What's the quantifiable impact of a good decision?
Most people have a goal. Those goals can vary. Some might be personal, some might be career-related, or some might be goals set by your company. What we can also say about goals, is that most of them are made for some sort of positive improvement.
What we often forget is that even the biggest, most overwhelming and terrifying goals are achieved by a myriad of small decision and activities to get to the end result.
Think about a health and fitness goal. Behind that goal, sits a $28 billion industry that helps people do two things: move more and eat healthier. In other terms, the health and fitness industry delivers tools and insights to individuals wanting to achieve their “overwhelming and terrifying” goals.
So, what does health and fitness have to do with labor efficiency and productivity? Both of them can feel like big initiatives that are challenging to achieve but can be tackled in a series of small decisions.
When it comes to labor efficiency and productivity, there are small decisions that can be made hourly, daily and weekly to keep you on the path to success. But, if companies don’t have the right insight delivered at the right time, there is no way to proactively make the right decision at the right time.
Today we are going to show you how five simple decisions can make a huge impact.
So, let’s use our frozen pizza example...
Our first good decision revolves around headcount.
Let’s say you have 35 people per line, but only 28 show up one day. That means you’re missing 7 people and their productivity! If those seven people don’t produce 2,542 frozen pizzas, you will miss $12,710 in revenue. That’s a lot of pizza!
Plus, it’s likely that the manager won’t be saying, “It’s fine we didn’t hit the productivity goal, that's fine, go home!”
It’s likely they will say, “Sorry, everybody is going to have to stay late, and keep working to hit our goal.”
The Bottom Line: In our scenario, every single time seven people don’t show up to get the job done, there is a potential of costing the business thousands of dollars in missed productivity and overtime.
Managing Headcount with analytic.li
Imagine that it’s Monday morning, and you’re an operations manager. At 9:00 am, you get an alert that says Line 4 should have 35 people, but they’re missing seven. Since you are notified early, throughout the course of the day you are able to recover a bit. You are able to make good decisions on the spot, that impact the rest of the day.
You’re able to grab people from the mailroom, call a temp agency, or call in another employee… all because you knew first thing in the morning you were short-staffed, so you took action. And, in this case, let’s not assume that we’re going to make that adjustment 100% of the time. It’s not easy to pull 7 people to fill the void in an instant. But the value comes from seeing what a difference you can make.
Let's say this decision, is made five times per month across all of the lines; you could recover $76,191 per month or $914,303 annually.
This is done by something as simple as saying, “I know in this very moment that I don't have enough people. So now I can go and make judgment calls, move people from line three to line four, call my temp agency, and have Josh get out of the back room and start working on the line.”
Now that we’ve covered headcount, it’s time to dive into overtime. Every company has regular hours and overtime hours. In our example, our regular hour is $18. That means you spend nine additional dollars on that one hour once it turns into an overtime hour.
So, let's say that every single time a team member is getting close to overtime you are aware and can make a good decision about whether or not it is necessary.
This is just one part of the impact you can have on overtime. The next example is more of a strategic example.
Knowing When to Add Headcount
Let’s explore when it makes sense to add headcount. On Line 4, you’re running at 40 hours of overtime per week. That means you’re spending 1.5x of an annual salary on OT. This impact is the difference between asking yourself: Should I hire another person, or should I continue to incur this overtime?
Here are some examples of other actions you can take to impact regular and overtime hours:
- 1. Making every hour count. When units produced per hour is low or labor expense per unit is high, moving people to different lines, doing training/coaching, sending people home, etc.
- 2. Knowing where team members are at in regard to overtime so you don’t use overtime when you don’t need to.
- 3. Knowing when to right size the labor force when orders and production is less than expected.
On the flip side, you could also be overstaffed in an area. In this example, there are too many people clocked in per line, so you are at risk of going over budget.
Per our examples above, say you are budgeted for 35 workers per line. In this case, 37 people showed up for one shift. It can be just as important to monitor headcount budgets and being overstaffed as it is to notice when you are understaffed.
The last good decision you can make for a simple ROI is all about productivity.
In this instance, let’s say your productivity is consistently under its budget. Your line is supposed to make 16,154 frozen pizzas per day.
With analytic.li, you are alerted at noon that your line is on target to miss 7.5% of their production goal for that day. That is 1,211 missed frozen pizzas… Since you were alerted early, you were able to work with the line, machines, etc. to make things work smoother.
If this same circumstance occurred 5 times per month, imagine the productivity and revenue you could recover. And, how much happier your employees would be!
Here are some other examples of actions you can take to impact productivity:
- 1. Increase headcount in advance of orders. Once the orders come in you have enough people to get as much out the door as possible.
- 2. Move employees to higher volume lines. Based on orders, moving people to lines where if you made more, you could sell more to customers
- 3. Increase production of popular items. Seeing what’s selling most and overproducing “hot” items and holding back on “cold” items
What's the Value of a Good Decision?
Walking through each of these examples shows the value of insight. Each little decision that is made, can have a huge impact on the bottom line. But, without the right data being given to the right person at the right time, these simple decisions become near impossible.
We’ll go out on a limb and saying that the value of a good decision could be in the millions.
Now imagine this was your company. What could your potential ROI be? Let us show you.
The value of a good decision is much greater than we all think. But most companies don’t have the time, resources or tools to make those decisions on their own.
That's Why We're Here
At analytic.li, we uniquely understand the need for manufacturers and distributors to closely monitor their productivity, headcount, overtime, and hours. After all, those are the foundations of labor efficiency and productivity.
With our first-ever, cross-functional labor efficiency and worker productivity platform we break down data barriers and organizational barriers to set up operations managers for success. This means businesses can arm their leaders with real-time insights by alerting leaders of staffing shortages, labor overages, and productivity trends to manage their organizations.
If you’d like to learn more about ways to proactively make good decisions or discuss how analytic.li will work for your organization, reach out to us. We’re eager to connect with you. If now is not the time to consider new software but you liked what you read here, subscribe to our blog below.