Manufacturing needs a more efficient workforce to survive
06 March 2013
As the worldwide economy takes tentative steps towards recovery in 2013, David Hughes considers the business environment for manufacturers and how a fresh approach to workforce management can give them a competitive edge.
The continuing pinch from global economic problems and the rise of cost-effective competitors from Europe and the Far East have put a strain on UK manufacturing businesses and left many bosses scratching their heads to find ways to compete in this tough environment.
The good news is that the tide appears to be turning. "There are encouraging signs of stability in overall demand however, with domestic orders, export orders and production expected to rise in the quarter ahead," the CBI’s head of economic analysis, Anna Leach, is quoted as saying. There is still much work to be done though if the UK sector is to return to sustainable growth.
The CBI has also reported that UK firms are embarking on a programme of investment to meet these challenges - investments not in high capital machinery and equipment, but instead in staff training and product innovation. More and more manufacturers are coming to realise the potential cost and efficiency savings that can be made through better workforce management, and by adopting a more flexible approach to working.
The rationale is that workers need to play an increasingly active role in their firms’ success by increasing their skills and helping to support product innovation so that they can keep a step ahead of the competition. Ultimately this can also help them secure their own continued employment, which can help with workplace morale and increase productivity.
But how does better workforce management actually work in practice? Traditionally, systems of overtime and hiring temporary workers have helped manufacturers overcome the challenges of peaks and troughs in demand and the natural seasonal variation in orders.
But these often come at a cost to morale and product quality, as well has hitting the bottom line. Also, if not carefully thought through and implemented, overtime schemes have been known to incentivise the wrong behaviours in staff.
Extra hours offered when targets are not met and on-call rotas that encourage absenteeism are just a couple of examples of management strategies backfiring.
Crown Computing believes an alternative solution lies in creating a comprehensive workforce management strategy that incorporates flexible working – for example utilising an annualised hours scheme. Strategies like this can see manufacturers increase business efficiency and make cost savings to reinvest back into the business.
Working hand in hand with workforce management strategies are IT systems which help keep the day-to-day management under control and in line with meeting the overall targets. Often HR and associated operations such as payroll still rely on manual data collection or out-dated Time & Attendance (T&A) systems that don’t offer any depth of analysis into the dynamics of the workforce.
Therefore putting in place a modern workforce management system can be key to achieving both cost-savings through greater automation of previously manual jobs, and better visibility of the workforce and its movements. Typically, these systems enable manufacturers to capture workforce data electronically that can not only be analysed and used as the basis for strategic business decisions, but also made available automatically to other systems – such as payroll – without requiring human intervention.
One business that has embraced flexible working to overcome the challenges posed by seasonal order patterns is Palram UK, a manufacturer of polycarbonate and PVC sheeting. In 2011, Palram introduced an ‘annualised hours’ scheme to provide it with the flexibility to manage staff levels to respond more effectively and competitively to seasonal fluctuation in demand.
The manufacturer has a production environment that can operate 24/7 and called Crown in to consult with staff and suggest options for the most appropriate shift patterns for each of its two sites, a process which included scene-setting and engaging with staff to get them on board.
An important benefit for employees is that their new employment contracts include100 unallocated reserve hours, which Palram can call on when demand is high, asking workers to put in more hours than normal. Any hours remaining at the end of the year are written off, essentially rewarding Palram’s workers for delivering output and quality targets.
After offering this as a carrot, together with countering employees’ fears of losing out on overtime by offering a predictable salary and greater job security, the new working patterns were almost universally accepted, and resulted in a 5 percent growth in order numbers, with fewer staff and very little overtime. The firm is now looking ahead to its shift patterns for the coming year.
Going back to T&A systems, in an environment where orders can arrive digitally at a moment’s notice from clients located anywhere, it is becoming ever more important to keep on top of workforce activity, identify patterns, drill down and deal with issues as they arise. Traditional T&A systems play a role but are often limited to recording hours worked rather than the detail of what tasks are performed during the working day.
A modern automated workforce management system can be an extremely valuable investment, a tool for managers to make timely and informed business decisions. It can take the hard work out of identifying patterns in staff behaviour, productive time and tying together data from disparate systems, which adds to the administrative load.
By tying together functions including time and absence recording, payroll and task management, the management team can choose to track what information is most important and use it to plan, place orders and make schedules for upcoming weeks.
In a manufacturing environment that has moved on to a global and digital age, getting the most out of a skilled manufacturing workforce is more important than ever. In this environment, flexible working schemes and workforce management systems can play their part in helping manufacturers meet their customers’ demands.
David Hughes is with the workforce management specialist, Crown Computing