successfully eliminate manual efforts and the many efforts that go along with those. Getting rid of paper-based methods saves time and increases overall productivity, but it also helps eliminate employee “buddy punching” and other forms of abuse — both of which are critical to improving payroll accuracy.

Lean Labor can also help automate repetitive actions and improve efficiencies to keep total costs low. Finally, by gaining a highly repeatable process that minimizes errors and wasted time, manufacturers can deliver the perfect paycheck, on time, every time.

Complete Insight. Complete Control.

Lean Labor can also help manufacturers improve the way they align employees with production demand. For example, scheduling applications — a critical component to a larger workforce management solution — help shift supervisors create each shift with the right mix of employees and skills. Not only does this increase total production and help hit revenue targets, but it also helps decrease overtime costs for any replacement workers who may be called in to fill a gap.

Lean Labor and workforce management technology also give manufacturers real-time visibility into what is happening on the shop floor. With true insight into what’s happening with materials, machine downtime, new delivery dates, and more, manufacturers can redeploy employees in time to minimize delays and added costs.

Minimize Compliance Risk

Today, litigation on behalf of nonexempt employees over alleged violations of state and federal labor laws — including the Fair Labor Standards Act (FLSA) and the Family and Medical Leave Act (FMLA) — is on the rise. Part of the challenge is just how difficult overall compliance can be. Many manufacturers still rely on manual, paper-based approaches or pulling data from disparate systems to attempt their compliance efforts. Inevitably, these approaches only increase their risk of violating union bargaining agreements, industry regulations, or state and federal statutes.

With workforce management technology, manufacturers can automate processes that are critical to complying with industry regulations and labor laws. The technology can help track the status of employee training, certifications, and safety profiles, and even send alerts before an employee’s status becomes an issue. The software also offers detailed records and complete labor audit trails to help streamline compliance efforts.

The Lean Labor Solution

While it is true that it is extremely tough to compete in the manufacturing industry today, Lean Labor can help. With Lean Labor, manufacturers gain a proven way to gain new efficiencies, reduce and control costs, and increase overall productivity. In turn, this allows them to focus on revenue-generating activities, strengthen the bottom line, and increase their overall competitive advantage.

Gregg Gordon is Senior Director of Big Data Practice at Kronos Incorporated.

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