For almost all businesses, maximising profitability is a key priority, but with manufacturers across Europe wrestling with a seemingly endless flood of challenges, growing profits is a complex, multifaceted endeavour easily derailed by diverse, escalating pressures.
Many such pressures seem beyond the immediate control of individual businesses – some even beyond the control of national governments. Spiralling energy, raw material costs, supply chain issues and labour shortages are just a few examples.
These pressures are taking their toll, directly and indirectly. Fighting inflation, currently running at 11.1% in the UK[1] and 10.7% in the Eurozone[2], the European Central Bank has raised interest rates three times this year[3] and the Bank of England no fewer than seven times[4], from 0.25% to 3%. Further rises are likely, each raising the cost of commercial borrowing and restricting manufacturers’ ability to invest, expand and capitalise on opportunities.
Overall, this looms the spectre of recession. The UK economy contracted by 0.2% during the third quarter of 2022 (2.3% in the manufacturing sector), and the Bank of England raised the possibility that the UK could see its most prolonged recession since records began[5]. The Eurozone is not faring much better, with preliminary growth estimates dropping from 0.8% in the second quarter to just 0.2% in the third.
Taking control
There is an area where manufacturers can take control, improving production uptime, throughput and productivity, growing revenues and maximising profits. What is that area? Workforce management.
Manufacturers must secure the best results from their labour while controlling costs and retaining employee engagement and goodwill. We wouldn’t pretend for a moment that this is easy or that there is a quick fix. Still, the benefits can be substantial and sustained for manufacturers that get it right. The key is to leverage technology to optimise labour management based on enhanced visibility into current and historical manufacturing operations, at all levels, including shop floor production lines.
New capabilities
Exploiting leading-edge innovations such as machine learning algorithms based artificial intelligence (AI-ML), today’s labour management tools are more capable than their predecessors of just a few years ago. These tools analyse a wide range of critical parameters such as planned and unplanned absences, workers’ shift preferences, shift swap requests, and the skills, capabilities and certifications each worker offers. Managers can understand the dynamics of the labour force at all levels of detail and safely automate a wide range of routine decisions.
Let’s explore a few examples of how this can work.
Empowering workers
Based on pre-configured constraints, workers can request and accept shift swaps without managerial intervention. Workers can post their shift swap requests, and others can bid for them. The system then checks that proposed swaps fulfil the business’ needs in terms of labour provision and skills availability. Additionally, it checks that health & safety, working hours and other regulations are met before approving them.
This process relieves managers of tedious and time-consuming “handle turning” activities, allowing them to devote more time and effort to higher-value activities. It also gives workers greater control over their work-life balance and swifter responses to such requests. This increases labour satisfaction, enhances workers’ loyalty, and drives higher productivity and profits.
Creative labour strategies
Managers can use current and historical data to build and explore scenarios and creative labour strategies. How would production uptime change if we used past performance data to inform task assignments based on the required skills? How would productivity improve if we optimise labour scheduling according to worker availability?
Such insights allow manufacturers to fine-tune operations, bringing scheduling and activity assignment into line with customer demand and raw material and plant availability. Productivity, uptime and profitability can be optimised, and the time and resources consumed by scheduling administration, absence management and operational downtime can be reduced.
Removing communication barriers
One of the key messages IDC identified for manufacturers in 2022 at its European Manufacturing Executive Summit was the importance of people engagement in remote working scenarios[6]. We’d highlight the importance of employee engagement, whatever the working environment.
Traditionally, queries about issues such as holiday entitlement and sick leave are raised by workers with HR, which collates the required information and sends it back to the enquirers. There will often be follow-up queries, so the cycle delays resolution, consuming HR and labour time and building up expenses, causing frustration and dissatisfaction. Automated HR service delivery software allows workers to self-serve, accessing the information they need on-demand without approaching HR. This directly reduces costs and saves workers’ and HR’s time, allowing both to devote more effort to higher-value activities, strengthening profits across the business.
There’s more
These are just three examples of how modern workforce management tools can help manufacturing businesses build stronger profits even in these challenging times. The key is not to micro-manage workers and push them to rigid schedules without regard to their life-work needs. Instead, to leverage technology to inform the business more precisely while empowering workers with greater control over their lives at work and beyond.